A recent research compiled by Autonomous NEXT has found out that there are 226 Million cryptocurrency hedge funds operating around the world. Interestingly, this number has doubled up in the past 4 months! While there are thousands of hedge funds already operating on stocks and other similar commodities, cryptocurrency hedge funds are getting increasingly popular too.
The past four months have been quite dramatic for cryptocurrencies. November and December of 2017 and January and February of 2018 couldn’t be more contrasting! The 2017 months witnessed a major boom in the cryptocurrency prices - with Bitcoin leading the markets to reach an all-time high of close to $20,000. However, over the next two months, the markets collapsed and went through a period of ‘bloodbath’, where Bitcoin crashed to a low of $6000.
However, despite the highs and the lows of the markets - cryptocurrency hedge funds keep increasing in number! In October 2017, there were only 110 cryptocurrency hedge funds. Between then and now, there are 116 more cryptocurrency hedge funds - bringing the number up to 226. A partner from Autonomous NEXT - the research firm that came out with this data said: “While the softer prices of crypto assets does create a more difficult environment for investors, I do not think it will pause the influx of funds and other financial institutions building products in the space”
The reason why cryptocurrency hedge funds are rising in number is that of the massive profits! In 2017, the average profit of cryptocurrency hedge funds was that of a massive 1,300%. Moreover, in the recent few months, these hedge funds are not only investing into the cryptocurrencies but are also dedicating a portion of their capital to invest into ICOs. Interestingly, even after the major drop in cryptocurrency prices over the past few weeks, most cryptocurrency hedge funds are down only by 5 to 6%. These hedge funds are run by seasoned investors and market analysts who make their move wisely, thereby averting dips and surviving the crashes.
Some of these Cryptocurrency Hedge Funds are actually charging high fees, as well as taking a significant chunk of the profits from the investors. However, investors aren’t really concerned much because of the high returns they are getting on their investments. While 2017 was a euphoric period for these cryptocurrency hedge funds, it would be interesting to see if 2018 continues to be a profitable year for them.
Market experts and cryptocurrency analysts have commented that while cryptocurrency prices were driven by retail investors and individuals last year, much of the price gain from this year and moving forward would largely be because of institutional investors. Hedge Funds are considered as institutional investors and this rapid rise in the number of hedge funds is expected to help the cryptocurrency prices grow in 2018.