According to a few trusted sources with knowledge of the situation, Cohen's decision to establish a separate corporation reflects his growing optimism toward digital assets.
As per Blockworks, which cited persons familiar with the situation, Steve Cohen, the billionaire behind the hedge fund Point72 Asset Management, is establishing a cryptocurrency-specific asset manager. Cohen began buying cryptocurrency in 2018.
- Early planning is being done for the new organisation. Based on the report, it will sell spot cryptocurrencies, a novel strategy for companies connected to Cohen. The asset manager will also supply funding to outside hedge funds with a concentration on cryptocurrencies and provide cryptocurrency derivatives.
- Cohen has been actively involved in the organization's formation, which will necessitate significant financial outlays for operational costs and employing personnel, according to Blockworks.
- Cohen's withdrawal from a previously stated proposal for a personal investment in the cryptocurrency trading company Radkl earlier this month raised worries that he might scale back his participation in the sector during the down market.
Building on Point72 Asset Management's previous ventures into cryptocurrency derivatives
- The project would require significant resources in terms of personnel and operating costs.
- Sources claim that the new company, which is still in its early stages, intends to trade spot cryptocurrencies, a market that Cohen's multi-strategy hedge fund company, Point72 Asset Management, has not yet entered.
- Additionally, it would engage in derivatives related to digital assets and try to provide payments to outside hedge fund managers that specialise in these assets, including potential seed investments.
- The startup's name is unknown; it was founded independently of Point72, Point72 Ventures, and Cohen's family office. However, Cohen's own involvement in its creation was crucial, necessitating significant employee costs in addition to expensive operating requirements and trading equipment.
This is the most recent proof that Cohen, who has invested in promising cryptocurrency firms, is continuing to remain positive on digital assets. As markets proceed to tremble in the wake of the failure of Terra stablecoin UST and the downfall of crypto lenders such as Celsius and Voyager, an increasing number of wealthy traditional financiers are considering investing a sizable amount of capital in the space while being aware of the space's bargain-basement prices.
Cohen and his asset management companies' spokesman declined to respond. Anonymity was granted to the sources so they could talk about private business affairs.
The new company would probably experiment with decentralised financial ventures, such as yield farming, in conjunction to trading more standard spot crypto assets, according to one source. The emerging business line would also like to get involved in staking, which has gained attention in light of Ethereum's impending switch from proof-of-work to proof-of-stake.
Although it's believed that the business has no immediate intentions to take outside funding, Cohen is using the project as a way to begin building the groundwork for a potentially widely used crypto trading platform. Competition for elite people has gotten more fierce even during the bear market as Point72 multi-strategy hedge fund competitors, including Millennium Management, have invested more money in the industry.
Even Ken Griffin of Citadel, a longtime critic of cryptocurrencies who last autumn called them a "jihadist appeal" against the US dollar, has changed his mind and now acknowledges that digital assets are here to thrive.
Despite this, the legislative environment is fraught with uncertainty, and conservative limited partners of sovereign wealth funds have advised prudence when it comes to cryptocurrencies. Both of these arguments explain why multi-billion hedge fund organisations often avoid trading spot crypto goods through their flagship vehicles, according to sources.
Although they are still ironing out the details, one insider stated that the idea was to not invest all of the money in the flagship fund. They obviously need to learn a lot about the area. Are definitely not prepared to make that decision just yet.
Tensions have increased as a result of the regulatory confusion regarding whether cryptocurrencies like bitcoin and ether are securities or services between the SEC and the Commodity Futures Trading Commission (CFTC).
One insider stated, "The regulatory issue is just something they're worried about, as well. They are concerned with how they will actually interact with this asset class.
Supporting outside traders could be another method to get information on workable and, more importantly for asset management, scalable methods, without the complexities that would arise from internally investing directly in digital products.
Overall, it's a logical continuation of Cohen's angel investments in blockchain startups. Although not all of them have succeeded, such as Cohen selling his investment in the exclusive digital asset dealer Radkl, he still has favored access to deal flow by conventional financial standards.
In the midst of the bear market, hedge fund billionaire Steve Cohen leaves cryptocurrency startup Radkl:
The NFT firm Recur received $50 million in capital from the hedge fund manager, and Messari received $21 million from Point72 Ventures.
According to reports, Steve Cohen, the man behind hedge fund Point72 Asset Management, has sold his holdings in Radkl, a cryptocurrency trading company.
Following his departure from the trading company, Cohen has lessened his exposure to cryptocurrency assets, based on a Bloomberg report published on Tuesday that quotes a Radkl representative. Radkl is allegedly still "very well capitalised with its present investors" and is supposedly expanding, according to the spokeswoman.
Cohen, whose estimated net worth is over $17 billion, has sponsored cryptocurrency and blockchain initiatives both through Point72 and his own holdings. The hedge fund manager participated in a $50 million fundraising round for the nonfungible token business Recur, according to Cointelegraph in September 2021, while Point72 Ventures funded a $21 million round at the crypto data firm Messari.
The reported investment occurred during a period of significant price volatility for various cryptocurrencies, particularly Bitcoin (BTC) and Ether (ETH), during what has been dubbed a bear market or the upcoming crypto winter by many. In spite of these unfavorable trends, almost 66% of the 89 hedge funds questioned in a PricewaterhouseCoopers analysis from June said they intended to increase their commitment to cryptocurrencies by the end of 2022.
Point72 stated that it managed over $24 billion in assets as of April 1. In June 2021, Coinbase will purportedly take over a portion of the company's New York City office space.
Join the Insider Trading: Don’t Stop Believin’ Trades
Not too sure where to start your trading journey or what stocks you should invest in? We can easily help you solve your problem when you join the WhatsApp trade notifications!