Falling prices for cryptocurrencies, and an uncertain regulatory environment, in 2018 haven’t deterred new crypto investment funds from opening, according to new analysis from Crypto Fund Research. In fact, 2018 is on pace to surpass the previous year for the most new crypto fund launches.
Through July 31, there were 96 new crypto hedge funds and venture capital funds, an annual pace of 165. This would surpass the record 156 crypto funds launched in 2017. More than half of all crypto funds currently in existence have launched in just the last 18 months.
There are now 466 crypto funds across the globe.
“We expected a large number of new crypto funds to launch in 2018 to satisfy growing investor demand.” Josh Gnaizda, founder of Crypto Fund Research, said. “However, the pace of new fund launches is a bit surprising given the dual headwinds of depressed prices and less than favorable regulatory conditions in many regions.” Crypto Fund Research provides market intelligence on cryptocurrency investment funds and also maintains a database of funds.
If 2017 was “the year of Bitcoin”, 2018 is shaping up to be the year of the crypto fund. While investors await decisions from various regulators on new investment vehicles, such as the bitcoin ETF proposed by Van Eck and SolidX, crypto fund managers are setting up new funds and hoping to take advantage of what they perceive as unmet investor demand for crypto investments.
“While volatility in the crypto markets can attract some investors to sophisticated crypto funds,” Mr. Gnaizda says, “it remains unclear if the industry can support such a large number of funds, with limited track record, if we experience an extended bear market.”
The pace of fund launches doesn’t represent the whole story, however. Though crypto funds are the fastest growing hedge fund strategy by number, overall assets are still quite meager. Crypto funds collectively manage just $7.1 billion – far less than many of the top traditional hedge funds. Most institutional investors remain on the sidelines, something many crypto fund managers hope will change in the coming months.
Top cities for crypto funds launches, 2018:
- San Francisco (9)
- New York (6)
- Singapore (5)
- London (4)
In addition to the above, Austin, Dallas, Hong Kong, Philadelphia, San Diego, Tokyo, and Zug have all seen multiple fund launches this year.