ASingapore-based hedge fund is getting in on what many cryptocurrency investors have been partaking in for years--Bitcoin arbitrage trading. A product of Vulpes Investment Management, Bloomberg reported that Kit Trading has raised $10 million specifically for a BTC arbitrage trading fund.
Apparently, things have been going well--the fund is on track to meet its goals by early next month.
Indeed, Kit Trading (which has traditionally invested in property startups, real estate, private equity, and life science) has a history of performing positively, returning 17.2% and 11.4% in 2017.
Bitcoin is a "Maybe", Arbitrage is a "Yes"
Despite the success of the BTC arbitrage fund, Vulpes CEO Steve Diggle does not seem to have been caught up in the crypto craze, saying “we are agnostic.” He continued: “What we firmly believe in is arbitrage, and arbitrage opportunities abound in this nascent asset class.”
If one has the means to pull off Bitcoin arbitrage trading, the practice can be quite profitable. Depending on local inflation, the price of Bitcoin can vary quite a bit from Exchange to exchange--during the height of the Bitcoin fever that peaked in mid-December 2017, Bitcoin was selling at an average of $2,500 higher than in the rest of the world, a special price tag that was eventually dubbed the 'kimchi premium'.
Crypto Hedge Funds Continue to Increase in Popularity
Over the past year, investment firms that would have laughed at the thought of crypto-based hedge funds have begun participating in the very same crypto investment practices that they scoffed at in the past.
Indeed, crypto hedge funds hit the market with a bang in 2017. The year started with just a handful--Polychain and Metastable Capital, to name two--but by the end of the year, more than 95 cryptocurrency-based hedge funds were operating worldwide.
Indeed, cryptocurrency’s foothold in the mainstream investing world has garnered increasing strength, attracting more and more institutional investors. Along with the blossoming of crypto hedge funds, the rising popularity of crypto futures trading and regulated crypto exchanges has given investors more confidence in volatile crypto assets. Undoubtedly, we will continue to witness the appearance of more crypto hedge funds throughout 2018.
