Industry giant Coinbase has scored a major win for its recently-launched institutional brokerage service, as a major hedge fund has begun using its platform to dip its toe into the fledgling cryptocurrency market.
Citing unnamed sources familiar with the matter, Business Insider reports that the $20 billion hedge fund — whose name was not disclosed by the sources — began using Coinbase Prime following its launch earlier this year, perhaps a sign that cryptocurrency is preparing to emerge as a mainstream asset, at least among alternative investments.
Earlier this year, Coinbase set up an office in Chicago, a location it likely chose due to reputation as a regional hub for professional trading firms. This provides the firm with the ability to more effectively offer hedge funds and institutional clients in-person support and develop personal relationships with traders.
The news follows the publication of a report indicating that Grayscale Investments — a New York-based firm that offers a range of cryptocurrency investment products wrapped as traditional financial instruments — is seeing $10 million in new investments every week, 56 percent of which is coming from institutional buyers.
Fellow cryptocurrency industry giant Circle has identified a similar uptick in interest from institutional clients. The firm recently reported that it experienced a 30 percent increase in new institutional clients in May and has seen enough activity from large-scale buyers to double the minimum order size at its cryptocurrency trading desk to $500,000.
As CCN reported, a growing number of hedge fund billionaires have made personal investments in bitcoin and other cryptocurrencies, though — with Peter Thiel being a notable exception — most of these visionaries have not allocated capital from their funds into this still-nascent asset class.
Just this week, Marc Lasry, who runs $9.6 billion asset management firm Avenue Capital Group, revealed that cryptocurrencies comprise about one percent of his estimated $1.7 billion in personal net worth. He further predicted that the bitcoin price could reach $40,000 within the next three to five years.
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