In The News - HedgeWeek - How changing market infrastructure is taming cryptocurrency’s “Wild West” image among investors

Few sectors have endured such colossal price swings and asset volatility in recent weeks as cryptocurrencies, but speakers at the inaugural DigitalAssetsLIVE summit on Thursday said evolving market infrastructure, growing product selection, and positive investment performance continue to drive digital assets’ institutionalisation, drawing more capital allocators into this once frontier market.

By Hugh Leask

The opening session heard how the previously off-piste segment of financial markets has firmly arrived within institutional investors’ frame of view, even if allocations still remain low. The Covid-19 pandemic proved crucial in the pivot from speculation to allocation, speakers said.

Lee Robinson, founder and CIO of multi-asset class hedge fund manager Altana Wealth, observed how a large number of institutions increased their gold and crypto allocations during the immediate aftermath of the initial coronavirus market shock last spring.

“Institutions have gone from a zero allocation three years ago to maybe 1 per cent core allocation and a 1-2 per cent trading allocation,” said Robinson, whose firm has experienced several cryptocurrency cycles since entering the asset class in 2014. “That’s been the big change we’ve seen over the last 12 months.”…

…Robinson said it is a sign of the maturity and development of a market that people now want to “put rules and regulations around it.”

Reflecting on how the market’s potential future direction of travel may impact the broader hedge fund industry, he noted: “The future talent pool is at these hedge funds and trading houses, in their late 20s and 30s, cutting their teeth on crypto. This space isn’t just about making money and investing in anti-fiat, it’s also about learning and finding out where the talent pool is for the future as well.”

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