The world’s largest hedge fund is preparing to get behind its first crypto fund as investment titans begin to take the $2 trillion industry seriously.
According to the fresh report, Dalio’s Bridgewater, which has $150 billion in assets under management (AUM) doesn’t intend to directly invest in the asset class itself. Last month, the company said it had no plans to invest, despite four sources indicating that it would do just that by mid-2022 earlier.
“While we won’t comment on our positions, we can say Bridgewater continues to actively research crypto but is not currently planning on investing in crypto.”
According to Coindesk, sources outlined an unofficial rough timeline for Bridgewater’s involvement in crypto. One person familiar with the hedge fund’s plans said:
“Bridgewater is in a first-half plan this year They’re planning on having a small slug of their fund deployed directly into digital assets.”
Another source said:
“Bridgewater is looking to get involved. They are doing serious diligence: liquidity, service providers and whatnot.”
Bridgewater issued a report on institutional trends in crypto in January, where it noted that “Cryptocurrencies are still far from being huge markets, but Bitcoin and Ether are now large and liquid enough that institutional investors could access them in relevant size.”
Dalio often uses the phrase “cash is trash”, telling investors to minimize cash and bond ownership in exchange for Bitcoin and gold.
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Hedge Funds Dip Their Toes into Crypto
On March 9, a Wall Street Journal article outlined that veteran (Tradfi) traders are increasing their crypto holdings and trading activity. This means two things:
- Traditional financial (Tradfi) capital is entering the space with a long-term vision.
- Bitcoin and Ethereum may trade differently as the industry matures.
In 2020, institutional players like Paul Tudor Jones first entered the market with small portfolio allocations (1%-2%). But as liquidity grew in the top two assets (Bitcoin and Ethereum), so too did the market’s appetite. In October 2021, Australia’s 5th largest pension fund admitted to looking into crypto for opportunities. Back then, the fund had $92.4 billion AUM.
Unlike stocks, bonds and traditional asset classes, crypto is still a relatively new market with ample inefficiencies, or opportunities for big firms with access to quality information. As liquidity increases and the markets mature, such opportunities are open invitations to fast-moving funds looking to make a name for themselves.