Compared to 2017, this year is very bad for cryptocurrencies so far. Initial Coin Offerings are also having a bad year and many investors are hesitant, because of the unregulated numerous scam ICOs that gave them such a bad reputation. The bearish trend is here to stay for now, but that doesn’t seem to trouble a crypto hedge fund. Crypto hedge fund launches have spiked like never before.
A recent report from Crypto Fund Research, states that 90 crypto hedge funds are already launched in the first 3 quarters of the year. If the same rate of launches is maintained, it can be expected that we can reach up to 120 until the end of the year.
A Crypto Hedge Fund is attractive to investors
This number doesn’t seem like a huge deal, but when compared with all types of hedge funds, it begins to make sense. Over 600 hedge funds of all types will be launched in 2018 and 120 or more of them will be focused on cryptocurrency. That would essentially comprise a 20% of that entire total.
This can be attributed to the raising global investor awareness about cryptocurrency. Even though we’re nowhere close to 2017 hype levels of growth, many investors realize cryptocurrency potential and are already setting roots in the industry. This also includes a lot of companies, who are currently in the phase of exploration and will potentially invest huge amounts when the opportunity presents itself.
The incredible growth of cryptocurrencies in the last two years plays a huge part as well. In 2016 the percentage of hedge funds focused on cryptocurrencies was less than 3%. In 2017 this number increased to 16% and now we can see an increase of up to 20%.
Even though most investors are currently hesitant due to the current market state, the records for crypto hedge funds are broken every year. Low crypto prices and regulatory uncertainty is a huge problem, but apparently it’s not enough to stop the crypto hedge fund creation. On the other hand, low cryptocurrency prices mean a low entry point compared to last years potential.
According to the Crypto Fund Research, crypto hedge funds are part of a larger group of crypto funds. Including the ones based on venture capital and private equity. When combined, there are 622 crypto funds across all categories. 303 of them are crypto hedge funds and they represent assets of a little less than $4 billion. If this growth continues, a bull market can potentially see crypto hedge fund launches to double in less than 12 months.