Written by marcuss 

The “smart money” is finally entering the crypto space…

And that means we’re about to see massive sums of money flow into the sector.

geralt / Pixabay

Let me explain…

Why the smart money has mostly stayed away from cryptos – so far

As we’ve written before, in the world of investing, “smart money” refers to professional investors who have more and better information than the general investing public. This includes hedge funds, large institutional investors and wealthy private investors. They have teams of analysts who do nothing but look for the best stocks and markets to buy.

Smart money tends to be the first to invest in “the next hot thing”… and the first to flee markets in anticipation of adverse conditions.

But with cryptocurrencies, the smart money has come late to the game.

You see, while there’s obviously been a lot of interest in cryptocurrencies as a new financial asset class from big institutions (it’s hard to ignore the massive gains we’ve seen in bitcoin and other cryptos), there are a lot of hurdles they must overcome to put some money into cryptocurrencies.

A sovereign wealth fund or endowment manager that wants to buy cryptocurrencies needs to jump through a lot of hoops. There’s all sorts of compliance required, legal opinions, not to mention expanding the scope of your investment mandate (which defines what assets you can invest in) – which is no easy task.

And there haven’t been many “bridges” between traditional asset managers and this new, less well-understood arena of cryptocurrencies.

Let’s say you’re the manager of a sovereign wealth fund, and you’re interested in making a small allocation to cryptocurrencies, how do you go about it? Do you build an internal team and do it yourself? Unlikely.

Instead, you’d be looking for people with strong backgrounds in asset management, who have transitioned over to crypto, and who know how to responsibly invest other people’s money (i.e., institutional level security, compliance and reporting, etc.).

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