The number of new cryptocurrency hedge funds has soared to an all-time high, despite prevailing bearish conditions in bitcoin markets.
Some 600 hedge funds are expected to be launched over 2018, with figures from Crypto Fund Research showing as many as 120 are cryptocurrency focused – equivalent to 20% of all funds launched this year.
The figures were based on a total of 90 crypto hedge funds to have launched in the first three quarters of the year, highlighting the growing enthusiasm for investment in cryptocurrencies like bitcoin.
It comes at a time of increasing interest from institutional investors in the cryptocurrency space, including investing in assets beyond bitcoin. The figures compare with 16% of hedge fund launches last year, and just 3% a year previous, reflecting the extent to which crypto has grown in significance as an asset class.
Bitcoin has had a challenging run in 2018, struggling to regain the momentum it had picked up towards the end of 2017. After crashing from highs of near $20,000 in late 2017, some had feared doomsday predictions were becoming a reality.
However, since then, the crypto sector has matured significantly, with regulators and the mainstream financial world finally beginning to treat cryptocurrencies like bitcoin, and associated investments, seriously.
Crypto Fund Research founder Joshua Gnaizda said that the uptick in crypto hedge funds came against a climate of declining new hedge fund starts overall.
“In the midst of 2018’s decline in traditional hedge fund launches, crypto hedge funds are a notable aberration.”
However, while he expressed doubt that the current rate was sustainable, he said there was little evidence of the launch of crypto funds of this kind decreasing any time soon.
“While we don’t believe the rate of new launches is sustainable longer-term, there are currently few signs of a significant slowdown.”
The research identifies several key locations for new funds, with the US laying claim to as many as half of those based there. Switzerland, Malta, China and the UK were represented amongst the remainder, as well as funds based in the Netherlands and Australia.