TL;DR: San Francisco-based Crypto Fund Research recently claimed dozens of cryptocurrency hedge funds have shut down this year, and the bulk of those closing operated in North America and Europe. Traditional finance firms such as Fidelity predicted 2019 to perhaps be the start of more institutional investment into the ecosystem. The immediate trends seem to be in the opposite direction for now.

Cryptocurrency Hedge Funds Closing Shop by the Dozens

Fidelity Investments and Fidelity Digital Assets published, New Research From Fidelity Finds Institutional Investments in Digital Assets are Likely to Increase Over the Next Five Years, earlier this year. “According to the survey,” Fidelity summarized, “about 22% of institutional

investors already have some exposure to digital assets, with most investments having been

made within the past three years. Four in ten respondents say they are open to future

investments in digital assets over the next five years.”

The trend, at least in the immediate months since Fidelity’s findings, seems to be going in the exact opposite direction. According to Crypto Fund Research, 68 hedge funds, for example, have shut down this year alone. A whopping 51 of them, 75%, were based in either Europe or North America.

That geographical peg is significant for a myriad of reasons, chief among them is where institutional money mostly resides, … namely North America and Europe. That two financial heavies are falling out doesn’t bode well for Fidelity’s five-year timeline. Analysts charge greater crackdowns by regulators on both continents, combined with notoriously fickle markets, as principal reasons why institutional investors might be growing skittish at least in the immediate sense.

The trend, then, such as it is, could be looked at another way. Crypto Fund Research also found less than half of hedge fund startups dared the waters this year compared to 2018 — an equally foul sign for institutional investment hopium. Further evidence can be seen with regard to futures contracts, once touted as a for-sure speculative moon play in late 2017 when CME and Cboe, both US-centric, entered crypto with great hype and hope. They, along with recent entrant Bakkt, have seen relatively little volume compared to traditional markets — all of which have been attributed by proponents to the newness of cryptos as an asset.

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DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH.