The bubble of cryptocurrency hedge funds has finally started to give way and is crumbling under its own weight. The world of cryptocurrencies saw a huge boom in 2017 with cryptocurrencies here and there hitting new all time highs in their pricing. There were many trends which emerged last year with the increase of the inception of cryptocurrency hedge funds being one of them. Last year saw 150 cryptocurrency hedge funds come into existence with the rise of Bitcoin’s value that really brought the cryptocurrency world into the mainstream.
Decline In Bitcoin Reason For Caution
Since almost hitting the $20k mark, the price of Bitcoin is now barely half of what it was and it is seeing its lowest value since November of last year. Due to this sharp decline in the value of Bitcoin and other cryptocurrencies, there is more reason for investors to be highly skeptical about making the decision to invest in cryptocurrency hedge funds.
Cryptocurrency Hedge Funds Crumbling All Around
With so many cryptocurrency hedge funds around, the ability for these funds to raise a significant amount of capital from external sources has suddenly seen a downturn and at least 9 cryptocurrency hedge funds are reported to have shut down in light of recent conditions in the cryptocurrency world.
Some of the biggest cryptocurrency hedge funds like Crowd Crypto Fund and Alpha Protocol have also seen the brunt of this change in the cryptocurrency ecosystem. The former went as far as deleting their social media profile presence and even deleting their website while Alpha Protocol made the announcement that it will be refunding the investors considering how bad things are going right now.
This Year Is A Far Cry From The Last
The reason why there are so many cryptocurrency hedge funds and still quite a few seeing inception in 2018 is to do with the fact that the cryptocurrency hedge funds enjoyed plenty of success last year. Some of the cryptocurrency hedge funds even saw 1000% profits being made. That probably led to so many eager investors lining up to invest because of the FOMO (Fear Of Missing Out) on a lucrative opportunity to make fortunes and retire early. After three months into the new year, at least 9 of the cryptocurrency hedge funds have been seen shuttering down with a decline of 23 percent in the returns.
Cryptocurrency Hedge Funds In Trouble
Lex Sokolin is the global director of Autonomous Research LLP’s fintech strategy. According to him, by the end of 2018, we are very likely to see a tenth of all the cryptocurrency hedge funds which have sprung into existence in recent years close down. It is estimated that at the current state of affairs, barely fifty of the cryptocurrency hedge funds might actually be able to raise enough capital funding to remain a sustainable option when it comes to profiting the institutional investors who have staked a claim in them. All of the rest are not going to make it.
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