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Banks and fund managers come back for another bite at bitcoin

Strong performance by specialist crypto funds has whetted traders’ appetites

Financial markets are cosying up once more to crypto. Institutions such as banks and asset managers have long had a vexed relationship with cryptocurrencies, put off by reputational risks, lack of regulation and volatile returns. But a spell of better performance is drawing them deeper in.

Dedicated cryptocurrency funds returned more than 16 per cent in 2019, according to a survey from Eurekahedge. In contrast, traditional hedge fund strategies yielded 10.4 per cent, according to HFR. “Bitcoin has a higher return on a one, three and 10-year basis than any other asset class,” said Steve Kurz, head of asset management at Galaxy Digital, a specialist cryptocurrency firm founded by billionaire investor Mike Novogratz, once of Goldman Sachs and Fortress. “When the returns are so high, investors will have to pile in.”

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