Bitcoin Investment

Crypto Hedge Funds Launching at ‘Surprising’ Record Pace in 2018

Georgi Georgiev | Aug 12, 2018 | 16:00

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Specialized cryptocurrency funds are launching at a record pace, according to a new research. While the prices are steadily depreciating across the board, these new findings challenge the notion of a continuous bear market.

More Than 150 Cryptocurrency to Launch in 2018

According to a new research from Crypto Fund Research, there are a total of 466 cryptocurrency investment funds. Most of them (255) are set up as hedge funds. Of these, 195 are set up as venture capital funds while 16 represent private equity funds.

Based on the current pace, the research projects that 2018 will see a total of 165 new cryptocurrency funds, surpassing 2017’s high of 156.

In terms of asset management, the wide majority of funds have $10 million or less in their holdings. Only 28 of all have more than $100 million. These include Arrington XRP, Novogratz’s Galaxy Digital Assets, Polychain Capital, and others. All the funds collectively manage roughly around $7.1 billion.

Josh Gnaizda, founder of Crypto Fund Research, finds the serious increase surprising, given the depreciating cryptocurrency prices. He said:

We expected a large number of new crypto funds to launch in 2018 to satisfy growing investor demand. […] However, the pace of new fund launches is a bit surprising given the dual headwinds of depressed prices and less than favorable regulatory conditions in many regions.

A Potential Catalyst?

While the currently existing cryptocurrency funds have relatively small holdings, a trusted custody solution might pave the way for institutional investments, according to experts.

Speaking on the matter, Mike Novogratz of Galaxy Digital Assets shared:

I think the next move up is going to need custody from a trusting source. It’s going to need a little more regulatory clarity.

It’s noteworthy that ICE’s Bakkt digital asset platform intends to deliver “physical warehousing in November 2018, subject to CFTC review and approval.” Furthermore, Goldman Sachs reiterated its plans to manage Bitcoin for its clients earlier this month.

According to popular cryptocurrency trader and founder of investment firm BKCM LLC, institutional interest to the field is already growing stronger.

“I can tell you from the calls that I’m getting, people that looked down on it [Bitcoin] in December didn’t like the price and are coming back now saying – Alright, this thing is not going away, we need to understand what it is, where does this asset class fit into our portfolio,” he said.

Will more cryptocurrency funds keep launching in 2018? Let us know in the comments below!

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