Reality Shares Set To Launch $100 Million Crypto Hedge Fund, After Its First Ever Blockchain ETF

Omar Faridi
  • Asset management firm Reality Shares is planning to launch a $100 million crypto hedge fund.
  • The investment firm's new crypto hedge fund announcement follows the successful launch of its blockchain-ETF in January.

Reality Shares, an asset management firm and blockchain exchange-traded fund (ETF) issuer, is reportedly planning to launch a $100 million crypto hedge fund.

Notably, soon after the small asset manager introduced its blockchain-ETF (Reality Shares Nasdaq NexGen Economy China ETF) in January, the investment company’s assets under management increased by over $100 million.

Over 100 Crypto Hedge Funds In 2018

According to a source working closely with the privately owned firm, $25 million has been committed so far to the crypto hedge fund, which is capped at $100 million. Reality Shares’ fund preparations come at a time when over 100 cryptocurrency hedge funds are expected to be launched in 2018, as noted by Crypto Fund Research.

Despite the crypto market shedding over $600 billion since January, it appears that the capital pouring into the volatile digital currency ecosystem is still on track to match, or even exceed, the 150+ crypto hedge funds launched last year.

Additionally, Business Insider noted that California-based Reality Shares’ crypto hedge fund will be “a mix of arbitrage, venture, and directional strategies” and it will join a market of over 366 crypto-asset funds. Moreover, the $100 million investment is also part of the asset manager’s focused expansion efforts into the crypto market.

Only 28 Crypto Hedge Funds Over $100 Million

While it might seem that there is considerable investor interest, the crypto industry is still “really struggling” with capital, as pointed by blockchain investor Meltem Demirors. Notably, a closer look at the numbers by Crypto Fund Research indicates that only 28 crypto hedge funds currently have over $100 million under management.

But when looking at the bigger picture, the entire market capitalization of the crypto market was only around $20 billion in January 2017. Since then, the total market cap of all cryptocurrencies has increased by 10x to currently over $200 billion. However, many market watchers such as Goldman Sachs’ investment advisors have said that cryptocurrencies “will not retain value”, as its recent economic-outlook report tended to focus more on the significant drop in crypto prices, after reaching all-time highs in December 2017.

Wall Street Firms Getting Serious About Crypto

Interestingly, even though Goldman Sachs has been critical of digital currencies, it is still reportedly planning to launch a crypto trading desk. Meanwhile, Intercontinental Exchange (ICE) also recently announced that it will be launching its own digital asset trading platform called Bakkt.

These developments will be encouraging to the crypto-economy at a time where crypto-assets are sliding across the board, as it suggests that traditional financial market institutions are beginning to take the industry more seriously.

CNBC’s Brian Kelly Explains the ‘Huge Difference’ Between Libra and Bitcoin

On Tuesday (June 18), the day that Facebook unveiled Libra, its new global cryptocurrency,  CNBC's Brian Kelly, who is also the founder and CEO of crypto hedge fund BKCM LLC, explained the "huge difference" between Libra, which he thinks of as digital fiat, and Bitcoin, which he thinks of as digital gold, and said that this was the reason that he does not consider Libra to be a real cryptocurrency.

In a segment titled "Facebook Goes Full Crypto" on CNBC's "Fast Money" show, the host, Melissa Lee, asked Kelly to explain why he does consider Facebook's Libra to be a real cryptocurrency (like Bitcoin or Litecoin).

Kelly started his "crypto class" with a super simple explanation of how Libra works from the point of view of a user:

  • You exchange some of your local fiat currency (say, dollars) for Libra tokens
  • You can then pay for goods/services using your Libra tokens
  • Whenever you want, you can convert some/all of your Libra tokens back to fiat currency

This all sounds fine, but Kelly says that one unspoken truth here is that as a user you need to trust the Libra Association to do everything behind-the-scenes correctly and honestly. In contrast, he says, a real cryptocurrency, such as Bitcoin, is trustless. As Satoshi Nakamoto explained in the Bitcoin white paper (which is titled: "Bitcoin: A Peer-to-Peer Electronic Cash System"), Bitcoin is "an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party."

According to Kelly, the main difference between Libra and Bitcoin is that Libra is trying to be essentially digital fiat (although he used the term "digital dollar" because he was addressing mainly a U.S. audience) and so it has all the "characteristics" of traditional fiat currencies, whereas Bitcoin is "digital gold" (and it is "probably a lot better than gold") and unlike Libra does not need a trusted third party, and to him "trustlessness" is what makes crypto "revolutionary". He said that this is why we can say that Libra "keeps the existing system" while Bitcoin "does away with it."

Kelly went on to say that Libra is not substantially different from systems such as PayPal or Venmo; it's the "next iteration of them". 

Meanwhile, David Marcus, who is the Co-Creator of the Libra currency and the Head of the Calibra project (a custodial wallet for Libra) at Facebook, thinks that it is wrong to compare Libra and Bitcoin since they do not belong to the same category:

One of the people who replied to Marcus' tweet was Dr. Saifedean Ammous, an economics professor and the author the book "The Bitcoin Standard":

 

Featured Image Credit: Photo via Pexels.com