Cryptocurrency hedge funds could face a transformative year in 2018 as sources warn 10 percent could close in the next eight months.
Bloomberg reported April 2 that lower prices across cryptocurrency assets have accompanied a marked slowdown in the number of hedge funds opening.
In 2017, over 170 began trading, while in the first three months of 2018 only 20 new players have appeared.
At the same time, several funds have already closed, with one, Alpha Protocol, directly citing “potential regulatory and market risks” in its decision to refund investor deposits.
“New capital has slowed, even for a higher-profile fund like ours,” Kyle Samani, co-founder of US-based fund Multicoin Capital, told Bloomberg in an email.
Not only market health, but regulatory uncertainty appears to be driving shifts in sentiment. As Cointelegraph reported last month, US regulator the Securities and Exchange Commission (SEC) is reportedly preparing to inspect as many as 100 hedge funds.
“We still don’t have the complete clarity as to whether we’re actually completely kosher,” Bloomberg’s Joe Weisenthal added in comments about the general feeling among fund operators in the US at present.
While there are still more than 220 funds in operation, some sources fear that only 50 will be able to raise sufficient capital to serve institutional money in the long term.