Latest figures from Crypto Fund Research reveal that prices for most cryptocurrencies are down more than 50 per cent in 2018, but despite that, crypto funds have been launching at a record pace.
The first five months of 2018 have already brought the launch 61 new crypto hedge funds and venture capital funds – on pace for 147 for the year. At this rate, 2018 launches will surpass the record 130 crypto funds launched last year, according to analysis from Crypto Fund Research.
There are now 366 cryptocurrency investment funds worldwide.
2017 is sometimes referred to as “The Year of Bitcoin”, the firm writes. Prices were up more than 1,300 per cent on the year, leading to a surge in interest from retail and institutional investors.
Crypto Fund Research writes that it was no surprise that more than 100 new crypto funds launched to take advantage of this euphoria. 2018, on the other hand, has seen steep declines in cryptocurrency prices and renewed calls for regulators to crack down on unscrupulous investment schemes. This makes the trend of recent fund launches somewhat more unexpected.
“The general sentiment was that we could see a slowdown in fund launches for 2018 as prices of cryptocurrencies fell sharply and regulators began to crack down on ICOs and certain unregulated funds,” says Josh Gnaizda, CEO of Crypto Fund Research. “Yet we’ve actually seen the opposite. The pace of new crypto fund launches has accelerated.”
The pace of fund launches can be a bit misleading, however, he warns. Though crypto funds are the fastest growing hedge fund strategy, total assets under management are still quite meagre. With a combined total of just over USD5 billion in assets, crypto funds collectively manage less than several of the largest traditional hedge funds.
For comparison, Bridgewater Associates, the world’s largest hedge fund, manages USD150 billion; more than 25 times that of the entire crypto industry. Gnaizda writes that in many ways the rapid launch of new crypto funds seems to be not so much a result of growing demand from investors, but of opportunity seeking by investment managers themselves.