Crypto Funds Closures on the Rise as Institutional Investors Sit On The Sidelines
2017’s bull market was deemed the reason that investors had been introduced to crypto funds. Compared to 2016, 2017 saw tripled increase in the launches, where the trend continued for most of 2018. However, 2019 witnessed a significant drop, at least by 50 percent since 2018.
What happened? For the longest time, there was a huge dependence on institutional investors’ participation in the crypto sphere, as they are considered critical in maturing the market, and stabilizing volatility. However, individuals have been sitting on the sidelines and will continue to do so until they find the right time to jump right in.
Since 2018, the market has witnessed waves of volatility with intense swings, so fear of the risk is normal. When assessing the plummeting by region, most of the closures were observed in North America (28), followed by Europe (23), Asia/ Asia Pacific (14) and Other (3).
What do the numbers look like now after the drops? As per Crypto Fund Research, there are 804 crypto funds, 355 crypto hedge funds, and 425 crypto venture capital funds.
This is not to say that firms are completely shying away, as the likes of Fidelity Investments and New York Stock Exchange’s parent company have been trying to make owning digital assets a simple task. In addition, firms run by the Winklevoss brothers and Novogratz’s Galaxy Investment Partners continue to focus on launching funds despite the plummets.
On that note, institutional investors cannot be blamed for not feeling comfortable in taking the risks, as most of the problems appear to stem from regulatory uncertainty, which on its own can be the final say for most investors.
All-in-all, it looks like the wait will have to continue, but according to the General Partner at Blockchain Capital LLC, Spencer Bogart, the fact that institutional adoption for Bitcoin was reached in a span of 10 years is a celebration on its own. Evidently, there is still some good in all the bad observed.