Bitcoin price is bearish but cryptocurrency funds are booming: Report
Bitcoin’s price has been witnessing a downward trend and the market is bearish but that did not stop the cryptocurrency funds to grow and the Assets Under Management (AUM) from booming. The data shows bitcoin’s price had little effect on the number of crypto funds, as they have increased to an astounding number of 312 in 2018.
Cryptocurrency funds boom amid bear market:
The number of cryptocurrency funds are 312 as in July, according to a research by Autonomous Next, a cryptocurrency analytics firm.
It is a 24 percent increase from January this year only 251 funds were operating. There has been a surge of 425 percent from 2016 when only 56 crypto assets firms were functioning.
As per a CCN report, most of the funds were launched in the second quarter while only 20 crypto funds entered the space in the first quarter but nine out of them closed as they couldn’t survive the market headwinds while the large funds couldn’t get new investors.
Researchers have established a link between the number of crypto funds with appreciation in Bitcoin. Despite continuous fall in cryptocurrency prices due to a plethora of activities around Initial Coin Offerings (ICO), the rate of new hedge funds has been largely endured in 2018.
It comes to somewhere between $7.5billion-$10billions, that 312 crypto funds manage together. But the capital is restricted to largest funds.
Autonomous Next’s report shows the 10 largest funds that account for almost half (43percent) of total investment capital in the industry, while 50 percent of it is managed by the top 50 cryptocurrency funds.
During a prolonged bear market, the top crypto funds easily survive and flourish given their coffer’s strength. But the smaller funds have reasons to worry as the report states, crypto funds with valuation below $25 million in AUM are vulnerable to more threats down the years.
Rising diversity in investment strategies used by firms has helped them grow their assets base. This might be a good sign of the crypto industry is taking baby steps towards maturity.
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