Over the years, in addition to being a secure and convenient medium of exchange, cryptocurrencies have established themselves as a distinguished asset class – one that market analysts and advisors see as changing the face of modern-day investments. And adoption trends have been out there for everyone to see.
In December 2017, regulated bitcoin futures were introduced for the first time in the market, when two major futures exchanges – the Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME) – started trading Bitcoin futures. As institutional interest continued to increase, the market soon saw the introduction, and rapid proliferation, of crypto investment funds.
Crypto Investment Funds: An Overview
Although crypto investment funds are sometimes also referred to as blockchain funds, such a label is inaccurate. Blockchain funds tend to invest in companies leveraging blockchain technology, and not into cryptocurrencies directly.
Crypto funds can consist entirely of crypto assets, or have a partial asset allocation mixed with other asset classes. An important metric to note here is that the number of crypto investment funds is rapidly rising. This is true for both kinds of crypto investment funds in the market today. A quick recap on the kinds of crypto funds, for those looking to refresh their memory:
#1 Hedge funds
Crypto hedge funds are operated and managed by experts and rebalanced based on market trends and strategies. A hedge fund might engage in exclusive management of cryptocurrencies, or a mix of cryptocurrencies along with other asset classes. There is also a growing trend of including newly introduced ICOs (Initial Coin Offerings) in the mix.
The lucrative returns generated by crypto hedge funds have played a significant role in the popularization of the crypto investment funds market.
#2 Venture Capital (VC) funds
A crypto VC fund involves the management of money invested in high growth potential start-ups and companies affiliated with the cryptocurrency and blockchain world. The number of crypto venture funds has surpassed crypto hedge funds in recent years.
Crypto Investment Funds: Current Market Status
The crypto revolution is gaining ground and plenty of thought leaders, influencers, and of course, prominent market trends that point towards blockchain as the next big thing since the internet. Many investors wish to be early beneficiaries of this wave. It’s this interest that has fueled the rise of crypto venture funds around the world.
There are crypto private equity funds and crypto ETFs as well (or the blockchain funds we just mentioned). But their number and market capitalization remain significantly lower than crypto hedge and VC funds.
- The AUM of crypto hedge funds globally increased from US$1 billion in 2018 to over US$2 billion in 2019. This 100% increase in AUM is an accurate indicator of the potential crypto funds hold, and perhaps more importantly – the market’s positive perception of this potential.
- Increased interest from VC firms in cryptocurrencies and blockchain technology is showing in the numbers. Out of 804 crypto investment funds, there are 425 VC funds, and 355 are hedge funds.
- The USA is home to the majority of the crypto invested firms, followed by the UK, China, and others. Market trends point towards a rise in crypto investment funds in the European countries.
- Crypto hedge funds performed staggeringly well in 2019, with median returns of 74%. Average performance varied from 33 – 58 % depending on investment strategy, with the lowest being 19% in the case of a multi-strategy approach. In comparison, traditional hedge funds averaged less than 7% in 2019.
- Crypto hedge funds with an AUM of US$20 million increased from 19% in 2018 to 35% in 2019. The number is believed to cross 60% in the 2020 market assessment.
The conclusions we draw from market analyses and forecasts for crypto investment funds are consistent and clear. Crypto fund AUMs are set to cross $3 billion by the end of 2020 and crypto fund managers are going to be a happy lot.
“The crypto hedge fund industry today is probably where the traditional hedge fund industry was in the early 1990s,” says PwC Hong Kong director Henri Arslanian. “We expect the industry to go through a rapid period of institutionalization and implementation of sound practices over the coming years.”
Crypkit: Empowering Funds With Data
As is evident, the world of fund management requires one to actively track portfolios in addition to regular analysis of market trends. Mismanagement, or even poor management of data, can seriously jeopardize a fund’s fundamentals, and therefore its returns. Crypkit aims to eliminate such catastrophes, and even elevate fund management experience via simple yet powerful solutions for everyday fund management.
Crypkit’s portfolio tracker module helps stay on top of all activities relating to crypto fund management. While portfolio monitoring is, of course, an essential need, Crypkit solutions also assist with:
- Tracking wallets & exchanges & new custodial solutions
- Clients & Fees management
- Monthly NAV & reporting
- Custom valuation rates
- Transaction monitoring
- Full history exportable to .csv
- User roles with audit trails
Crypkit Fund Manager
Of course, in order to offer true utility, Crypkit works with all the data you offer – including past data prior to you integrating it with your fund or portfolio. It’s what makes Crypkit truly useful.
All these solutions are supplemented by critical statistics, NAV, and fee calculations displayed on an advanced dashboard. With support for multiple accounts, every key member in the fund can readily access (and analyze) portfolio performance.
The growth trajectory of crypto investment funds has been highly satisfying to witness, both for participants and for crypto enthusiasts who may be watching from the sidelines. Positive sentiment and market trends substantiate the impressive impact that cryptocurrencies and blockchain tech are set to have on modern-day financial systems and investment. The increased interest from investors in crypto funds points to the massive influx of businesses that fund managers are going to experience.
The future of crypto investment funds, undoubtedly, looks extremely bright. At Crypkit, with the Crypto DeFi Asset Tracker and the Crypto Fund Manager, we’re beyond excited to participate in accelerating this transition to an exciting future.