Hedge Fund Bitcoining Investment Strategies While State Street Moves In

GoldenTree a hedge fund with $41 billion in assets under management specializing in high yield bonds, leveraged loans, distressed products and emerging markets debt, has began using bitcoin in their investment strategies.

“The New York-based firm has been adding Bitcoin to its balance sheet as a diversifier for the broad mix of debt-focused strategies,” says The Street according to unnamed sources.

We asked for further clarification, including what role is bitcoin playing exactly in their strategies, and will update once there’s a response.

Making this notable because it’s the first time there’s confirmation financial powerhouses are using bitcoin within their financial structures.

We’ve been suspecting as much since late 2020 due to bitcoin responding to market opening times in New York and Europe as well as Shanghai in a way that suggests it is being incorporated within sophisticated investment strategies.

That’s after numerous studies especially since 2018 found bitcoin does not correlate with any asset class, making it very useful as a diversifier and as a hedge in investment portfolios, with academic economists suggesting back then 1% should be distributed to crypto, now they suggest at least 10% for optimal risk-adjusted gains.

Demand for bitcoin from sophisticated investors has therefore increased, with one of the oldest bank, State Street, which has some $40 trillion under custody and $4 trillion in assets under management, now getting involved.

“The growth in popularity of digital assets is showing no signs of a slowdown and State Street Digital is committed to continuing to build out the necessary infrastructure to further develop our digital assets servicing models to help meet our clients’ growing demands,”says Nadine Chakar, head of State Street Digital, before adding:

“Our work with Lukka will leverage their software and data in order to help expand our digital and crypto asset fund administration capabilities to alternative managers is just another advancement in our digital solution set and marks a very exciting development.”

Lukka started off as a crypto tax calculator with it now serving digital asset institutions with middle and back office software and data solutions.

Thus State Street is providing a wholistic one stop shop of sorts for those that want to get into crypto with large traditional funds and in particular family offices becoming more and more interested in the asset class.

That is leading to a greater integration between traditional and crypto finance with established financial companies so expanding their services to include crypto in their offerings, bringing the asset class into mainstream.

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