But many investors still view it as an opaque, esoteric instrument used by gun-runners and drug-dealers on the Dark Web that should be avoided. This year, though, a flood of new hedge funds focused on cryptocurrencies has offered institutional investors who might be unfamiliar with the market a potential route into the world of digital currencies. But the head of hedge funds at a major European bank that invests in more than hedge funds said there were no crypto funds in his portfolio.
Bitcoin has been on a rollercoaster ride this year.
Ethereum has been even more erratic. Its price surged almost 50 times from the start of the year to June, before falling back by about a fifth, according to industry website CoinDesk.
That kind of volatility means committees at institutional investment firms looking at the relative risks of asset classes are likely to rule out cryptocurrencies, asset managers said. The fund is up 32 percent so far this year, having managed to exploit the kind of arbitrage possible in a young market where large price gaps exist. Reporting by Jemima Kelly and Maiya Keidan; additional reporting by Claire Milhench; editing by David Clarke.