CRYPTOCURRENCY INVESTMENT FUNDS

DO CRYPTOCURRENCIES HAVE STAYING POWER?

Cryptocurrencies today may seem like the latest cyber-fad, but their popularity is increasing. This “trend” has longevity, and it may be time to get on the bandwagon early.

We are seeing much interest from traders and asset managers alike wanting to take advantage of the volatility that this digital asset class offers. It is this volatility that attracts investors for its potential for extraordinary profits.

RAPID GROWTH

Cryptocurrencies have grown incredibly fast in the modern financial market. Decentralized technology, the foundation upon which they are built upon, can be credited for the popularity of cryptocurrencies. Because of this, cryptocurrencies are available to everyone; you do not have to be a City trader to participate in the cryptocurrency explosion.

Currently, it’s estimated that the total market value of all cryptocurrencies is in excess of USD 420 billion dollars. Digital currency markets have grown phenomenally in the last eighteen months. In addition to a boom in cryptocurrency coins and tokens, we have also observed an explosion in the number of Crypto Exchanges and Broker platforms.

NO MORE ISSUES WITH CREDIBILITY

More than a year ago, most major banks and trading institutions were expecting the crypto phenomenon bubble to burst. Now, these same major financial institutions are the ones driving this phenomenon even further.

As expected, there are been severe price drops in the last few months across an array of cryptocurrencies. However, this is the kind of volatility that attracts the institutional investor to the crypto arena.

Additionally, a certain degree of creditability has now been afforded to cryptocurrencies in recent times with the CME and CFE launching futures contracts on Bitcoins.

The global brokerage fraternity has also thrown their collective hats in the ring with various forms of derivatives which are links to the volatility of the major cryptocurrencies.

Many of the larger banking institutions are now showing serious interest in the cryptocurrency space having previously denounced the digital asset class as unregulated and unfit for purpose. There is speculation that some of the major banks will begin to issue their own cryptocurrencies.

A recent survey by Thomson Reuters, the mass media and information firm, suggested that approximately one in five institutional financial firms are considering starting to trade digital assets in 2018.

INCREASED INTEREST IN CRYPTO

Since the beginning of 2018, we have observed a marked increase in inquiries on a nearly daily basis from cryptocurrency traders and managers that wish to start a “crypto fund.”

Even existing client-funds are beginning to add cryptocurrencies, such as Bitcoin, to their investment portfolio. Interest is coming also from the traditional asset managers who are actively exploring the digital asses trading environment. Managers and traders now consider cryptocurrencies as just another asset class — but, most importantly, an asset class that provides daily volatility with trading profit potential.

In the past, the major fund jurisdictions and regulators previously outlawed cryptocurrencies. They would not entertain the normalization of cryptocurrencies as an asset class. This is now changing, with several EU jurisdictions not only embracing blockchain technology but also normalizing the digital currencies as an asset class. Malta, Gibraltar and Switzerland are encouraging banking and asset management institutions to be open-minded towards cryptocurrencies.

INVESTMENT OPTIONS

There are a variety of strategies when it comes to creating “crypto funds.”

Some funds are replicating the cryptocurrency benchmark indices, such as the benchmark CCi30 index. Others are concentrating on ICO issues. Some are looking at crypto-mining, either by providing funding to mining operations or providing venture capital for equity interests. Others adopt a multi-strategy approach.