Hedge fund manager Pantera Capital Management LP which manages money for Fortress Investment Group LLC (FIG) executives, in a statement said that it will be investing close to $10 million in Bitstamp Ltd., the top Bitcoin exchange after the collapse of Mt. Gox. Bitstamp is expected to get a huge boost with an injection of funds in its operations.
According to the sources at Pantera Capital Management LP, the decision to invest money in Bitcoin startups is aimed at boosting the returns for its clients. Particularly, when Bitstamp Ltd. is making great inroads in the Bitcoin economy after the collapse of Mt. Gox, the decision may bear fruits and ensure that Pantera Capital Management LP clients receive higher returns.
Additionally, investment in the Bitcoin company is part of a broad Pantera strategy to build a brand in the Bitcoin world and there cannot be any better option than London-based Bitstamp Ltd. Lately, after the Mt. Gox collapse, this Bitcoin exchange’s share of dollar-Bitcoin trades multiplied and now it has a lion’s share.
Whereas Mt. Gox would face a lot of technical glitches, Bitstamp Ltd. has not faced any such issues so far. It is a well maintained and well-run Bitcoin exchange which is moving up strength to strength. The decision on the part of Pantera Capital Management LP coming at a time when Bitcoin is facing an onslaught from the government may boost consumers’ confidence.
Bitcoin Startups are in Dire Need of Investments
In its statement Pantera Capital Management LP said that three prominent investment firms e.g. Benchmark Capital, Fortress Investment Group and Ribbit Capital are acquiring an interest in its Bitcoin fund. The hedge fund managing company believes that the decision will further boost the confidence of investors and Bitcoin may move further up.
Dan Morehead, Pantera’s founder and CEO said that he believes that Bitcoin is at an inflection point, making it the right time for a transition to more institutional management.
The hedge fund managing company formed in 2003, so far, did not focus on investing in tech companies as its major focus has been on global macro-hedge fund investments.
Hedge fund managers are accountable to their clients walk on a tight rope as they are duty bound to generate higher returns albeit with safe investments. The decision on the part of Pantera Capital Management LP is similar to tight rope walking i.e. it is trying to invest in a technology that can produce dividends at higher risks.
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