Increasing Number of Crypto Hedge Funds: Research Group Found the Reasons


Crypto Fund Research, the industries analyst firm, has found that the number of hedge funds in cryptocurrency space has grown at an alarming rate. Additionally, the assets which each of these trading entities manage have also increased steadily.

Results of Study

The study group took over 13 months to table its report, after following diverse organizations for several trading periods.

There were an alarming 239 new organizations which were launching cryptocurrency hedge funds. But follow-up research has found that of the big number nearly 40 now do not exist in the markets.

First wave of crypto hedge funds

Of the hedge funds constituted in 2017, 224 hedge funds which were launched continue to operate setting new records. The second wave of hedge funds in cryptocurrency began in the period between December 2017 and January 2018. As per the statement Josh Gnaizda., “After January, we see fewer launches of funds, but the number of closing organizations has increased. We expect that this trend will continue further, at least in the short term.”

By first few months over 40 of them closed down.

Interesting nuggets of information the research group found related to an increase in the number of such hedge funds in the United States itself.

At last count, the total number of crypto hedge funds numbered 398. The highlight was the fact that these organizations were very small-sized with employee strength at a low 5 people. In contrast, it was found that as many as 360 hedge funds managed assets to the tune of $10 million.

Industry participant, Eurekahedge cryptocurrency noted since January 2018, 42 funds have since closed, and over 70% were poorer in their invested funds by 70%.

According to the report, “The rapid pace of new fund formation is unlikely to continue in 2019. Barring a steep increase in deal activity and crypto prices in 2019, we anticipate less than half the rate of new crypto fund launches, as compared with 2017 or 2018.”

Record crypto fund launches

According to the research studies, “2018 was a record year for crypto fund launches. Interestingly, it was also a record year for fund closures as prices for cryptocurrencies plummeted 80% or more from their record highs.”

This despite the plunging prices of bitcoin and other alternate coins; the number of funds launched in 2018 was 224 by 2017.