Why Hedge Funds will not throw money into BTC

[pbody]

My theory is that hedge funds are not going to throw money into BTC anytime soon.

Having worked in IT for 6 years at one of the top 5 hedge fund companies, I learned how they operate. Basically, they DO NOT take risks! BTC is just too volatile for them to invest in. They may have one or two guys in the Value department looking at BTC and keeping an eye on it to see where the future may lead, but I am pretty certain they are not going to make any large investments, if any at all. People get fired all the time for even suggesting risky trades and for coming across as "gambling". I once asked a trader what he thought of investing in stem cells and he laughed saying they wouldn't even consider it being that its way too volatile, and as we know BTC is insanely volatile. What they would do is play with the arbitrage opportunities which may explain all the money going through China. There is basically no risk in doing that.

Anyway, this is just my .02. Im not a trader, though I do understand certain things having studied finance at one point. I wish I knew what I know now while I was working there. I do know their trades are very conservative and right now the chance for loss in BTC is too great. Clients would get concerned.

The smaller start-up funds in the industry could jump in to BTC, but I just cant see the big whales getting involved anytime soon unless more arbitrage opportunities pop up.

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[T.Stuart]

My theory is that hedge funds are not going to throw money into BTC anytime soon.

Having worked in IT for 6 years at one of the top 5 hedge fund companies, I learned how they operate. Basically, they DO NOT take risks! BTC is just too volatile for them to invest in. They may have one or two guys in the Value department looking at BTC and keeping an eye on it to see where the future may lead, but I am pretty certain they are not going to make any large investments, if any at all. People get fired all the time for even suggesting risky trades and for coming across as "gambling". I once asked a trader what he thought of investing in stem cells and he laughed saying they wouldn't even consider it being that its way too volatile, and as we know BTC is insanely volatile. What they would do is play with the arbitrage opportunities which may explain all the money going through China. There is basically no risk in doing that.

Anyway, this is just my .02. Im not a trader, though I do understand certain things having studied finance at one point. I wish I knew what I know now while I was working there. I do know their trades are very conservative and right now the chance for loss in BTC is too great. Clients would get concerned.

The smaller start-up funds in the industry could jump in to BTC, but I just cant see the big whales getting involved anytime soon unless more arbitrage opportunities pop up.

You don't think some would want in at $300? I mean the charts are there for all to see and it looks like Bitcoin is going to be regulated as an asset unless something weird happens.

[BittBurger]

I was under the impression that Hedge funds were already putting money into BTC.

I know of a couple which are in the process of getting approval to set one up entirely dedicated to BTC.

-Burger-

[windjc]

I was under the impression that Hedge funds were already putting money into BTC.

I know of a couple which are in the process of getting approval to set one up entirely dedicated to BTC.

-Burger-

Stem cells and bitcoin are not comparable. Hedge funds will make small % portfolio buys because of the risk reward potential.

[tacotime]

That's weird.  All the people I know in hedge funds make lots of risky investments.  Because they don't have huge obligations to transparency, it's hard to tell how most of them are actually functioning.

What you're describing is more classical mutual funds/general investment firms, not something like BlackStone's BAAM.

[seriouscoin]

Hedge fund managers rather spend your money on hoes and drugs....True story....

They're living a dream, spending others money.

[pbody]

What you're describing is more classical mutual funds/general investment firms, not something like BlackStone's BAAM.

Could be. I worked for a place like DE Shaw, Black Rock, or Davidson Kempner Capital.

Hedge fund managers rather spend your money on hoes and drugs....True story....

They're living a dream, spending others money.

True. One of the managers fits this description. Though the rest do not.

[dopamine]

My theory is that hedge funds are not going to throw money into BTC anytime soon.

