Strong Demand: Crypto Hedge Funds are Still Raising $100 Million+

Throughout 2018, the cryptocurrency market has lost 75 percent of its valuation. Yet, crypto hedge funds are raising hundreds of millions of dollars from accredited investors and institutions.

On November 1, CCN reported that Grayscale Investments, a subsidiary company of cryptocurrency venture capital behemoth Digital Currency Group, raised more than $330 million from both existing and new investors.

After recording a 1,200 percent increase in the amount the firm had raised across three quarters in 2017, Michael Sonnenshein, managing director of Grayscale Investment stated that the substantial 69 percent drop in the price of Bitcoin had minimal impact on the company’s client base.

“Bitcoin prices doing nothing but go down the entire year has not deterred our existing clients from putting more capital to work. Asset inflows are really strong despite these price declines. Investors are taking the pullback as an opportunity to increase their exposure. The price has not slowed down the pace of investments — it’s actually caused us to broaden our relationships.”

Not Just Grayscale

As a publicly tradable instrument provider of Bitcoin, Ethereum, Ethereum Classic, and Zcash that allow investors in the stock market to invest in the cryptocurrency market, Grayscale has a strong reputation as a digital asset asset manager and investment firm.

But, over the last several months, other major cryptocurrency hedge funds such as Pantera Capital and former Point72 portfolio manager Travis Kling-founded Ikigai Asset Management have raised over $100 million to invest in the asset class.

The cryptocurrency sector has fallen by a significant margin within a 11-month period, but to many investors exploring the asset class as a long-term investment opportunity, the correction of the market has been considered an opportunity.

Throughout the past 10 years, the cryptocurrency market recorded four major corrections, all of which demonstrated drops of over 80 percent in valuation. Hence, as Travis Kling emphasized, the cryptocurrency market is merely at the start of exponential growth and the correction is a viable opportunity for new investors to enter.

“Same as that earlier invention, I believe crypto will create trillions of dollars along the way. Already the market for virtual coins is valued at hundreds of billions of dollars. And it’s all just getting started. So I left Point72, billionaire Steven A. Cohen’s hedge fund, in December to continue my investing career, but in a new asset class,” Kling wrote on August 1.

In August, Pantera Capital raised more than $100 million and is targeting to raise $75 million more to establish a venture capital-style fund to invest in cryptocurrency startups.

Over 140 investors participated in the $100 million fund of Pantera with a 10-year long-term vision to invest in the cryptocurrency industry and emerging startups rather than cryptocurrenies like Bitcoin and Ethereum.

Market Growth is Strong

Historically, the cryptocurrency market has rebounded strongly from large corrections and consistently achieved new all-time highs.

2018 has evidently shown that cryptocurrency as an asset class is strong and robust, supported by a rapidly growing industry. It is not a fad but rather a newly emerging technology, consensus currency, and computing system that is competing against existing centralized systems.


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Author: Joseph Young
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When the next crypto bull run happens, it’s going to be epic

The current overall market cap for the crypto space is a shadow of what it once was. 2018 has tested the patience and skill of everyone involved. Crypto asset prices are down at least 75% across the board for the most part. But strangely enough, institutions and mainstream entities continue to gain interest and involvement. Logically, all this interest should make the next bull run huge (when the market finally turns around).

Significant Mainstream Interest

The Elusive Bitcoin ETF

The approval of a Bitcoin ETF seems to be the most referenced topic in crypto this year. The Securities and Exchange Commision (SEC) appears to be getting closer to a decision on approving a Bitcoin ETF. The SEC has reviewed numerous Bitcoin ETF proposals this year, with no approvals yet.

A possible decision may come in late December for the Van Eck/SolidX ETF, which appears to have the best chance for success.

A Bitcoin ETF would provide a way for institutional (wealthy) players to enter the market and feel that their funds are safe. The market cap all-time high for the cryptocurrency industry has never surpassed $1 trillion, which is not very high, considering global involvement. The crypto space needs more people and money in order to grow. A Bitcoin ETF is a way to increase people’s involvement in crypto, offering an option with regulatory backing (by the SEC).

Ethereum Futures Coming

Everyone in crypto last year remembers the impact Bitcoin futures made on the market, starting last year’s end of year bull run. Money flooded into the crypto space like never before. Bitcoin futures trading on the Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) showed significant mainstream interest in the crypto space and resulted in the legitimization of cryptocurrency (to a degree).

This year, the CBOE plans to launch Ethereum futures, possibly before the end of the year. This shows that institutional interest is still growing and that Bitcoin futures were not simply a failed experiment. People still want to become more involved in crypto, even after a tough year.

Nasdaq Crypto Exchange Interest

Earlier this year in late April, Adena Friedman (Nasdaq CEO) made comments expressing interest in possibly becoming a crypto trading platform.

Nasdaq further states they will likely wait for regulation to be sorted out, and for the crypto space to mature. But the point is – the interest is there from one of the most prominent financial entities. A Nasdaq crypto exchange would make the crypto space even more legitimate.

Crypto Hedge Funds

90 crypto hedge funds have launched so far this year, with another thirty estimated before years end. 600 hedge funds total are projected to launch this year (including traditional markets). If 120 of those 600 are crypto hedge funds, that means crypto would comprise 20% of that.

It makes sense that these hedge funds are only launching as the result of interest in the crypto space. Crypto hedge funds also provide another on-ramp to crypto involvement for traditionally-minded people.

IBM’s Food Blockchain

IBM is another giant in the world of traditional markets. They are currently developing a method to track food using blockchain technology. IBM Food Trust as it’s called, is also collaborating with giants such as Nestle, Walmart, and Kroger.

Mainstream business giants see the potential in blockchain and crypto, and are becoming involved. More involvement leads to greater blockchain solutions to world difficulties (such as food origins and tracking).

ICE and the Bakkt Platform

ICE stands for International Exchange. They plan to launch Bitcoin futures trading in November, on a platform/ecosystem called Bakkt.

The big news is that these Bitcoin futures will be settled in actual Bitcoin, as opposed to the current CME and CBOE options that are cash settled. This would require the actual purchase of Bitcoin, causing more demand for Bitcoin holdings.

Bitcoin only has a total supply of 21 million coins. ICE will need to buy large amounts of Bitcoin for trading on the Bakkt platform. If entities like ICE continue to buy Bitcoin, less supply is available for the general public. Less supply could mean greater demand and higher price for Bitcoin.

Ripple, xRapid, And The Banks

Ripple/XRP is a touchy subject in the crypto space. Some people like it, and some see its centralization as a problem that goes against one of cryptocurrencies best qualities – its decentralization. Whether in support of Ripple or against it, Ripple news is still a sign that mainstream use and interest is building.

At its swell conference this year, Ripple announced the launch of xRapid – a product to change global remittance payments. There is said to be a significant amount of interest for xRapid’s potential from financial institutions.

It seems as though most of this information has not significantly impacted crypto asset prices (with the exception of Bitcoin ETF speculation in July). It will be interesting to see what happens when the crypto market finally turns around, and people start seeing the price action relating to such interest.


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Author: Benjamin Pirus
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