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.

Weekly Newsletter

Grayscale Digital Asset Manager Sees 84% of Inflows From Institutions

Neil Dennis

Grayscale, the digital assets fund manager, revealed its strongest quarterly inflows in a year during the second three months of 2019, as 84% of investments in the period came from institutions.

The company, with manages its flagship Grayscale Bitcoin Trust, said across all its investment products it raised $84.4 million - a near 100% increase in quarter-on-quarter product inflows - with the majority - 84% - coming institutional investors, dominated by hedge funds.

The company said in its quarterly report:

This quarter, institutional investors comprised the highest percentage of total demand for Grayscale products since we began publishing this report in July 2018.

Bitcoin Trust Leads the Way

Primary among these, as the price of bitcoin rallied to 18-month highs during the quarter, was the flagship Bitcoin Trust fund, with average weekly investment into the vehicle hitting $4.1 million. Grayscale praised all of its investment products, which all made positive quarterly contributions for the first time. The report said: 

The digital asset market rebound gained momentum in the second quarter as all ten investment vehicles in the Grayscale family of products generated positive performance net of fees.

Total assets under management at Grayscale nearly tripled from $926 million to $2.7 billion thanks to the digital asset market resurgence. The company added:

This growth demonstrates that the recent rally in digital asset prices is supported by fresh investment.

Growth in Altcoin Products

Grayscale also noted "early signs" that an altcoin investment cycle could be starting as these products accounted for 24% of fresh capital, led by inflows into its Ethereum Trust - $14 million - and Ethereum Classic Trust - $5.5 million.

The company said:

While most of the capital invested into Grayscale Ethereum Trust came in June, Grayscale Ethereum Classic Trust saw twelve consecutive weeks of new inflows through the end of the quarter.