Wednesday, August 21, 2019

Crypto Funds Account for 20% Hedge Fund Launches in 2018

The amount of cryptocurrency hedge fund launches has drastically increased this year even with the bearish market, a new research; Crypto Fund Research has revealed. The study further finds that the crypto sector witnessed over 90 crypto funds at the end of Q3 of 2018 with every tendency to rise to 120 before the year runs out. Overall, there are 600 hedge funds proposed to launch this year. The report notes;

“The number of crypto hedge funds has skyrocketed since the beginning of 2017. Two-thirds of all currently operational crypto funds have launched in the last seven quarters, through Q3 2018.”

The research also shows that crypto hedge funds are part of the 622 crypto funds, not neglecting the fact that this figure includes funds based on private equity and venture capital. Overall the whole sector stands at $4 billion.

Bearish Market a Likely Entry Point

There is no doubt that more crypto funds in the hedge fund industry entered the sector during the bearish market trend. The cryptocurrency market cap has dropped by over 70 percent in 2018 after climaxing in 2018. The founder of Crypto Fund Research, Joshua Gnaizda holds the opinion that the new crypto hedge funds launches are not deterred by the bearish market. He explained;

“In the midst of 2018’s decline in traditional hedge fund launches, crypto hedge funds are a notable aberration. Cryptocurrency prices have been in a bear market for the better part of the year, and regulatory uncertainty persists in much of the world…While we don’t believe the rate of new launches is sustainable longer-term, there are currently few signs of a significant slowdown.”

For instance, the most popular cryptocurrency, Bitcoin (BTC) has been struggling to stay above $6,000 which has led many to believe it cannot go lower than that. Another justification is the entry of several institutional investors, the last which is Yale University’s whopping $30,000 endowment investing in two cryptocurrency hedge funds; a major reason why hedge fund managers are inclined to add their crypto asset in their collection of documents.

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