Almost 70% of Crypto Hedge Funds Will Close this Year Due to Volatility

Crypto Fund Research, one of the largest databases of crypto hedge funds based in San Fransisco, conducted an analysis and found out that almost 70 crypto hedge funds will be closing this year, as reported by Bloomberg. The hedge funds in focus mainly catered to family offices, pensions and affluent individuals.

The research also found that less than half number of crypto hedge funds that started last year are newly launched funds. The cutback in the number of new funds launched is a demonstration of an unpredictable and unstable year for cryptocurrencies.

Although Fidelity Investments and its fellow businesses are working towards establishing digital assets as easy and convenient possessions for new crypto users, they are facing challenges due to hesitation in customers as popular cryptocurrencies, such as Bitcoin(BTC)trade, are in volatile swing of prices that are driving traditional investors away.

Nic Carter, co-founder of the cryptocurrency market tracker Coin Metrics, says that the cryptocurrency market will remain retail driven for the conceivable future. Even though trading volumes on exchanges, such as Chicago Mercantile and Bakkt, on Bitcoin futures have seen growth since they began offering futures a few months ago, the numbers are still low.

CME Group observed a trading average of 32,500 Bitcoins in daily volumes this year which would amount to almost $236.8 million based on the current exchange rate of Bitcoin. The numbers are accumulation of over 3,500 individual accounts trading on the platform according to the company.

This is just one in many examples of trading platforms, especially the ones that are not as regulated or are based outside of the United States, aggregate Bitcoin futures volume. According to digital tracker Skew.com, crypto exchanges that allow any retail speculator purchase contracts that cost 125 times more than the amount that they put down adds up and exceeds $10 billion every day.

For the most part, consumers and crypto platforms blame obstacles that are associated with regulation for the rate of growth as governments are unable to efficiently stop crypto-related scams and create a barrier for companies like Facebook from gaining too much power and influence in the digital currency sphere.

This results in many investors being hesitant in going forward with engaging in these platforms. The uncertainly of the potential value of cryptocurrencies and the continuous volatility is causing reluctance. For example, Bitcoin is still down by more than 40% since its peak in June despite having doubled in price value since the beginning of this year.