The big boys are coming to play in cryptocurrencies.
According to a report in Fortune magazine, billionaire Steven Cohen has invested in Autonomous Partners, a hedge fund focused on investments in the cryptocurrency and blockchain industry. Cohen made the investment through Cohen Private Ventures. The fund also boasts investments from other bigwigs, such as Coinbase CEO Brian Armstrong, Union Square Ventures, and Craft Ventures.
Cohen, who founded the storied hedge fund SAC Capital, has not publicly commented on prospects for the cryptocurrency or blockchain industry. SAC Capital was shut down by the SEC for insider trading in 2013. (See also: Billionaire Steven A. Cohen Is Planning The Largest Hedge Fund Ever). According to its website, Cohen Venture Partners is focused on real estate and other asset-based investments and direct private equity.
Arianna Simpson, head of Autonomous Partners, told Fortune that she is focused on areas with long-term prospects within the industry. A key determinant that will separate winners from losers is regulation. While it has not outlined clear distinctions, the SEC has already fired warning shots against certain coins, such as Ripple. Simpson told Fortune that a “small percentage” of Autonomous Partners’ fund is invested in bitcoin and ethereum, two cryptocurrencies that the SEC has declared are not securities. “It’s still up in the air, if people want to do, a number of things on the blockchain. We’re still figuring it out what needs one and what doesn’t,” she said.
Cohen’s entry into crypto-focused hedge funds should further boost their ecosystem after news of custody solutions, being launched by notable players, such as Coinbase and Ledger. (See also: Rise Of The Crypto Hedge Fund). According to reports, there are more than 250 crypto-focused hedge funds today and they produced returns of more than 1,100% last year on the back of rising prices and valuations for cryptocurrency markets. This year, however, has been a different story as most coins, headlined by bitcoin, have slumped by double figures due to negative sentiment and news.
Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns bitcoin and litecoin.