Bitcoin Breaks $100,000 Mark, Cryptocurrency Funds Reap Rewards

So far this year, the price of Bitcoin has risen by 130% to around $100,000, pushing the total market capitalization of major cryptocurrencies from $1.8 trillion to $3.5 trillion.

As Bitcoin price recently surpassed the $100,000 mark, hedge funds focused on cryptocurrencies are reaping substantial profits.

According to data from Hedge Fund Research, funds adopting cryptocurrency strategies averaged a 46% increase in November, with a year-to-date return of 76%.

This performance far exceeds the industry average, with the average return for hedge funds during the same period being only 10%. Notably, Brevan Howard Asset Management and Galaxy Digital, the cryptocurrency investment management company founded by billionaire Mike Novogratz, are among the biggest winners in this wave of digital asset surges.

As reported by the Financial Times, citing informed sources, Brevan Howard's main cryptocurrency fund rose by 33% in November, with a cumulative increase of 51% over the first 11 months of this year. As one of the largest hedge fund management companies, Brevan Howard launched a dedicated cryptocurrency business in 2021, handling assets totaling up to $35 billion.

On the other hand, Galaxy's hedge fund strategy rose by 43% in November and has increased by 90% year-to-date in 2024. This New York-based company has more than doubled its managed assets to $4.8 billion over the past two years by acquiring assets from bankrupt cryptocurrency companies.

Despite a recent pullback in the cryptocurrency market due to the Federal Reserve indicating that next year's rate cuts may be lower than expected, analysts believe this does not overshadow the digital assets институционалs' overall strong performance.

In 2022, the industry faced a deep crisis with the collapse of Sam Bankman-Fried's FTX exchange, causing Bitcoin's price to drop to around $15,500. However, in January 2024, the U.S. Securities and Exchange Commission approved 11 exchange-traded Bitcoin funds, opening the door for institutional and retail investors to enter the cryptocurrency market.

Last week, the world's largest asset management company, BlackRock, also stated that they believe “there is ample reason to include Bitcoin in a multi-asset portfolio.”

Moreover, some macro hedge funds have also increased their investments in digital assets. Notably, MP Alpha Capital's $20 million global macro hedge fund has risen by more than 30% this year. The company's partner, Damien Miller, stated that their investment strategy revolves around the institutional adoption of digital assets, against a macro backdrop of loose monetary policy, a weak dollar, and ample liquidity.

“We have performed well in digital assets: Bitcoin, Ethereum, and Bitcoin miners.”

Several managers, however, cautioned that Bitcoin's recent surge should prompt investors to pause and take stock. Huang from NextGen Digitalventure expressed optimism about Bitcoin and cryptocurrencies in the long term, but noted that “no asset will rise in a straight line.”