A New York Times report has pointed to hedgefunds as fuel that has helped the most reason spike in Bitcoin prices

As of publishing, the price of Bitcoin has surged once again and is now worth over US$7,300. By the time you start reading the article, it probably will have crossed the US$7,500 mark. When you are done, I’d guess it costs US$8,000 for a coin (and this is a short article).

Yes, I am being a bit facetious, but the point remains, the price of Bitcoin is in the middle of an exponential explosion.

Consider that, at this same point last year, a person could buy a Bitcoin for US$720, the price growth over the last 12-months — coupled with the growth of ICOs and other cryptocurrencies — has probably become “the story” of 2017.

But, according to a report in the New York Times, it would be wrong to think that this is simply the result of mom-and-pop investors taking a stab and speculating on the currency.

That’s not to say the individual investor is not an important factor, but when talking about cryptocurrency investment, the article points out that institutional investors play a big role in the price spike. Specifically big whales have entered the ocean in the form of hedge funds.

The New York Times article points to a research study from Autonomous Next. It says the number of hedge funds that have been set up specifically to invest in Bitcoin has jumped from 30 to almost 130 in the last year.

Furthermore, this trend will probably continue if the Chicago Merchantile Exchange goes through with its plan to allow people to trade Bitcoins as futures contracts by the end of this year.

Also Read: App Annie APAC Managing Director heads to Appier as company makes executive appointments

While enthusiasm from hedge funds helps bring the cryptocurrency another step into the mainstream, one of the risks it presents is possibly making the price fluctuations more erratic. If a hedge fund had invested a large amount of money into Bitcoin when it costs US$721 and saw it rise, and rise, and rise to US$7,000, a responsible Manager would have sold ages ago and ran to their partners boasting of absurdly high returns.

Thus, according to the New York Times, it puts Bitcoin at risk of falling victim to a negative run, whereby if the price does start to drop, investors can happily pull out large chunks of their stake and still report fantastic returns. It’s great for whoever invested in Bitcoin, but it might help accelerate a drop because large chunks of cash will leave all at once.

That being said, other investors think it is inevitable that Bitcoin will eventually impact the global financial system, making these kinds of shifts inevitable.

Also Read: Hong Kong-based mobile lending startup WeLab raises US$220M from Alibaba, IFC, others

For every person who predicts Bitcoin will continue to rise, there are an equal number screaming ‘bubble!’ and forecasting its doom. Whether or not shifting investor-types will contribute to any outcome is also hard to project.

The point is, moving forward, when thinking about Bitcoin — and logically any cryptocurrency — it is best to stop imagining investors as tech geeks, housewives or speculators buying one or two coins for fun.

Rather, keep in mind that those people do exist, but remember that a significant amount of investors are more comfortable on Wall Street than Main Street.

—
Copyright: audioundwerbung / 123RF Stock Photo

The post One reason for surging Bitcoin prices? Hedgefunds appeared first on e27.