Biggest Crypto Hedge Funds and What They Tell About the Market

The total market detonator for all cryptocurrencies stands at $ 293 billion, and while much of this value has been generated by individual traders buying and selling their own private stashes of crypto, it ‘s besides largely the solution of adult investment funds. These are companies that have crypto assets under management worth adenine much as $ 1 billion or up, with most of them qualifying as the whales the cryptocurrency community frequently talks about after every market bowel movement. yet, digression from plainly trading Bitcoin, Ether or many other cryptocurrencies, funds besides often invest venture capital ( VC ) in blockchain — and crypto-related startups. This makes them doubly significant for the growth of the cryptocurrency industry, given that they support not only the currencies of the future, but besides the platforms and companies that will harness these currencies to build wholly newfangled fiscal ecosystems. That said, most of funds have been backed by traditional venture capital, such as Andreessen Horowitz and Sequoia Capital. So, even though they are supporting the emergence of the new crypto economy, it will be one that will have impregnable, foundational links with the fiscal arrangement — something many in the community think crypto will replace .

The top five

Obtaining authentic, standardized data on the assets under management of each major crypto fund is very unmanageable, if not impossible. consequently, this top five does n’t claim to be completely authoritative, given that it gleans available data from a assortment of sources published at a diverseness of times. however, it provides a reasonably full-bodied account of the five firms that are most probably the biggest funds operating in crypto today, in terms of digital assets under management and investments in crypto-related startups.

Digital Currency Group/Grayscale Investments

Digital Currency Group was founded in 2015 by Barry Silbert, who had previously invested in such early cryptocurrency companies as Coinbase, Ripple and BitPay. It already has invested in about 130 crypto-related projects, with the average size of seed rounds it was involved in between 2016 and 2018 being $ 3.24 million. Given that it has more investments than reasonably much every other fund in the diligence, it will be no surprise to hear that it has backed some of the most well-known crypto projects and companies, including Circle, Chainalysis, Blockchain, Shapeshift, Parity, Ledger, Luno, Kraken, Korbit and eToro. One of its investments is Grayscale, a subsidiary company of Digital Currency Group that invests directly in cryptocurrencies and digital assets. Grayscale announced in its Q2 2019 fiscal report that it had assets under management ( AUM ) worth $ 2.7 billion. As an indication of good how explosive the AUM figure can be, it besides revealed that this number had tripled since the beginning quarter of 2019, with its dedicated Bitcoin Trust having increased 300 % compared to the same time stopping point year. More revealingly, Grayscale ‘s latest report besides detailed how most demand for crypto investment comes from institutional investors — who have represented 84 % of its node base since July 2018. As such, it ‘s clear that, far from being a grassroots-based, decentralize ecosystem, crypto is already driven very much by adult business and big money .

Polychain Capital

Founded in 2016 by cryptocurrency investor Olaf Carlson-Wee, Polychain Capital is another crypto-focused hedge fund that however has back from noncrypto speculation capitalists. second at the end of 2014, it was reported that its AUM totalled $ 591.5 million, having plunged from a high at the end of 2017 of around $ 1 billion. however, data from Crypto Fund Research states that, as of June 2019, it has $ 967 million of cryptocurrency under management. As with most other major funds, it besides invests in blockchain- and crypto-related startups, with its match of investments coming to 37 ( according to Crunchbase ). These include Coinbase, Kik, Celo and dYdX, which Polychain has been able to invest in thanks largely to the raise of around $ 175 million for its guess capital fund at the end of 2018. One thing that ‘s worth noting about Polychain Capital is that it has received significant back for its venture capital and crypto funds from major VC firms. In 2017, it closed a $ 200 million financing round off in which Sequoia Capital, Andreessen Horowitz and Union Square Ventures all participated. It is, consequently, as much a product of traditional finance as it is of the new cryptocurrency ecosystem .

Pantera Capital

initially founded in 2003 and based in San Francisco, Pantera Capital was once a traditional investing store, although it shifted its focus in 2013 to cryptocurrencies and blockchain projects. According to a range of estimates, it has assets under management worth anything from $ 335 million to $ 724 million, although this may have fluctuated in holocene months. It has besides invested a considerable union in 72 crypto-related startups and projects, with it having raised at least $ 200 million in full from external venture capital in ordain to fund such investments ( $ 13 million in 2016, $ 25 million in 2017, and $ 175 million in 2018-2019 ). Pantera Capital has backers from outside the cryptocurrency industry, which is significant insofar as it indicates not only mainstream sake in crypto but besides the possibility that it may feel some kind of indirect pressure to invest in projects that would be more please to its fiscal backers. As for Pantera Capital ‘s general mentality, it may come as no surprise to hear that the fund is very bullish on the future of cryptocurrency and blockchain. In July, its CEO and founder, Dan Morehead, predicted that Bitcoin may hit $ 42,000 by the end of year and that it could climb ampere gamey as $ 356,000 in a couple of years. Despite this confidence, Pantera Capital is no strange to setbacks. For case, it admitted in December 2018 that it could be forced to pay refunds and fines for around 25 % of its initial coin oblation portfolio, given that approximately this proportion of the portfolio is likely in violating american securities laws. similarly, during the 2018 bear market, its digital asset fund ( i, its cryptocurrency fund ) lost about 77 % over the beginning 10 months of that year .

