- $US1 trillion money manager Wellington Management has folks looking into putting crypto assets in its portfolios.
- Analysts wrote in a wide ranging note that the firm also updated its tech to trade bitcoin futures.
Wall Street has derided bitcoin as a fraud and a tool only useful for criminals.
But one $US1 trillion dollar asset manager might jump on the cryptocurrency bandwagon.
In a report exploring cryptocurrency, analysts at Boston-based Wellington Management said the company upgraded its systems to trade bitcoin futures and has teams looking into how it could include “cryptoassets” into portfolios.
“Some of the firm’s investment teams are evaluating the potential inclusion of cryptoassets in client portfolios,” the firm said. “Portfolio teams would only invest in cryptoassets if explicitly permitted by client guidelines.”
To be sure, the company maintains a cautious position on crypto, citing “the newness and volatility of the space.”
Still, elsewhere on Wall Street banks and money managers are less interested in offering crypto to clients. Financial advisers employed by Bank of America Merrill Lynch were instructed to not hawk Grayscale’s Bitcoin Investment Trust, an investment product that seeks to mirror the price of bitcoin, to clients. JPMorgan head Jamie Dimon famously called bitcoin “a fraud,” and he once said he would fire bankers who trade it for being stupid.
The rise of bitcoin and the overall cryptocurrency market in 2017 captured the attention of Wall Street and Main Street alike. At its peak, the market for digital coins and tokens hit over $US800 billion and bitcoin soared close to $US20,000, according to data from CoinMarketCap. The rapid rise of the market precipitated the launch of a number of crypto-focused investors. At last check, over 220 such hedge funds exist, according to a Reuters report.
But mainstream money managers have stayed away. To be sure, the cryptocurrency market is brimming with fraud, uncertainty, and hacks. JPMorgan estimates that a third of bitcoin exchanges have been hacked.
Looking at the market more optimistically, Wellington notes that the market’s infrastructure is “falling into place.”
“Funds dedicated to cryptoassets have been created. Futures contracts were launched by the Chicago Mercantile Exchange and Cboe Global Markets in December 2017. And starting in January 2018 Weiss Ratings began to assign ratings to several cryptocurrencies.”