Global Cryptocurrency Fund Development Status, Development Trend and Income Analysis Forecast
Recently, the
explosive growth of crypto asset funds, which have risen for more than six
years, seems to be a boost to the blockchain industry. Today, crypto asset
funds are like catalysts for the blockchain industry, driving crazy business
opportunities sprinting madly. From 224 new funds in 2017 to the unprecedented
launch of 239 in 2018, the investment engine for crypto assets seems to be
eternal Non-stop. In 2022, crypto currencies are still as much fluctuating as ever.
There is a concept that VC's multiple choice of fund models has created an
excellent incubation platform for blockchain, so VC's creation of crypto asset
funds for blockchain is a new trend now.
For hedging investments, crypto assets
effectively maximize the diversification of investment portfolio risks,
especially based on the characteristics of crypto assets with high volatility.
For example, some volatility options have allowed many hedging investment
institutions to successfully establish a global A low-relationship portfolio
with a recession.
Most risk-averse investment institutions use long-term
investment strategies to face crypto assets, including the issuance of tokens
and incubation of innovation and entrepreneurship. This is similar to VCs.
Crypto Asset Fund
Although the crypto asset fund industry is booming, according to related reports, more than 60% of the fund's operating amount is less than 10 million US dollars. In other words, these hedge funds are all mini companies, that is, the entire company has no more than five It is composed of people, but manages funds with an amount of more than 50 million.Crypto Asset Management Amount
It can be seen that
the crypto asset fund is far less than the amount managed by traditional hedge
funds, and the entire crypto asset fund only accounts for about 1% of the total
hedge fund management amount.
It is difficult to
see that the return on investment of hedge funds exceeds its target index in
the traditional industry, but the blockchain industry has done it. The
traditional hedge fund investment method looks old and outdated under
decentralized digital finance. In 2019, the average profit of investing in the
bitcoin market was 100%, but counting 40 crypto asset hedge funds, their
returns were 1400%.
What's more
interesting is that when the bull market was booming in 2017, the return rate
of crypto asset funds grew slowly compared to general digital asset
investments. However, when the bear market that everyone feared came in 2018,
crypto asset funds dominated the market. Of course, the bear market will lose
money for any kind of investment, but compared to Bitcoin's return of -96%,
crypto assets' -46% return is a victory.
After the bear
market in 2018, venture capital analysts began to look for promising and
innovative blockchain projects in the low-price market. It is their help that
has made the crypto asset market's comeback after this heavy hit. Much simpler.
Annual crypto fund issuance
Cryptocurrency
funds have experienced batch failures in 2019. As of December 25, 2019, the
total market value of the global cryptocurrency market was $ 192.556 billion,
down 76% from the highest value of $ 811.8 billion in 2018. As the bear market
continues, more than 70 cryptocurrency funds globally will fail in 2019. In
terms of quantity, the number of cryptocurrency funds in 2019 has dropped from
284 in 2018 to 140, a decline of more than 50%. A total of 269 venture capital
investments have fallen to $ 1.5 billion, a decrease of about 40% year-on-year,
and the number of transactions has also decreased by 60%.
Changes in the number of cryptocurrency funds
The growth of
cryptocurrency fund assets in 2019 is relatively stable. The change in assets
stems from two main factors: the launch of cryptocurrency funds and the
appreciation of underlying assets. Therefore, due to the obvious increase in
the value of basic assets in the first half of the year, and some
cryptocurrency funds that have performed relatively well in 2019, although the
number of cryptocurrency funds has declined in 2019, the overall growth has
been relatively stable, while the value of basic assets has declined in the
second half of the year. Therefore, the growth rate of assets has slowed down
significantly.
Changes in cryptocurrency fund assets
Most cryptocurrency
funds have small assets. Compared with traditional VCs, most cryptocurrency
funds are small in scale. Half of the funds manage less than $ 10 million in
assets, but there are also projects such as GrayScale that have more than $ 100
million in scale.
Cryptocurrency Fund Assets
But cryptocurrency funds such as Grayscale have grown rapidly. Among them, the assets invested by Grayscale, the world's largest cryptocurrency investment fund, have changed from complex to simple. Simple, passive, and low-cost structures have increased the number of single-asset investment instruments. the result of. In the third quarter of 2019, Grayscale Bitcoin Trust Fund experienced the largest quarterly capital inflow ($ 171.1 million) in the product's 6-year history.
In addition to
Grayscale, there are still many cryptocurrency funds that have maintained rapid
development. The top ten active cryptocurrency funds in 2019 include
DigitalCurrencyGroup, CoinbaseVentures, GalaxyDigital, NGC, Distributed Capital,
PanteraCapital, PolychainCapital, DragonflyCapital, BlockchainCapital and
ArringtonXRPCapital.
