Crypto-Focused Hedge Funds Keep Launching at Hectic Pace

The number of crypto-focused fund launches continues to accelerate this year despite the sharp drop in Bitcoin prices from 2017.

Despite the wild swings in digital currency prices this year, hedge funds and venture capital groups continue launching cryptocurrency-focused investment vehicles at a brisk pace, Crypto Fund Research (CFR) reports.

According to CFR’s analysis, there are now 366 cryptocurrency investment funds worldwide, with 61 launched so far this year. This puts the number on track to exceed 140, surpassing the record 130 launches unveiled last year. The researchers noted that digital currency-focused funds began springing up in 2017 as cryptocurrency prices soared. Surprisingly, the trend continues in 2018 despite the significant drop in crypto prices.

The researchers also noted that nearly two-thirds of digital currency funds set up this year were either tokenized investment funds or hedge funds that invest mostly in cryptocurrencies. The rest are venture capital funds focused on startup blockchain projects.

The research added:

“Most of the funds launched are still quite small. Plympton Capital, founded by four Harvard students to invest in cryptocurrencies, has under $1 million in assets. On the other end of the spectrum, Houbi, the world's third-largest cryptocurrency exchange, announced its plan to set up a $1 billion fund to invest in blockchain startups in China. Because China has banned ICOs, Houbi’s investments will likely be via traditional venture capital.”

The year of Bitcoin

CFR dubbed 2017 “The Year of Bitcoin" in light of the 1,300% surge in the digital coin price. This jump in value sparked massive interest from retail and institutional investors.

Josh Gnaizda, CEO of CFR, commented:

“The general sentiment was that we could see a slowdown in fund launches for 2018 as prices of cryptocurrencies fell sharply and regulators began to crack down on ICOs and certain unregulated funds. We've actually seen the opposite. The pace of new crypto fund launches has accelerated."

Crypto drawing interests from institutional investors

The latest study from TABB Group shows that institutional investors are ready to take a closer look at the cryptocurrency space provided that a few critical issues are resolved.

In a report titled “Crypto Trading: Platforms Target Institutional Market,” TABB says a significant amount of institutional money is being accumulated and just sitting idly, waiting to be allocated to digital currencies once regulatory issues are clarified.

The author of the report, TABB senior analyst Monica Summerville, added that “institutional grade data and enterprise-ready infrastructure,” are the other issues troubling large investors and preventing them from jumping on the crypto bandwagon. However, TABB expects major changes “to begin happening this year.”