Despite the dominance of bears in the market for the past few weeks, along with the recent decline in the Bitcoin price, cryptocurrency as an industry has reached a new milepost. The insignificant growth of hedge funds invested in the crypto assets has not prevented the number of cryptocurrency funds from reaching a new height.
Autonomous Next, a cryptocurrency analytics firm, reported that the number of cryptocurrency funds has escalated to above 300, with exactly 312 crypto firms operating successfully in the beginning of July.
It was published that there was an increase of 24% considering the beginning of the year, when the number was 251. It has swelled 457% from the 56 funds that were functioning in 2016.
The special mention is of the fact that most of the firms had entered the market with their funds in the second quarter, as only 20 of them had joined in the beginning of the year. 9 funds succumbed to the volatile market conditions that were difficult to bear for even the big names in the crypto industry, and exited the markets.
The research conducted by Autonomous Next also reported that there was a high correlation between increase in number and Bitcoin appreciation. In spite of the declining price of Bitcoin, the number of crypto funds continued to increase owing to the buzz around the initial coin offerings (ICOs).
These 312 funds collectively account for the capital of $7.5 billion and assets worth $10 billion. However, it is worth noting that the concentration of this capital is among the largest funds. The top 10 funds constitute the total of 43% and the top 50 have a share of 80%. Only the major funds in the industry have the capital to thrive, or at least survive, during times like these when the market shows bearish bias.
The growing industry also correlates with the number of investment options available. Like the traditional financial markets, a variety of options are being developed for the investors keeping their interests in mind. In conclusion, the increasing number of funds is the sign of the nascent industry growing and maturing.