With cryptocurrencies losing hundreds of billions in total market cap in the past several months, as well as continued confusion about its regulatory status in the U.S., one might expect that the nascent crypto hedge fund industry would be struggling. However, a report by CryptoGlobe suggests that this could not be further from the truth. In fact, the pace of investments in hedge funds with a cryptocurrency focus has actually picked up significantly so far in 2018.
Data from Crypto Fund Research indicates that by June 15 of this year, 216 investments had been made in these funds, compared with 236 investments for all of 2017. It seems that the cryptocurrency hedge fund space is continuing to grow in popularity despite potential troubles in the digital currency world itself.
Crypto Fund Research indicates that investments in the digital hedge fund space from Jan. 1 through June 15 of this year totaled $637.7 million. In 2017, the total inflows for these funds for the year were $496.7 million, meaning that 2018 investments in the space have already surpassed those of last year.
Venture Capital as Well
Beyond cryptocurrency hedge funds, crypto-related venture capital is also thriving in 2018. Crypto Fund Research ranks venture capital firms according to criteria such as capital outlay, investment activity overall, recent activity in the blockchain space and overall blockchain investment experience. According to the report, Digital Currency Group leads the overall group of blockchain venture capital funds. The company, based in New York, has made 58 total investments worth $78 million with 15 of those investments happening in the past 12 months.
Next up was Pantera Capital out of Menlo Park, California. Famed firm Andreessen Horowitz, which recently revealed a $300 million crypto fund in the works, was fourth on the list.
Crypto Fund Research CEO Josh Gnaizda explains that "the four criteria we used [reflect] not only total investment but also how long they've been investing in blockchain and how active they are today, not just a year or three ago ... the industry is changing rapidly. So what's most accurate today won't be as correct next month."
Investing in cryptocurrencies and Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns bitcoin and ripple.