How a Crypto Hedge Fund can change the Way Investors Invest in Digital Assets
As Bob Dylan said, The times they are Changin’. They are changing indeed, especially in the tech industry. Crypto Hedge Fund is the next big thing in tech and its growing tremendously as the cryptocurrencies gain value. 2017 was the year of tremendous break-out growth in cryptocurrency market, from astronomical value growth to new and exciting projects entering the space. Whereas market corrections, natural ebb, and flow in value, are expected in the future. This highlights a very promising future for blockchain and cryptocurrencies. Millions of dollars have been invested in cryptocurrency funds to date and this trend will likely increase in the coming future.
New cryptocurrency hedge funds are being introduced every week. Hedge fund managers are quickly realizing the potential of cryptocurrency asset classes and their value for the potential investors.So if you haven’t heard of cryptocurrency funds, then it is about time that you learn and understand their importance.
There are 2 major Bitcoin investment categories that you should know of:
- 3 ETFs (US-based)
- Hedge funds covering every cryptocurrency asset
Now, before we go on about the cryptocurrency funds, let’s look into the definition of it to understand what these funds stand for.
What exactly is a Crypto Hedge Fund?
Crypto Hedge Fund is pretty much like any conventional hedge fund: it allows you to invest in different underlying securities and create large groups of investments. Except in this case the assets are digital in nature.
In other words, Cryptocurrency fund is a pool of managed capital that is available for investment for investors. The managed capital includes publicly traded cryptocurrency assets, which include Bitcoin, various digital tokens, Ethereum and 500+ other coins that are qualified to be publicly tradable.
By a rough estimate, these funds have more than 20 billion invested in different cryptocurrencies.
It is important to mention here that venture capital funds there are usually invested in shareholder equity, such as blockchain startups, do not qualify for cryptocurrency funds.
Did you know Bitcoin has recently hit $100 Billion market capitalization?
At this point, there are mainly two kinds of crypto hedge funds, let’s call them Hedge Fund A and Hedge Fund B.
Hedge Fund A exclusively manages cryptocurrency portfolios, and the Hedge Fund B manages cryptocurrency with other assets creating a mix of conventional and digital assets.
Hedge Fund A aims to maximize the returns by introducing new coins in the portfolio, while the Hedge Fund B maximizes result by introducing different assets to the portfolio which makes it much more risk-averse than the Hedge Fund A. It is also less profitable as compared to Hedge Fund A given that the cryptocurrencies continue to rise in value as compared to other tradable assets.
Some of the most known Crypto Hedge Funds include:
- Logos Fund – a German-based bitcoin and mining fund.
- Global Advisors – a Jersey-based bitcoin fund.
- Polychain – a US-based Digital fund.
- Metastable – a US-based altcoins and bitcoin fund.
This is just the beginning for crypto Hedge Funds; in the near future, you will see a lot more Hedge Funds for the cryptocurrency and a lot more option to diversify your digital portfolio.
Benefits of Crypto Hedge Fund
Individuals who invested in Bitcoin 5 years ago and are already cryptocurrency millionaires have a great opportunity with Crypto hedge funds. They can make accounts with various Crypto hedge funds and carefully invest cryptocurrency to maximize the returns. Remember that Bitcoin used to be only $ 12; today it stands at around $ 13,000.
While Crypto hedge funds can offer a great value to the early buyers, there’s still a great idea for those looking to make an investment today. As we have learned earlier in this article that cryptocurrencies are on a stellar rise, it is safe to say that investing in a Crypto Hedge fund will promise tremendous result.
It is true that you cannot predict the value of cryptocurrencies in the future but if we will look at the results from the past few years, we can safely conclude that cryptocurrencies will definitely have a substantial future in a time where technology surpasses traditionality.
So if you are looking to invest in digital assets then Crypto hedge funds are so far the best way to help you build a profitable portfolio that is all set for the future.
How Crypto Hedge Fund differs from Conventional Hedge Funds
Crypto hedge funds make a very small portion of the Hedge Fund industry. However, the Crypto Hedge Funds are rising gradually as different cryptocurrencies become mainstream. We might see cryptocurrency ATMs throughout the country very soon.
Traditional fund managers are quickly adapting to Digital Asset Management to keep up with the technological revolution. Many hedge fund managers are considering cryptocurrency as a part of their financial business model.
Now you may think why there is a need for Crypto Hedge Fund when you can easily trade on Cryptocurrency Exchange?
Simply relying on the exchange can cause a Mt. Gox disaster. A crypto Hedge fund is a safe middle ground that ensures security for your investment.
Final thoughts: If you are not a cryptocurrency holder today, you will likely be in the coming few years. And when you do, you will need a reliable way to invest in digital assets. Start researching Crypto Hedge Funds today and keep an open mind about the ones that come down the road, and prepare for the future investments!
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