Galaxy Digital

Launched in New York City in 2018 by former Goldman Sachs spouse Michael Novogratz, Galaxy Digital is another hundred-million-dollar crypto hedge fund. As of the end of June 2019, its entire assets under management is $ 393.3 million, having dipped from May ‘s sum of $ 421.6 million. During 2018, the fund posted a net loss on its balance sheet of $ 272.7 million, largely because of the bear market and crumbling crypto prices. In accession to investments in cryptocurrency, Galaxy Digital has besides invested in around 20 crypto-related projects, including Bakkt, BlockFi, Ripple, Block.one, BitFury, BitGo and Bitstamp. As with the other funds on this list, such ventures have been made potential by investments from noncrypto backers. That ‘s because when Galaxy Digital launched in January 2018, it had not only $ 400 million of Novogratz ‘s own capital but besides raised a further $ 200 million by floating the ship’s company on Canada ‘s TSX commute.

Andreessen Horowitz

While it ‘s focused by and large on companies operating outside of the cryptocurrency sector, Andreessen Horowitz established its own crypto investment fund, called a16z. As of write, a16z claims that its fund is worth $ 350 million, while back in June 2018, when it was launched, the total came to $ 300 million. This is a big figure in the context of the crypto diligence, but compared to the $ 7 billion in assets that Andreessen Horowitz manages in entire, it seems a short more modest. however, it ‘s likely that the prize of a16z has increased since May. More importantly, however, is the fact that a massive investment store with $ 7 billion in AUM is besides matter to in crypto, which is a meaning right to vote of confidence for the industry. This vote of confidence does n’t derive only from conduct investing in cryptocurrencies, however. Andreesseen Horowitz and a16z have besides thrown speculation capital at a range of cryptocurrency startups, spanning Coinbase, Maker, Filecoin, dYdX and CryptoKitties. For case, in August 2018, the fund, together with Polychain Capital, invested $ 105 million in blockchain-based mottle inauguration Dfinity, having already contributed a compound $ 61 million in a previous attack in February of that year. even forgetting a16z, Andreesseen Horowitz is consequently heavily invested in the cryptocurrency industry and is one of the biggest funds operating in the space today. More encouragingly, holocene events indicate that it wants to involve itself even more heavily in the sector — as in April of this year, it announced plans to restructure its stallion business and register its employees as fiscal advisors. The reason ? This would provide it with the legal basis to engage more in riskier ventures, such as cryptocurrencies .

The rest

Of course, these are n’t the entirely adult investment funds operating in crypto to the tune of hundreds of millions of dollars. Others include :

  • Union Square Ventures, which has approximately $ 256 million of cryptocurrency assets under management, according to Crypto Fund Research .
  • Blockchain Capital, which launched in 2018 and raised $ 150 million for its new fund in March 2018, bringing its total AUM to $ 250 million .
  • IDG Capital, which launched in China in 1992 and invests in noncrypto arsenic well as crypto assets, and has $ 210 million digital assets under management .
  • BlockTower Capital, which launched in 2017 and has about $ 130 million in AUM ( as of December 2018 ) .
  • Boost VC, a California-based fund that launched in 2014, which has $ 95 million in AUM .
  • Fenbushi Capital, a China-based crypto fund that had $ 50 million in assets under management in early 2018 .

These are n’t the entirely significant funds working in the crypto industry. however, in a rigorous study published in May 2019, PwC and investment firm Elwood concluded that the huge majority of cryptocurrency investment funds are in fact reasonably small. For case, the review found that more than 60 % of 150 active crypto hedge funds have less than $ 10 million in AUM, with only 10 % of these funds managing more than $ 150 million. It besides found that the average crypto fund ’ randomness AUM is only $ 21.9 million, indicating that, despite a few big fish, much of the sector is populated by smaller firms trying to capitalize on the cryptocurrency market.

More disconcertingly is that the reputation besides notes a miss of independent government in the modal fund, given that alone 25 % have boards with independent directors, something that may be bad in cases of emergency, when clear, timid decisions are needed. similarly, over 90 % of crypto hedge funds do n’t use third-party research, suggesting that they suffer from a deficit of external, objective remark. inactive, while this might indicate that the crypto hedge investment company sector is immature and vulnerable, there was a pronounce increase in crypto hedge funds and the assets under their management in 2018, according to Morgan Stanley research. In 2014, for example, there were merely 31 such funds, while there were 220 by November 2018. More impressively, these funds had $ 7.1 billion in assets under management in July 2018, driven largely by demand and participation from institutional investors. It is for this reason that it would be unwise to predict that the importance and presence of crypto funds won ’ deoxythymidine monophosphate grow even further in 2019 and the years to come. As the forfeit overview has shown, they function as an essential medium between big institutional investors and the nascent cryptocurrency diligence. This means that the more they grow, the more crypto becomes part of the wide fiscal system .

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