Those who got into Bitcoin, ETH and other coins and tokens early may have made considerable sums of money. Detractors think prices are in for a substantial leg down. I believe we're going to see far more upside in the months ahead, based upon one simple thing - hedge fund entry into the space in massive numbers.
Professional money managers have had an ongoing problem justifying their fees to clients because passive products have been outperforming most actively managed products for some time. In my practice of recruiting for asset managers I hear this constantly. Yesterday I read a blurb in a hedge fund news aggregator that at least 70 hedge funds will soon be offering products that invest in crypto currencies. Why is that? They want to invest in an asset class with huge upside potential so they can generate returns that outperform passive products and justify their fees to clients.
In January 2017 it is reported that hedge fund assets under management topped $3 trillion worldwide. I've seen the crypto currency total market cap reported around $120 billion. So what happens to prices of these things when massive capital inflows start to come from hedge funds? Those funds that enter the crypto space will outperform their peers and begin to siphon off customers from funds struggling to achieve superior results. The managers who are not in the space will be forced to follow the high returns there. That will bring in even more money. Granted these new players might cause increased price volatility, but there should be some huge winners, even from current price levels.
