Data from the San Francisco-based Crypto Fund Research has shown that nearly 70 cryptocurrency-focused hedge funds have closed this year, while the number of new funds opening is nearly half of what it was in 2018.
The funds reportedly mostly catered to pensions, family offices, and wealthy individuals. Region-wise, data shows North America leads in the number of crypto fund closures with 28 shutting down this year. Europe followed it with 23 closures, and the Asia-Pacific region came in third with 14 closures.
Bloomberg reports that the volatile nature of cryptocurrency prices and regulatory uncertainty surrounding the nascent space have been keeping institutional investors at bay. Nic Carter, the co-founder of Boston-based crypto market tracker Coin Metrics, was quoted as saying the market is “definitely retail driven and will remain so for the foreseeable future.”
The news outlet noted, however, that a Fidelity survey has shown institutions’’ investments into cryptocurrencies are likely to increase over the next five years, and that the CEO of Galaxi Investments Mike Novogratz has said in a recent interview he believes the next wave of adoption will come from “the wealth advisers, maybe with endowments and small foundations participating.”
Spencer Bogart, general partner at San Francisco-based Blockchain Capital, pointed out it’s a matter of expectations, as while to some the levels of institutional adoption are “disappointing or underwhelming,” to him they are a “radical success.” He said:
To me, the fact that there is any institutional adoption for Bitcoin only 10 years into existence is a radical success and beyond what anyone could have imagined just 3 or 4 years ago.
Data from the Crypto Fund Research’s website shows there are currently a total of 804 cryptocurrency-focused funds, 355 of which are hedge funds, and of are venture capital funds. Most crypto funds – 403 – have less than $10 million worth of assets under management, while only 57 have over $100 million under management.
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