Hedge funds focused on digital assets have gained significant traction in 2018, and recent data suggest that they now account for 20% of all fund launches.
According to a recent report by Crypto Fund Research, a market research firm specializing in institutional capital, 90 cryptocurrency hedge funds were launched in the first three quarters of 2018 with roughly 120 in total projected for the full fiscal year.
Current estimates have the total number of hedge fund launches in 2018 at roughly 600, bringing the percentage of crypto funds to 20%. This is a major jump from 2017, which had crypto funds comprising only 6% of new hedge fund launches, up from less than 3% in 2016.
The analysts admit that this growth is far from sustainable, but this trend could continue well into the foreseeable future, despite the bearish market.
“Yet these seemingly unfavorable market conditions have not deterred managers from launching new crypto hedge funds at a record pace. While we don’t believe the rate of new launches is sustainable longer-term, there are currently few signs of a significant slowdown,” says Joshua Gnaizda, founder of Crypto Fund Research.
Gnaizda also explained that, in general terms, crypto hedge funds have significantly underperformed relative to traditional hedge funds in 2018.
Nonetheless, there are currently 303 crypto hedge funds, comprising only 3% of the more than 9,000 hedge funds currently in operation.
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.