JAKARTA - Hedge fund Brevan Howard stated on Monday, September 12 that it is expanding its crypto business. This is the latest sign that institutional interest in the asset class is gaining momentum.
Brevan, better known for betting on macroeconomic trends, has become one of the most well-known major hedge funds moving into the world of crypto trading, known for its volatile markets and scope for huge profits.
The asset manager said it would launch a new unit, BH Digital, to manage cryptocurrencies and digital assets. They will also hire Colleen Sullivan, currently CEO of the digital trading arm of CMT, to lead private and venture investments in crypto.
Brevan's expansion comes on the back of other high-profile money managers venturing into this space in recent months. The hedge fund manager, Paul Tudor Jones, has invested in bitcoin while the Man Group trades bitcoin futures.
An annual report published by PriceWaterHouseCoopers, the Alternative Investment Management Association and Elwood Asset Management found the total assets under management of crypto hedge funds globally nearly doubled to US$3.8 billion in 2020 from US$2 billion the previous year. .
The increase in institutional interest comes as more and more cryptocurrencies become available while bitcoin and ethereum, the world's most famous coins, are trading well below their record highs.
"What was initially seen as something of a fad now appears to be a more permanent structure of the financial landscape and this has started to see what was originally a fringe financial instrument move into more mainstream and overwhelmingly forcing our institutional interests now," said Stuart Cole, head of macroeconomics at London-based Equiti Capital.
Increased institutional interest has spilled over into the trading space. Eurex, the Deutsche Boerse derivatives exchange, launched bitcoin futures on Monday, September 12 to meet growing interest.
Coinbase, one of the world's largest cryptocurrency exchanges, also said institutional interest in cryptocurrency trading has surged this year.
In a second-quarter letter to shareholders, Coinbase said cryptocurrency turnover hit a record $462 billion in the three months to June. Of this, $317 billion was traded by institutional investors and the rest by retail clients.
This ratio has changed from the first quarter of 2018 when retail investors accounted for the lion's share of cryptocurrency trading.
While hedge funds and exchanges have scrambled to capture trading revenue, global banks have been relatively slow to keep up with trends. While their wealth management clients have mostly encouraged them to offer cryptocurrency trading.
Citigroup Inc is considering offering bitcoin futures trading for some institutional clients. Meanwhile Standard Chartered has formed a new research division for cryptocurrencies. This is a new fact where cryptocurrencies have now become an important part of the world's financial investment.
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