Hedge funds can’t get into the cryptocurrency investor space fast enough, it seems. There are now at least 800 digital currencies, such as Bitcoin, which are not centralized, but rather rely on what is known as distributed ledger technology. These various currencies, when combined, have a marketcap of about $166 billion, and are attracting investors like bees to honey.
Financial technology analytics company Autonomous NEXT published a list of 55 cryptocurrency hedge funds last week, highlighting the growing appeal of the sector.
“Like wild mushrooms, crypto hedge funds have been taking root in the volatile and unregulated soil of the crypto economy,” Autonomous NEXT wrote on their website. “So we went digging, and digging and digging,” they stated.
One of the newer funds on the list, 1confirmation, was launched on August 22, 2017 and is backed by the high-tech billionaire and star of the reality TV show “Shark Tank,” Mark Cuban.
It is no wonder hedge fund managers are siting up and taking notice. Since 2016 Bitcoin’s value has grown by 700%. The 3300% rise of Ether during the same time span gives new meaning to “meteoric price rise.”
In addition, the market for initial coin offerings, or ICO’s is going gangbusters, with more than $1.8 billion raised since the early days of 2017. ICO’s use a novel method to raise funds based on blockchain technology, what else?
Traditional hedge fund managers have noticed the party.
“We have seen managers invest in the actual currencies and/or in the ICOs, and soon there will be derivatives as well,” Steve Nadel, a hedge fund attorney said. “Cryptocurrencies have garnered a fair amount of interest in the investment management space, primarily because of the returns they have recently shown.”