A massive hedge fund might be about to invest $500 million in Bitcoin — in yet another sign that institutional money is flooding into the space.
Guggenheim Partners, a firm that claims to have $295 billion in assets under management, revealed the plans in a filing with the U.S. Securities and Exchange Commission.
At this stage, it merely wants to “reserve the right” to dedicate up to 10% of its $5 billion Macro Opportunities Fund to the world’s biggest cryptocurrency — but the fact it’s mentioned these plans in an SEC filing must mean it’s pretty serious.
The investment doesn’t mean that Guggenheim is going to start raiding major exchanges and snapping up BTC on the spot market.
Instead, it will gain this exposure by pouring this cash into the Grayscale Bitcoin Trust, which has amassed BTC worth $10.1 billion after buying the crypto faster than it can be mined.
Guggenheim was upfront about the risks associated with dipping its toe into the world of digital assets, describing Bitcoin as “highly volatile.”
Setting out the dangers, it said:
- Bitcoin’s price could drop “precipitously” — including to zero — because of regulatory changes
- Crypto enthusiasts might decide to ditch Bitcoin for another digital asset
- Like cash, Bitcoin is susceptible to theft, loss and destruction
Why this news matters
Now, it’s worth noting that this SEC filing was made on Nov. 27 — and the plans were probably drawn up before Bitcoin crashed by 15% in the run-up to Thanksgiving.
Nonetheless, crypto analysts are excited by Guggenheim’s plans, as it suggests that institutional investors are still interested in BTC despite the recent, nasty correction.
This could also mean that Guggenheim will start rubbing shoulders with the likes of PayPal, Square and Grayscale, all of which are buying Bitcoin heavily right now.
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