Cryptocurrency hedge funds – Image source: moonstone.co.za
Cryptocurrency hedge funds have reached over 100 for the first time, Reuters reports, citing fintech research house Autonomous NEXT. According to the new data, of the 110 funds, 84 were launched in 2017. Assets across cryptocurrency hedge funds rose to $2.2 billion.
A stellar rise from 55 cryptocurrency hedge funds on August 29 to 110 funds on October 18 comes as investors try to get in on the action in a red-hot market which has seen a tenfold increase in value so far this year. More than three-quarters of the funds – 84 out of 110, have launched in 2017.
Assets across the 110 funds rose to $2.2 billion, according to new data from Autonomous NEXT. With over 1,000 coins on the market and a combined market capitalization of more than $168 billion, the mounting interest in crypto economy is self-evident.
“We have seen managers invest in the actual currencies and/or in the ICOs, and soon there will be derivatives as well. Cryptocurrencies have garnered a fair amount of interest in the investment management space, primarily because of the returns they have recently shown,” Steve Nadel, hedge fund attorney and partner at Seward & Kissel, told Business Insider.
Hedge funds, a long-time, prevalent choice for risk-averse investors, are basically an investment partnership between fund managers and fund investors. The latter contribute the money, the former manage it with the purpose to maximize the investors’ returns and eliminate risk.
The best funds constantly strive to be in the front line and seek out the next edge. Given criptocurrency’s growth and, subsequently, the increased demand in the investing populace, long-standing hedge funds are starting to take notice, and new funds are emerging.
Currently, cryptocurrency hedge funds fall into two categories: those that manage cryptocurrency-only portfolios and those that have added cryptocurrencies to other assets. The former type of hedge fund is deemed more profitable (albeit potentially less risk-averse), due to massive returns often achieved by newly offered coins (ICOs).
