Two veteran investors of BlackRock have left the asset manager to invest in a cryptocurrency hedge fund. Michael Wong and Adam Grimsley will join Oxford Maths PhD Nic Niedermowe in a new hedge fund called Prime Factor Capital.
The three hope to achieve a £10 million of assets under management. However, this amount is small compared to amount raised by many cryptocurrency hedge funds. For instance, BlockTower Capital recently raised $140 million. On the other hand, former Fortress manager Mike Novogratz wanted to launch a $500 million fund. He shun those plans for a crypto-focused merchant bank.
“The market is still at an early stage. It’s rare for a big institutional asset manager to commit to a new asset class, particular if they don’t feel the market is there. It’s not surprising that they’re biding their time. We view this as an opportunity”.
Cryptocurrencies lost more than 40 percent of their value since the highs in December. However, more investors are willing to invest in cryptocurrencies according to Grimsley. This includes institutional investors, high net worth individuals, family officers and sovereign wealth funds.
Michael Wong led the BlackRock’s fixed income asset allocation division. Adam Grimsley is a fixed income specialist who previously worked with Prime Factor Capital.
Hedge Fund Research in December showed that more investors are interested in cryptocurrency hedge funds. Many investors have joined from traditional institutions. This is despite six of the world’s largest asset managers telling Financial news that they do not plan to invest in Bitcoin.
Other investors who left traditional institutions to invest in cryptocurrencies include Petro Levchenko. He was former Credit Suisse director and FX spot trader. He left bank to invest in a cryptocurrency startup.
Travis Kling also left Point72 Asset Management, a family owned by Steve Cohen. He invested in digital currencies in December.
The move for more people to jump ship is because large firms hesitate to bet on the burgeoning crypto assets. Many other financiers are also hostile towards this asset class.