Cryptocurrency fund total moves above 300
The number of cryptocurrency funds has steadily risen this year and the total now stands at a record 312, according to research by cryptocurrency analysis firm Autonomous Next.
The figure represents a 24% increase since the start of 2018, when 251 funds were operating, and 457% up on 2016 when the total was only 56.
Most of the new funds opened in the second quarter. The first quarter of 2018 saw only 20 new firms entering the market, offset by nine others closing their doors as market volatility made it difficult for even large funds to attract new investors.
As might be expected, the researchers found that the number of cryptocurrency funds is highly correlated with bitcoin appreciation. However despite a general decline in cryptocurrency prices this year the formation of new funds has continued, due largely to a flurry of activity around initial coin offerings (ICOs).
Wider investment strategies
The 312 cryptocurrency funds now active collectively manage between $7.5bn and $10bn in assets, though this capital is highly concentrated among the largest funds. According to the report, the 10 largest funds account for 43% of the industry’s investment capital, while the top 50 hold 80%.
The report concludes that these larger funds have the capital and resources to flourish — or at least survive — during prolonged bear markets, but it warns that firms with less than $25m in assets under management (AUM) could face an uphill battle over periods when conditions are more challenging.
The increased number of funds has also correlated with growing diversity in investment strategies utilised by these firms. This not only provides investors with a wider array of options but is also perhaps a sign that the nascent industry is maturing, the report suggests.