Cryptocurrency prices have plummeted in 2018, causing the market to lose around $600 billion since January. Regardless, a recent report shows that cryptocurrency funds now account for 20 percent of all the hedge funds launched in 2018.
2018: The Year of the Crypto Fund
A recent report reveals that 1 in 5 hedge funds launched in 2018 are crypto funds. The study shows that the first three quarters of 2018 have seen the launch of 90 cryptocurrency hedge funds, while the fiscal year is on track to see this number rise to 120.
The research puts forward a very interesting sentiment which defies traditional thinking which poses that hedge funds tend to launch most frequently while the markets are bullish. 2018 has been all but bullish for cryptocurrencies so far, as the market has lost around 75 percent of its value year-to-date (YTD).
Speaking on the matter was Joshua Gnaizda from Crypto Fund Research – the company conducting the study. He noted:
Yet these seemingly unfavorable market conditions have not deterred managers from launching new crypto hedge funds at a record pace. While we don’t believe the rate of new launches is sustainable longer-term, there are currently few signs of a significant slowdown.
To What End, Though?
Earlier in February, Live Bitcoin News reported that there are no less than 226 cryptocurrency hedge funds in existence, and the number has obviously increased since then.
However, a closer look at the performance of those funds reveals a much more alarming reality. Grayscale Bitcoin Investment Trust (GBTC) was recently reported to have its assets at their lowest point since the end of last year’s price rally. Earlier in July, the fund raised $250 million, which was the highest investment rate in its history.
Another marquee fund – Pantera’s Digital Asset Fund – recently released information that it marks a 72 percent decrease YTD, while displaying a negative compound annual growth rate of 50 percent.
What do you think of the current state of cryptocurrency hedge funds? Don’t hesitate to let us know in the comments below!
Images courtesy of Shutterstock.