The number of crypto hedge and venture capital funds is increasing at a fast pace this year, already reaching a total of 466, despite the bearish market trend and continuing regulatory uncertainty. 96 new funds have been founded by the end of July, according to a new study whose authors believe this year’s number will exceed the record 156 launched in 2017.
96 New Crypto Funds Founded In 2018
In a year of falling prices across the board, stubborn bearish market trend and persistent regulatory uncertainty, one would think this might not be the best time to deep dive into crypto. Some, however, see opportunities. Recently released data shows that 96 new crypto hedge and venture capital funds have been founded through July 31, this year.
According to a study conducted by Crypto Fund Research, a provider of market intelligence on cryptocurrency investment funds, 2018 is in fact on the way to surpass 2017, “The Year of Bitcoin,” when it comes to the number of crypto fund launches. If the current pace of opening new crypto investment funds is maintained, their number is projected to reach 165 by the end of the year, compared to 156 launched last year.
The cities that have hosted the biggest number of new crypto funds are San Francisco – 9, New York – 6, Singapore – 5, and London – 4. Cities like Austin, Dallas, Hong Kong, Philadelphia, San Diego, Tokyo, and Zug, where the Swiss Crypto Valley is based, have also seen multiple fund launches this year.
More than half of all crypto funds currently in existence have been established in the last 18 months, according to another finding in the report. Their total number around the world has reached 466, Crypto Fund Research claims. Quoted in a press release, the company’s founder Josh Gnaizda commented:
We expected a large number of new crypto funds to launch in 2018 to satisfy growing investor demand. 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.
Is There Enough Space for All of Them?
The authors of the study note that if 2017 was “The Year of Bitcoin,” 2018 is shaping up to become “The Year of the Crypto Fund.” They also point out that while investors await decisions from regulators regarding new investment vehicles such as the Vaneck Solidx bitcoin ETF, crypto fund managers are setting up new funds in hope to take advantage of what they perceive as unmet demand for crypto investments.
In further comments, Mr. Gnaizda expresses doubts about the capacity of the crypto space, under the current circumstances, to accommodate so many funds: “While volatility in the crypto markets can attract some investors to sophisticated crypto funds, 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,” he said quoted by PRweb.
Despite the impressive growth in the number of crypto funds, the capital they control remains limited – about $7.1 billion USD, and the researchers stress this is far less than what many of the top traditional hedge funds manage. At the same time, the majority of institutional investors are still waiting on the sidelines and many crypto fund managers hope this will change in the near future.
Do you think the growing number of crypto funds indicates optimistic expectations about the future of the crypto industry? Share your thoughts on the subject in the comments section below.