Having worked in IT for 6 years at one of the top 5 hedge fund companies, I learned how they operate. Basically, they DO NOT take risks! BTC is just too volatile for them to invest in. They may have one or two guys in the Value department looking at BTC and keeping an eye on it to see where the future may lead, but I am pretty certain they are not going to make any large investments, if any at all. People get fired all the time for even suggesting risky trades and for coming across as "gambling". I once asked a trader what he thought of investing in stem cells and he laughed saying they wouldn't even consider it being that its way too volatile, and as we know BTC is insanely volatile. What they would do is play with the arbitrage opportunities which may explain all the money going through China. There is basically no risk in doing that.

Anyway, this is just my .02. Im not a trader, though I do understand certain things having studied finance at one point. I wish I knew what I know now while I was working there. I do know their trades are very conservative and right now the chance for loss in BTC is too great. Clients would get concerned.

The smaller start-up funds in the industry could jump in to BTC, but I just cant see the big whales getting involved anytime soon unless more arbitrage opportunities pop up.

Sounds like another Troll giving his .02 cent... how many hedge funds are already taking this so called "risky" investment?

[Satyre_Noir]

Exante is hedge fund based in Malta, apparently they like volatility.

[pbody]

Sounds like another Troll giving his .02 cent... how many hedge funds are already taking this so called "risky" investment?

I just do not see huge money coming from large investment firms having experienced the climate they operate in. I do feel confident that there will be a price jump from smaller-medium size investors in the coming six months or so and I keep buying at low prices.

[pbody]

Exante is hedge fund based in Malta, apparently they like volatility.

they are a "smaller start up fund".

[humanitee]

I agree with OP, hedge funds would never touch something so risky!

The Bitcoin Fund which is traded exclusively on the EXANTE fund platform and was launched in late 2012 is the best performing hedge fund year to date (2013) with a return of 4847% (Source: Bloomberg). The Bitcoin Fund has now secured its place in financial history as never before such an exceptional result has been achieved by a fund of its kind.

WHOOPS

[ArticMine]

Ever heard of combining different assets together reduce risk and volatility while maximizing returns? Consider this for example invest 95% in short term US treasury bills and 5% in Bitcoin. The combined return in terms of USD will exceed that of many hedge funds while the risk and volatility in terms of USD will actually be well below.

Edit: The above is the reason why many hedge funds will take a serious look at Bitcoin for a small percentage of their assets.

[Satyre_Noir]

Ever heard of combining different assets together reduce risk and volatility while maximizing returns? Consider this for example invest 95% in short term US treasury bills and 5% in Bitcoin. The combined return in terms of USD will exceed that of many hedge funds while the risk and volatility in terms of USD will actually be well below.

Edit: The above is the reason why many hedge funds will take a serious look at Bitcoin for a small percentage of their assets.

+1

#PBody- size of fund is unimportant if you have good strategy to secure profit.

[sgbett]

[pbody]

not an employee. I was an IT contractor.

[Peter R]

pbody: you mentioned that hedge funds may be interested in arbitrage opportunities, and I agree.  An interesting property of bitcoin is that they would need to take a position in it in order to arbitrage.  The more arbitrage they do, the more bitcoin they need, and the more they boost the price. 

[Edward50]

I also didn't think wall street, or hedge funds would jump into bitcoins any time soon. It just seemed to risky.

First, all the exchanges etc. are far too risky to hold any significant amounts of money in. They are also slow as hell, I Just lost hundreds today in potential profits because stupid bitcoin took way too long to confirm a transaction.

Bitcoins I would think would also be highly unsafe to deal in. Imagine someone internally just transferring out all those bitcoins into anon coin, then transferring them to another coin, and mixing it up until their is no trace. Hedge funds would have to take serious security measures here, its not like trading in fiat which is much more safer.

It could happen, but bitcoins are in no shape or form ready for serious money from wall street. I just don't see it.

[Satyre_Noir]

. Imagine someone internally just transferring out all those bitcoins into anon coin, then transferring them to another coin, and mixing it up until their is no trace.

How somebody would mix anon coin with bitcoin?

[sgbett]

not an employee. I was an IT contractor.

i feel for you, that must have been hard.