Bitcoin’s inefficiencies are creating arbitrage trades for crypto hedge funds

Bitcoin’s sustained rally over the past year saw the cryptocurrency roar to a record high of more than USD41,000 in early 2021, with many investors increasingly using it as a hedge against falling real yields and inflation risks stemming from central bank quantitative easing.

But as more hedge fund managers join the digital asset arena, running a range of discretionary and quantitative strategies, the potential for alpha generation “will likely moderate” in the coming months and years, said senior Lyxor Asset Management strategists Jean-Baptiste Berthon and Philippe Ferreira, and hedge fund analyst Pierre Carreyn...

SPAC Mania Gives Early Investors Steady Returns With Little Risk

Sudden excitement about the flurry of startups going public through so-called blank-check companies is enriching some of the biggest players in finance, particularly hedge funds.

The gains come through the unique rights given to early investors in special-purpose acquisition companies, or SPACs, which look to acquire promising startups and take them public. As the vehicles become more popular, the hedge funds that invest in them early on, such as Magnetar Capital, Glazer Capital and Israel Englander’s Millennium Management, can earn lofty returns without much risk...