Crypto hedge funds closing down according to a report by Bloomberg. According to experts, instability is bad for business in the long run.
“Just wait until institutional investors jump in” has long been a rallying call for the cryptocurrency faithful.
It appears they’ll need to keep waiting a little longer, with nearly 70 crypto-focused hedge funds that mostly cater to pensions, family offices and wealthy individuals closing this year, according to San Francisco-based Crypto Fund Research. The number of new fund launched is less than half the amount started in 2018, the researcher said.
The retrenchment comes amid another volatile year for cryptocurrencies, with Bitcoin and its peers once again posting the kind of swings that make institutional investors uncomfortable. While high-profile advocates such as Fidelity Investments and the New York Stock Exchange’s parent company plow ahead with initiatives seeking to make it easier to own digital assets, their potential customer base seems to be disappearing at a quick clip.
“The market is definitely retail driven and will remain so for the foreseeable future,” said Nic Carter, co-founder of Boston-based crypto market tracker Coin Metrics.
At the same time, one of the other projected lures for professional money managers — regulated futures — continue to be greeted with a muted response.
Trading volumes on Bitcoin futures on exchanges like Chicago Mercantile Exchange and Bakkt, which began offering futures that settled in Bitcoin in September, have increased, but are still relatively low. CME’s daily volume this year averaged about 32,500 Bitcoins, or $236.8 million at current prices, with more than 3,500 individual accounts trading, the company said in November.
That’s just a drop in the bucket compared with the volume on less-regulated trading platforms outside the U.S. Aggregate Bitcoin futures volume — mostly on exchanges letting any retail speculator buy contracts with as much as 125 times more money than they put down — exceeds $10 billion a day, according to tracker Skew.com.
That hasn’t stopped Fidelity from joining long-time crypto advocates such as Michael Novogratz and the Winklevoss brothers from building out services such as custodial storage to make institutional investors more comfortable owning digital assets. Fidelity said recently that growth is exceeding internal expectations without providing specifics.
“It’s not a stampede by any stretch, but people are all doing their work,” Novogratz, chief executive officer of Galaxy Investment Partners LLC, said in a recent interview. “The next wave will come from the wealth advisers, maybe with endowments and small foundations participating.” In November, Galaxy launched two new Bitcoin funds for institutional investors, such as high net worth individuals.
$9 Billion in Bitcoin moved
$9 Billion has been moved in Bitcoin on the mainnet according to reports online. The news is a boost for the crypto community as it seems that bitcoin is becoming mainstream.
Bitcoin’s high transaction volume was pointed out by Rafael Schultze-Kraft, the co-founder of on-chain market intelligence firm Glassnode. In a tweet on Dec. 4, he claimed that such a high hourly transaction value was a first for the network:
“It’s the highest hourly USD transaction volume in Bitcoin’s history.”