From January to March, 25 cryptocurrency-oriented venture and hedge funds appeared on the market, which is the highest figure since the second quarter of 2021. This is reported by Bloomberg with reference to data from Crypto Fund Research.
In 2024, the number of new foundations and organizations has almost doubled the number of closed ones. During the bearish year of 2023, this ratio was almost the same.
The bankruptcies of hedge funds Three Arrows Capital and Alameda Research have opened up opportunities for new players to come as the market recovers, said Joshua de Vos, head of research at CCData. He noted that the "surviving" organizations received double-digit and three-digit returns.
"Given the cyclical nature of the cryptocurrency, it is highly likely that new crypto funds will appear that will help fill the void left by some companies, as well as new opportunities," de Vos added.
According to Galaxy VisionTrack, the total market for specialized cryptocurrency hedge funds grew from $16.3 billion in early January to $21 billion by the end of March.
Among the new investment organizations, journalists highlighted:
Frachtis by Chorus One CEO Xavier Meehan;Topology by Casey Caruso, ex-partner of the venture capital firm Paradigm;Nazare Venture from the founder of Orchid Labs startup Stephen Waterhouse.Increased competition
Bailey York, head of data at VisionTrack, stressed that the first quarter was "a good time for many actively managed fundraising strategies."
However, the launch rate of new funds is now significantly lower than during the "renaissance" of 2017, when an average of 73 new organizations were launched every three months.
Since the beginning of 2024, 631 venture deals have been recorded for a total amount of $2.62 billion. Over the same period last year, startups raised $2.9 billion in 781 rounds.
In the first quarter of 2021, the figure reached $7.2 billion with 817 transactions.
In many ways, the revival of investment crypto funds is due to the January launch of spot bitcoin ETFs in the United States and the May approval of applications for a similar Ethereum-based product.
"The launch of cryptocurrency hedge funds is likely to be somewhat smaller in volume than a couple of years ago. This is partly due to the fact that cryptocurrency ETFs have absorbed part of the market," explained Josh Gnaizda, CEO of Crypto Fund Research.
The founder of Frachtis stressed that it is "still quite difficult for foundations to raise money." According to him, there are not many new players in the market who are willing to invest.
However, Waterhouse of Nazare Venture disagreed with his conclusions.:
"I would say that in 2014-2016, when I worked at Pantera, it was more difficult to raise money. Then the main question was: “Does this even make sense?Now the question is completely different: "What will actually happen next and what's the big deal?""
Recall that at the end of the week from May 11 to May 17, the inflow into cryptocurrency investment products amounted to $ 932 million, according to CoinShares.
By the end of the first quarter of 2024, the hedge fund Millennium Management owned spot bitcoin ETFs worth $1.94 billion.