With the growing popularity and acceptance of cryptocurrencies, a lot of venture capital firms and hedge funds have been pouring hundreds of millions of dollars into crypto assets and blockchain startups. Crypto hedge funds invest in digital currencies directly or they buy altcoins during ICOs. Sometimes they also invest in blockchain-related startups and technologies. Here we take a look at the top 10 largest crypto hedge funds in the world.
Unlike crypto ETFs, index funds, and exchanges, hedge funds take a more active approach to identify and invest in opportunities. Hedge funds have a team of experts to analyze opportunities. They use a wide variety of strategies to maximize returns while minimizing the downside risk. Crypto hedge funds are much smaller than the traditional hedge funds, but they are growing in size rapidly.
According to Crypto Fund Research, there are 355 crypto-focused hedge funds worldwide. Most of them have less than $10 million in assets under management. Only a small number of crypto hedge funds have above $100 million in assets. Amid the extreme volatility, as many as 70 crypto-focused hedge funds closed in 2019. Most of them were in the US and Europe.
The ranking is based on data from Crypto Fund Research, the official websites of the funds, and other sources.
Founded by Jeff Nabers and Ryan Ballman, CoinCapital is a hedge fund that focuses on cryptocurrencies, ICOs, and blockchain startups. It enables individuals, institutions, and startups to invest in crypto assets. Individual investors with a net worth of at least $2.1 million can invest in the hedge fund.
9- Multicoin Capital
Multicoin is a $100 million crypto-focused hedge fund. It has the backing of venture capitalists like Andreessen Horowitz and Union Square Partners. Multicoin uses both long and short strategies to trade in at least 11 publicly-traded cryptocurrencies. The hedge fund has also invested in about two dozen blockchain startups. Binance has turned out to be one of Multicoin’s most successful bets.
Founded by Cedric Jeanson in 2014, BitSpread is a London-headquartered crypto hedge fund. It’s a market-making fund that profits by trading Bitcoin, Ripple, Ethereum, Litecoin, and other crypto assets. On average, BitSpread performs more than 5,000 transactions a day, trading about $1 billion worth of cryptocurrencies every month. It has more than $100 million in assets.
7- BlockTower Capital
BlockTower Capital was founded by former Goldman Sachs executive Matthew Goetz in 2017. As per CryptoFundList, it has at least $150 million in assets. The hedge fund has attracted funding from VC heavyweights like Union Square Ventures and Andreessen Horowitz. BlockTower focuses on thematic investments and event-based trading strategies.
6- Altana Digital Currency Fund
ADCF is an actively-managed, multi-asset cryptocurrency hedge fund. Founded in May 2014, it was Europe’s first crypto fund. The fund claims to have returned more than 1400% net of fees in the last five years. It uses both long and short strategies to take advantage of volatility to maximize investor returns. It has an estimated $450 million in assets.
5- Galaxy Digital Assets Fund
Founded by Michael Novogratz, New York-based Galaxy Digital Assets Fund debuted on the crypto landscape in 2018. The hybrid hedge fund invests in digital currencies, ICOs, and related companies. According to CryptoFundList, it launched with $500 million in assets. It had also planned to raise at least $200 million. In 2018, the fund suffered a loss of $273 million as crypto prices crashed. The company also lost $68 million in the third quarter of 2019.
4- Alphabit Fund
Domiciled in the Cayman Islands, Alphabit Fund is a hybrid between a hedge fund and an open-ended mutual fund. It was launched with just $1 million of seed capital. The hedge fund raised an estimated $300 million from investors in 2017. According to estimates by Crypto Fund Research, Alphabit has more than $500 million in assets. The fund aims to outperform the price of Bitcoin while generating lower volatility.
3- Polychain Capital
Olaf Carlson-Wee, the former Head of Risk at Coinbase, founded Polychain Capital in 2016. This crypto hedge fund has raised funds from Andreessen Horowitz and Sequoia Capital. The San Francisco-based fund had $967 million in assets at the end of June 2019, according to Crypto Fund Research. The multi-strategy hedge fund invests only in cryptocurrencies, not in companies.
2- Pantera Capital
Pantera Capital was launched in 2003 as a traditional investment fund. It shifted its focus to cryptocurrencies in 2013 with the launch of Pantera Bitcoin Fund. The multi-strategy hedge fund has an estimated $810 million in assets, according to CryptoFundList. Pantera invests in cryptocurrencies, ICOs, and blockchain startups. Pantera has the backing of Fortress Investment Group, Benchmark Capital, and Ribbit Capital.
1- Grayscale Investments
Grayscale Investments is a subsidiary of New York-based Digital Currency Group. According to CoinTelegraph, it had a staggering $2.7 billion in assets in 2019. The crypto hedge fund invests in a wide range of digital assets including Bitcoin, Ethereum, Litecoin, Ripple, and blockchain companies. Grayscale has invested in several crypto companies including eToro, Circle, Ledger, Shapeshift, and more.