Increasing number of crypto hedge funds, a closer look

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When cryptocurrency started to have such a huge impact on the market a lot of financial sectors had their doubts and were a little sceptic. But with Bitcoin breaking record after record everyone is starting to see that this cryptocurrency rise isn’t temporary, but a permanent thing. So it isn’t a surprise to see hedge fund after hedge fund popping up to capitalize on the growing market.

According to Reuters $2.2 billion is available in the hedge fund sector ready to be invested in the cryptocurrency market. The reason for such a high amount of capital available is clearly linked to the growth in hedge fund numbers. In 2017 alone 90 hedge funds have been established and all have set their aim on virtual currency assets like Bitcoin.

The increased number of hedge funds will without a doubt have an impact on the market, but why? According to some crypto-experts, with big players like start-up hedge funds becoming interested in crypto assets the demand will skyrocket leaving the supply to battle.

Matt Stover, founder of MG Stover & Co evens aid, “This is the first time I can remember where we have had a hard time keeping up with the sales calls.” With hedge funds increasing their want for cryptocurrency market entry the price will surely be pushed up as well.

A Look into the Space

With a deeper look into the hedge fund pop up situation, it was made clear that 37 percent of all funds used venture capitalist-type strategies and had about $1.1 billion in assets under management. Right under that was trading digital assets which was made up of 32 percent, with about $700 million in assets under management.

But a word of advice for all hedge fund investors looking to jump into the market, this is the perfect time as it’s not always that we see the reward outweighing the risk by so much. What makes the reward higher than the risk is cryptocurrencies are becoming better know and easier to understand.

Crypto Hedge Fund Adoption

A great number of different cryptocurrencies are falling off and the growing cryptocurrencies are starting to stand out. Knowing which cryptocurrency is a profitable investment it makes sense that hedge funds will quickly act and join in. For example, with the current Bitcoin fork, the price of the currency is making new highs and strides.

With everyone becoming more familiar with cryptocurrency, CEO of Pantera Capital, a Bitcoin investment firm, Dan Morehead statement comes to mind. “We believe digital currency is at an inflection point, making it the right time for a transition to more institutional management.”

According to CNBC, institutional investors are being provided by these hedge funds. The investors are unfamiliar at the start of the cryptocurrency journey but as knowledge is shared so will the investments increase. When this happens the cryptocurrency market will experience a wave of capital entering it. This will also drive up the price for cryptocurrency like Bitcoin.

However, what caught the entire community’s attention is that before these hedge fund investors are clued up with how cryptocurrency work, they are already pouring in capital into the market. Alphabit Fund, Auryn Capital, Block View Capital, Crypto Asset Fund, General Crypto, and SuperBloom Capital are a few newly found funds that made quite a big impact on the market.

With so many hedge funds already established and still much more to come, some will inevitably fail, and the lack of cryptocurrency knowledge might the main cause.


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