Can Institutional Investors Increasing Bitcoin Interest Revive the Crypto Industry?
The majority of people involved in trading digital assets believe that the entry of institutional investors will have a huge and positive impact on the crypto space. Bitcoin ETFs were expected to spur this development, but no significant progress has been made on that front. Regardless, it appears that institutions are finally venturing into the crypto sphere, going by the increased number of hedge funds showing their interest in cryptocurrencies in recent months.
According to a report published by Crypto Fund Research, large companies are delving into crypto trading. The report states that she is currently over 700 investments fund focused on digital currencies and blockchain technology. Most of these are venture capital funds, followed by hedge funds and hybrid funds.
Furthermore, the report details that the majority of the funds were introduced in 2017 and 2018, with 224 and 234 respectively. This year, however, the number has dropped to 145 and is not expected the record set in the two aforementioned years.
Although they are many in number, most of the crypto and blockchain investment funds are small. Over 50% have less than $10 million worthies of under assets under management. Only a few such as Galaxy Digital Assets, Pantera Capital and Polychain Capital have an asset base worth over $100 million. This means that crypto investment funds make up a paltry 1% of the total hedge fund assets. However, the steady increase in assets under management could improve this figure in the coming months.
Another development highlighted by the report is the increased popularity of venture funds. Indeed, they are now the preferred private investment fund, surpassing hedge funds. Existing fintech venture capital firms are increasingly setting up blockchain startups that come with their own blockchain funds. Also, blockchain companies are launching private equity funds upon reaching maturity.
In addition to trading and investing in various coins, institutional investors have introduced many ventures and private equity funds into the crypto space. Their participation will certainly play a big part in the predicted rise in the value of various cryptocurrencies as well as promote the adoption of digital assets.