The Rising Number of Cryptocurrency Hedge Funds

Autonomous Next, the fintech practice wing of Autonomous Research based out in London recently revealed that the number of cryptocurrency hedge funds have increased more than twice in the last four months.

It was reported by Reuters that:

“The number of crypto hedge funds more than doubled in the four months to Feb. 15…The research firm recorded a record high of 226 global hedge funds with such a strategy, up from 110 global hedge funds as of Oct. 18.”

Staring from 37 at the beginning of 2017 and 55 in August 29th, cryptocurrency hedge funds have surely come a long way to managing assets worth $3.5 to $5 billion presently. Lex Sokolin, partner at Autonomous Next exclaimed that:

“While the softer prices of crypto assets do 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…It would take the extreme case of the entire space contracting by 80 percent and high regulation before the flow of funds turns around.”

It was revealed by Eurekahedge, an independent hedge fund data provider that cryptocurrency hedge funds lost about 4.6% following the market correction in January. Reuters further noted that:

“Some invest in just bitcoin, taking both long and short positions, some buy a basket of cryptocurrencies and others exploit the arbitrage between different exchanges’ prices.”

Nine hedge funds holding collective assets worth $1 billion are currently being tracked by Eurekahedge. The news outlet conveyed that they “made an average of 1,477.85 percent in 2017.”

Cedric Jeanson, the founder of fintech firm Bitspread stated that:

“Some of the hedge funds charge high fees – an average of 1.6 percent for management and 17.5 percent for performance for funds tracked by Eurekahedge – even though they are using largely passive strategies.”

Diana Gbson, the managing director at investment consultant Cambridge Associates referred to the cryptocurrency hedge funds in general while pointing out that:

“Gains in 2017 were largely generated from being long.”

The Cryptocurrency hedge fund of Pantera Capital returned 25,004% last December to its investors since its 2013 launch. According to data published by Bitstamp, the skyrocketing price of Bitcoin during its December 17th peak at $19,666 was the main reason triggering this gain.

Also Read: Techcrunch Founder Launching $100 Million Ripple (XRP) Hedge Fund

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Rohit Kukreja is a Commerce graduate with Financial Markets expertise involving Stocks, Forex, Futures & Options Market and now Bitcoins & Cryptocurrency Markets. Blockchain Enthusiast but not a techie, Rohit is an active member of various Blockchain & Crypto communities all over India.