During 2017, the surge in prices in the cryptomarket triggered euphoria and curiosity among many investors who had not previously looked at crypto-currencies, causing a flood of hedge funds to facilitate investments in this market. But with the sharp drop in crypto asset prices in recent months, many of these funds have been negatively affected, even having to close operations.
According to Bloomberg reports, at least 9 funds have had to close their doors so far this year. And some of them, such as Crowd Crypto Fund, have closed their websites and accounts on Twitter and Facebook. For example, the Alpha Protocol fund decided to publish a message explaining that due to regulatory and market risks they decided that a refund to their private contributors was their best option.
In recent months the cryptomarket has experienced a clear downward trend. At the time of writing, the price of Bitcoin, the main currency in the market, was $7,024.30, one of its lowest levels since the beginning of last November.
This depression in the market has hit the funds that invest in crypto-currencies hard. In fact, according to data from EurekaHedge, the return that these funds have given their investors so far this year is -23.31%. Therefore, the fact that some hedge funds decided to close their doors is no surprise; and some other funds, although they have not decided to close deals, have been forced to take action in the face of this bear market.
Such was the case with Polychain Capital, one of the largest hedge funds involved in cryptomarkets, which decided in January not to proceed with its public offering (IPO).
Also, the creation of new hedge funds has decreased significantly so far this year. Compared to the 167 funds that were launched in 2017, 20 funds launched in 2018 are quite low. This, according to Bloomberg sources. It seems that the bear market has dampened investor sentiment a bit and therefore there is a decrease in the amount of new funds entering the market.
However, this does not mean the end of investment funds related to the blockchain ecosystem. There are still optimistic voices in this part of the financial markets. For example, the president of CBOE Global Markets, Chris Concannon, who stated a few days ago that the arrival of ETFs is the next step to be expected in the evolution of Bitcoin. Also, others argue that the revolutionary potential of blockchain technology will inevitably drive the price of cryptomoney in the future.