Fear of missing out on the crypto market outweighs the risks

Cryptocurrencies have caught the attention of hedge funds as investors anticipate a bullish rally in 2023 and 2024 in a sector that has fallen more than $2 trillion since last November.

Nearly a third of traditional hedge funds currently invest in crypto assets. Two-thirds or 67% of these hedge funds intend to funnel more capital into the emerging asset class by the end of 2022, according to a report from the Alternative Investment Management Association, Financial News writes.

According to experts, interest in such an asset class as Bitcoin and Ethereum remains high. Factors such as fear of missing out (FOMO) also play an important role, as “strong hands” do not want to miss the rally in the cryptocurrency market. In fact, FOMO already outweighs the potential risks in this sector.

In recent years, hedge fund giants like Ray Dalio and Daniel Loeb have changed their minds about bitcoin and other cryptocurrencies. Dalio, who once expressed concerns about the sector, said in January that allocating up to 2% of his portfolio to BTC is prudent.

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Billionaire hedge fund chief Loeb also went deep in cryptocurrencies last year, holding an undisclosed number of cryptocurrencies in Coinbase (NASDAQ:COIN).

This is a combination of the likelihood that the market has bottomed and the expectation of the next bull run, which could happen in 2023 or 2024, i.e. by the date of the next bitcoin halving. The so-called halving of the value of bitcoin occurs every 4 years due to the inherent network that manages the cryptocurrency, a fixed rule that guarantees that only 21 million bitcoins will be in circulation, writes Financial News.

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