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According to a tweet by Reuters, UK Based Hedge Fund, Man Group will add cryptocurrencies like Bitcoin to its “investment universe” if CME Group’s plans to open a regulated futures exchange are approved by regulatory authorities. Man Group is one of the largest hedge funds in the world managing $95 billion in funds.
Man Group CEO on Bitcoin
Speaking at the Reuters Global Investment Outlook Summit in London, Luke Ellis, the CEO of Man Group said there are there a number of challenges with cryptocurrencies but they are still worth the investment.
He said :
“Conceptually digital currencies are an interesting thing. It’s not part of our investment Universe today-it could be. If there is a CME future on bitcoin, it would be.”
“There is big difference between a digital currency and a tradition currency. Traditional ones are supported by governments who have armies and tax men that can make people follow their rules, and digital ones don’t. But it does n’t invalidate digital currencies at all.”
Implications of Bitcoin Acceptance by Hedge Funds
Future Market operator, CME Group announced on Oct 31, that it would launch bitcoin futures product in the fourth quarter. On Monday, CME chairman and CEO Terry Duffy said bitcoin futures product would mostly be ready by the second week of December.
Hedge Funds are only open to "accredited" or qualified investors who have net worth exceeding $1 million. Hedge Fund have wider investment latitude with the objective to maximize investor returns and eliminate risk. They can basically invest in anything - land, real estate, stocks, derivatives, currencies. Mutual funds, by contrast, are open to regular retail investors. They have to basically stick to stocks or bonds.
An Exchange-Traded fund (ETF), is a marketable security that tracks an index, a commodity, bonds, or a basket of assets. It tracks it like an index fund. A Bitcoin ETF would therefore allow ordinary investors to gain exposure to Bitcoin by adding it to their brokerage or retirement accounts.
Wider acceptance by Hedge Funds like Man Group and Future Markets like CME Group creates a significant positive impact on cryptocurrency market especially Bitcoin. This will encourage and invite more involvement from the cautious investors thereby increasing the cryptocurrency market cap.
Greater acceptance by Wall Street and greater liquidity on regulated futures markets will surely pave the way for Bitcoin ETF. We can expect this announcement as early as next year.