Nearly 70 Crypto-Focused Funds Closed This Year as Institutional Investors Tread Carefully

Data from the San Francisco-based Crypto Fund Research has shown that nearly 70 cryptocurrency-focused hedge funds have closed this year, while the number of new funds opening is nearly half of what it was in 2018.

The funds reportedly mostly catered to pensions, family offices, and wealthy individuals. Region-wise, data shows North America leads in the number of crypto fund closures with 28 shutting down this year. Europe followed it with 23 closures, and the Asia-Pacific region came in third with 14 closures.

Bloomberg reports that the volatile nature of cryptocurrency prices and regulatory uncertainty surrounding the nascent space have been keeping institutional investors at bay. Nic Carter, the co-founder of Boston-based crypto market tracker Coin Metrics, was quoted as saying the market is “definitely retail driven and will remain so for the foreseeable future.”

The news outlet noted, however, that a Fidelity survey has shown institutions’’ investments into cryptocurrencies are likely to increase over the next five years, and that the CEO of Galaxi Investments Mike Novogratz has said in a recent interview he believes the next wave of adoption will come from “the wealth advisers, maybe with endowments and small foundations participating.”

Spencer Bogart, general partner at San Francisco-based Blockchain Capital, pointed out it’s a matter of expectations, as while to some the levels of institutional adoption are “disappointing or underwhelming,” to him they are a “radical success.” He said:

To me, the fact that there is any institutional adoption for Bitcoin only 10 years into existence is a radical success and beyond what anyone could have imagined just 3 or 4 years ago.

Data from the Crypto Fund Research’s website shows there are currently a total of 804 cryptocurrency-focused funds, 355 of which are hedge funds, and of are venture capital funds. Most crypto funds – 403 – have less than $10 million worth of assets under management, while only 57 have over $100 million under management.

Featured image via Pixabay.

Gold Has Entered All-Time High Territory, Goldman Sachs Still Hates It

Colin Muller

After a powerful gold (XAU) runup in the age of COVID-19, the precious metal has re-entered its all-time-high zone. According to a leaked slide deck, infamous investment firm Goldman Sachs is still quite cold on gold (as it is on Bitcoin).

Goldman’s presentation came a couple of days ago (May 27), with a focus on gold, Bitcoin, and general inflation.

In short, they are generally not enthralled with the shiny, somewhat useful metal as an investment over time; only in specific circumstances did GS find that gold outperformed dollar inflation, with other asset classes like equities and real estate reliably beating it.

Goldman Sachs did note, however, that while gold generally does not offer “reliable downside protection,” in certain select circumstances—giving the example of the 1973 crisis caused by the Middle Eastern oil embargo—gold can provide “tremendous downside protection” (i.e., a hedge against other falling assets).

Looking at the charts, though, we may be seeing one of gold’s exceptional periods. The shiny metal has been reliably uptrending throughout 2019, and the onset of the covid-financial-crisis has done nothing but push it higher.

back at the highsXAU chart by TradingView

It has in fact entered the general zone of its previous all-time-high, set down in 2011. A rejection around here is entirely possible; but given the exceptional circumstances in the global economy at the moment, a break of this level cannot be discounted entirely.

The views and opinions expressed here do not reflect those of and do not constitute financial advice. Always do your own research.

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