It’s a long shot, but I’d bet on Bitcoin, according to a new hedge fund that is betting on the crypto-currency.
Read moreThe $1 billion fund, which will be based in New York City, said Thursday it plans to invest $500 million in Bitcoin and $50 million in Ethereum, which it said are a safe haven for investors who want to hold on to their cash.
The fund will also bet on other cryptocurrencies, such as Ripple, Ripple Capital and Digital Asset Holdings.
The move comes after a week of speculation about Bitcoin, which has seen the value of the cryptocurrency drop by more than 30 percent since the beginning of the year, as investors worry about the economic downturn.
The Bitcoin Investment Trust, which is backed by the U.S. government, said it expects the currency to hit $1,200 by year-end.
“We think that the underlying fundamentals of Bitcoin, as well as the fact that it’s relatively new, are strong enough to sustain its price trajectory,” said David Weisbaum, chief executive officer of the fund.
He added that there is “solid evidence” that the blockchain, the system of digital records that underpins Bitcoin, is secure.
“The underlying technology is very secure,” Weisbach said in an interview.
“The underlying value proposition is strong enough, in our view.”
Bitcoin is a decentralized virtual currency that operates in a virtual world.
It is currently worth less than $2,000 and is a relative unknown among many investors.
The value has declined over the past year and a half amid worries about the U:S.
economy, China’s rapid growth and an increase in the number of companies in the digital currency space.
The latest gains were made in the last week, when the price of Bitcoin soared to more than $6,000 from $1.25 at the beginning, according for Ether, a cryptocurrency trading platform.
The currency surged more than 25 percent on Thursday.