The current bitcoin worth decline and subsequent bear market put a extreme dent in revenue projections for hedge funds that spend money on cryptoassets, but it surely has not prevented the sheer variety of these cryptocurrency funds — and the scale of their property beneath administration (AUM) — from swelling to report ranges.
Number of Cryptocurrency Funds Surpasses Another Milestone
According to new analysis from cryptocurrency analytics agency Autonomous Next, the variety of cryptocurrency funds has exploded to extra than 300 in 2018, with 312 up-and-running when the report was accomplished earlier this month.
That’s a 24 p.c improve from the start of the yr when 251 funds have been operational. It’s additionally a 457 p.c surge from the 56 funds that have been energetic in 2016.
The majority of recent funds opened within the second quarter. As reported, simply 20 new corporations entered the area in the course of the first quarter, and 9 others shut their doorways attributable to market headwinds that made it tough for even giant funds to draw new traders.
More Funds, More Investment Strategies
Unsurprisingly, the researchers discovered that the variety of cryptocurrency funds is very correlated with bitcoin appreciation. However, the speed of recent funds has largely endured this yr, regardless of declining cryptocurrency costs, largely attributable to a flurry of exercise surrounding initial coin offerings (ICOs).
Together, the 312 cryptocurrency funds collectively handle between $7.5 billion and $10 billion in property, although this capital is very concentrated among the many largest funds. According to the report, the 10 largest funds account for 43 p.c of the trade’s funding capital, whereas the highest 50 maintain 80 p.c.
These bigger funds have the capital and assets to flourish — or not less than survive — throughout extended bear markets, however the report warns that corporations with much less than $25 million in AUM might face an uphill battle in flat or down years.
Notably, this improve in funds has correlated with rising range in funding methods utilized by these corporations. This not solely gives traders with a wider array of choices however can be maybe an indication that the nascent trade is maturing.