Top 10 active funds and their portfolios in 2019
Interestingly, all
funds other than GalaxyDigital are either keen on investing in regional
exchanges (South America, Europe, Middle East) or investment transaction
related services. This direction has become the first choice for active
investment institutions in 2019. Outside of exchange or transaction-related services,
wallets, open financing platforms, and blockchain game studios are popular
investment categories that follow closely behind.
Mix of categories of inverstments among Top 8 investors
Currently, more
than half of the world's TOP10 cryptocurrency funds are concentrated in the
United States. Among them, PanteraCapital, PolychainCapital,
ArringtonXRPCapital and other crypto funds that have performed well in 2019 are
concentrated in the United States.
Distribution of the top ten active funds in 2019
Data source: public information collation
The performance of
cryptocurrency funds is also significantly better than that of
cryptocurrencies, and there are differences with traditional funds.
Cryptocurrency funds have a shorter life cycle, their portfolios outperform the
performance of most cryptocurrencies, and far exceed the performance of the S
& P 500, but the scale is relatively large. Small and inexperienced. Among
them, the CFR CryptoFundResearch (CFR) tracks more than 40 crypto funds through
various strategies, mainly hedge funds, even if Bitcoin was in January 2017 to
During June 2019,
it climbed about 1000%, the crypto fund also increased by more than 1400%, and
the S & P500 index increased by only 35%. In 2018, Bitcoin lost nearly 75%
of its value, however, the CFR Crypto Fund Index "only fell" by 33%.
Cryptocurrency
Fund, Cryptocurrency (Bitcoin), and S & P500 Yield
Data source: public information collation
In 2019,
traditional fund giants from all sides also began to enter the market. Among
them, American mutual fund giant Vanguard cooperated with NasdaqVentures-backed
blockchain startup Symbiont to establish a trading platform. According to
reports, the platform has been operating normally and completed the first
transaction. Fidelity Fund's cryptocurrency funds have also begun to serve
institutional clients extensively, attracting large amounts of funds to settle
in. In the future, it may help cryptocurrency funds and institutional investors
to store crypto assets more securely. Coinbase established CoinbasePrime in
2019, spanning asset management, venture capital, and inclusive finance, and
may provide margin financing services in the future, which has attracted USD 20
billion in risk funds. In addition, two US pension funds with total assets
under management of $ 5.1 billion invested heavily in a consistent $ 40 million
fund established by MorganCreekDigital. The fund focuses on crypto asset
investment and has a strong sense of risk aversion in pension funds. This
capital injection also represents a conservative financial institution Began to
accept crypto assets as a way to hedge hedges.
Development Trend
and Income Forecast of Crypto Asset Funds
1. Institutional investors' interest in cryptocurrencies will continue to increase
A May 2019 survey
by Fidelity investment showed that 47% of 441 US institutional investors
"considered digital assets as an innovative technology product." The
survey also showed that more than 70% of the respondents are optimistic about
digital assets, and 40% of the respondents said that they are open to investing
in digital assets in the future.
It is expected that
with the development of Facebook-led Libra and the central bank's digital
currency that may adopt blockchain technology, as well as the development of
derivatives on licensed exchanges such as Bakkt and CME, in 2020, institutional
investors will Interest in digital assets will continue to increase.
In the trend of digital asset development in full swing, the
digital asset exchange, as its indispensable platform, will have the following
development trends:
2. Revenue Forecast of Crypto Asset Funds
From experience,
the profit cycle of a risk fund is 52 months, and the return of the first year
will be three times that of the fifth year. It can be very optimistic to
predict that the crypto asset fund is still in its initial stage. The age is
about 16 months, so it can be guessed that now is the main profit cycle of
crypto asset funds, and it is time to get rich returns.
The future of the U.S. vs. China
Generally speaking,
small hedge funds usually do not become the focus of much attention, but crypto
asset funds are not. The US Securities and Futures Agency is preparing regulations
for token issuance and token issuance. Token issuance is tightly linked, so
they face tougher regulations than traditional hedge funds. For example,
Pantera Capital of the United States faced a high fine for investing in the
issuance of tokens at the end of 2018. Relevant institutions in the Chinese
market predict that next year, the number of China's crypto asset hedge funds
will surpass the United States as the largest country, and relevant regulations
are also in preparation for implementation.
Hedge fund competition is fierce. Whether it
is a hedge fund or a diversified business project, crypto asset funds have been
affirmed by a group of financial people. From this we can see that the prospect
of the blockchain market is very clear. As far as investment status is
concerned, crypto asset funds also belong to a “strange investment”, which is a
high-risk and high-yield. Perhaps after a few fluctuation cycles, crypto assets
will become another unique type of stocks, bonds and foreign exchanges. Investment
Products.
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