Despite unfavorable regulations and wild market fluctuations, new cryptocurrency funds are springing up and their numbers are projected to break 2017 records.
According to Crypto Fund Research, “If If 2017 was ‘the year of Bitcoin’, 2018 is shaping up to be the year of the crypto fund.”
So far this year, 96 new cryptocurrency funds have launched, and by year’s end, the projected number may reach 165 as opposed to 156 in 2017 and 42 in 2016. All together, there are now 466 crypto funds worldwide.
- 55% of crypto funds launched so far are hedge funds.
- 42% are crypto venture capital funds.
- 3% are private equity funds.
Of the 466 crypto funds launched so far, 255 are crypto hedge funds.
According to Crypto Fund Research, cryptocurrency hedge funds are the fastest-growing segment within the hedge fund sector. In fact, of the best performing hedge funds of 2017 were crypto funds.
However, the value of assets held by crypto funds is below 0.1% of what hedge funds hold. The Crypto Fund Research states that 28 crypto funds held more than US$100 million in assets. These funds included Galaxy Digital Assets, Arrington XRP, and Polychain Capital.
Of the 252 US crypto funds, only 84 are registered with the Securities and Exchange Commission (SEC). The US is by far the biggest holder of crypto funds; China/Hong Kong is second with 34, and the UK with 29. Within the US, California leads with 121 crypto funds. And within California, San Francisco leads with 55 crypto funds.
Despite the anticipated rebound, some analysts worry that a prolonged bear market will mean the demise of some crypto funds.
“While volatility in the crypto markets can attract some investors to sophisticated crypto funds. It remains unclear if the industry can support such a large number of funds, with limited track record, if we experience an extended bear market,” said Josh Gnaizda of Crypto Fund Research.