Crypto Fund Research: Crypto Funds Launches to Set Record in 2018

It is doubtful that the industry can sustain such a large number of crypto investment funds if the market remains bearish for a long time.

The number of launches of new cryptocurrency investment funds is on course to set a record in 2018. The assertion comes from a new analysis by Crypto Fund Research, a US company specializing in compiling of lists of cryptocurrency hedge funds and venture capital companies.

Through the end of July this year,  96 new hedge and venture capital funds had been launched, which sets an annual pace of 165, the analysis found. If this speed is maintained, the number of newly-launched crypto funds will surpass the record number of 156 crypto funds launched last year.

In addition to the launch of new venture capital and hedge funds, it is expected that existing hedge funds would incorporate cryptocurrencies in their portfolio. Similarly, the existing venture capital companies would likely continue to add blockchain investments and launch their own blockchain funds. A Crypto Fund Research infographic shows that currently, slightly more than half of the crypto funds are hedge funds (255), followed by venture capital (195). There are also 16 private equity funds.

“If 2017 was “the year of Bitcoin”, 2018 is shaping up to be the year of the crypto fund,” the report reads.  Moreover, the data shows that more than half of all currently existing 466 crypto funds have launched in the past 18 months. The main factors include the launching of new crypto funds and the appreciation of the underlying assets.

However, it is not clear whether the industry can support such a large number of funds with limited track records, especially if the bearish sentiment on the market continues. In fact, Crypto Fund Research does not exclude the possibility of some contraction in total crypto assets during 2018.

“We expected a large number of new crypto funds to launch in 2018 to satisfy growing investor demand.” Josh Gnaizda, the founder of Crypto Fund Research, said. “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.”

The Crypto Fund Research study also found that half of the crypto funds have less than $10 million in assets, but that there are some big ones, too. Collectively the crypto funds manage just $1.7 billion, or less than 10% of the assets of the largest traditional hedge fund managers.

About half of the funds are small in terms of staff as well and have less than five employees, usually the founder and a couple of assistants.

More than half of the crypto funds are located in the USA (252). The United Kingdom, Singapore, Switzerland, Germany, Canada, and China also have a relatively large number of funds, but some are appearing in Eastern Europe and Russia.