Over 100 Hedge Funds Now Focus Exclusively on Cryptoassets

The research team, Autonomous Next, shared their findings on October 27 that outlined the current financial landscape of cryptoassets like bitcoin.

Financial Breakdown

In an exclusive release to CNBC, Autonomous Research, an independent research provider founded in 2009, reported the generation of almost 90 digital assets funds in 2017. The analysis included details about which portion of funds are being generated by venture capitalist-type strategies and which portion of funds focused on the trading of digital assets.

Source: Autonomous Next

A reported 37 percent of the market share, making up roughly $1.1 billion in assets, belonged to the VC-type strategists. The latter was responsible for a market share of 32 percent with nearly $700 million in assets.

The London-based analysis group, also pointed out that nearly $100 million in assets were used for data science, statistical arbitrage, and machine learning. In total assets, all crypto-funds make up approximately $2.3 billion.

2017: A Surge in Bitcoin

Naturally, these figures have experienced fantastic surges. The volatile economic sector that surrounds bitcoin and other digital assets have been said to change the world in the same way the internet did. Others, more skeptical, point out that bitcoin in particular is a bubble, much like the dot-com era of the early two thousands.

Apple co-founder, Steve Wozniak, told CNBC in June that even he bought bitcoin when it was at the $700 level. He reported being less interested in investing and more interested in “playing with bitcoin.” If not bitcoin, Wozniak among others, are also interested in the blockchain technology behind many of the cryptocurrencies.

Conflicted Predictions

This conflicted interest has been met with varied responses in the financial world. Jamie Dimon of JP Morgan, for instance, let loose a handful of scathing reports on the subject earlier this summer. Dimon also announced the release of a joint blockchain-based venture with the Royal Bank of Canada and Australia and New Zealand Banking Group on October 16. The group seeks to reduce transaction speeds “from weeks to hours.”

On the flip side, Mike Novogratz told Business Insider that if there is a bubble,“prices are going to get way ahead of where they should be. You can make a whole lot of money on the way up, and we plan on it.”

Novogratz’s next venture, Galaxy Digital Assets, is opening a $500 million hedge fund that will focus exclusively on initial coin offerings (ICOs) and cryptocurrencies. At this size, this will be the largest hedge fund in the sector and seeks to professionalize an unstable market. He told Bloomberg News, that, “bubbles happen around things that fundamentally change the way we live. The railroad bubble, railroads really fundamentally change the way we live.”

In April 2017, BTCManager reported that Novogratz holds ten percent of his wealth in crypto-assets like bitcoin and ether, and the billionaire began to put his personal wealth into this space as early as 2013.

Whether one decides to play with digital assets for the simple sake of experimentation, or to catch the market before it pops, the interest lay in the implications. If not bitcoin, then the ways paved by the currency will undoubtedly change the way we think of finance.