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New Report says- Cryptocurrency hedge funds are on Rise

Feb 19, 2018 Posted /  1523 Views

New Report says- Cryptocurrency hedge funds are on Rise

We all know that Hedge funds are profit loving entities who crave for double-digit returns. A hedge fund can be defined as an alternative investment mechanism, which is available only to sophisticated investors, such as institutions and individuals with significant assets. Much like mutual funds- hedge funds are pools of underlying securities.

There is a huge number of Hedge funds that are involved with algorithmic trading on stocks and other financial instruments, however, cryptocurrency hedge funds are a new thing in the market. Nonetheless, despite being new market enterprises the cryptocurrency hedge funds are growing at an incredibly faster rate. It is being analyzed that volatility in the space contributes to increasing number of algorithmic trading in the cryptocurrencies.

To certain this theory, new reports have surfaced from Autonomous NEXT the financial technology research house. The findings by the research firm say that the number of hedge funds grew by 100% to 226 in the time period between Oct 2017 to Feb 2018, which accounts for the straight last 4 months. The firms also report that the assets under management have also escalated to approximately $5 bln.

This increase in the number of hedge funds has come in that point of time when the cryptocurrency market facing highest amount of volatility and the overall market capitalization for the cryptocurrencies dropped by roughly 30% bowing to the market correction.

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A partner in the Autonomous NEXT was quoted by media as saying, "While the softer prices of crypto assets does create a more difficult environment for investors, I do not think it will pause the influx of funds and other financial institutions building products in the space”

What kinds of ROI to expect?

So far, 2017 remains the most profitable year for the cryptocurrencies as the prices of the currencies truly skyrocketed before finding a major correction in 2018. During the time many hedge funds disclose an average return of more than 1400% and most of these returns have been expanded by holding the cryptocurrencies and monitoring the price index. The currencies are held till the reach a record high price.

Not only trading in virtual currencies is on high in hedge funds, but many have been shifting towards Initial Coin Openings- ICOs. For instance, several funds and venture capital firms invested in FileCoin in its early days. Participation in ICOs as such ensure that the hedge funds procure greater return when the coins trade publicly on the digital currency exchanges.

The names of the cryptocurrency hedge funds who are involved in the ICO's and actively participating in them include Token Capital, BitSpread. As reported, some of the companies charge high fees and ask for the good amount of the profits too, but these hedge does not seem to care about these facts. They are generally content with the high returns in comparison to the traditional financial instruments.

It is being further analyzed by the market experts that soon many large hedge fund enterprises might pursue with this crypto-love and shift with their trading strategies in the coming months. Surely, these firms also have released that they can find better returns with virtual currencies.

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Tags: cryptocurrency Hedge Funds bitcoin blockchain technology

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