Cryptocurrency hedge fund industry continues to boom

Summary:

• IMF says growth of cryptocurrency sector may destabilize financial system in case cyberattacks continue to occur

• BITCOIN surged to over $6700 in the morning

• Crypto hedge funds continue to launch at record pace despite bearish sentiment on the market

Major cryptocurrencies march higher at the beginning of the new week. Bitcoin along with other coins surged in the morning but reversed some of the gains later on. After struggling in the vicinity of $200 billion mark the capitalization of the whole market climbed back above the $210.

BITCOIN surged in the morning to above the $6700 handle. The bounce was quick and the bears were similarly quick to push price back below $6500. Nevertheless, the coin still trades significantly higher on the day and may be eyeing to break back above the recently broken short term uptrend line. Source: xStation5

International Monetary Fund (IMF) addressed cryptocurrencies in its latest report called “World Economic Outlook: Challenges to Steady Growth”. The Fund is concerned with numerous cyber attacks in the past months  as well as cyber security breaches as a whole. IMF claims that attacks targeting the critical financial infrastructure pose a threat for the cross-border transaction and goods flow. The Fund said that in case the cryptocurrency market continues to expand so quickly new vulnerabilities may arise in the international financial system. As more and more governments decide to regulate cryptocurrencies hackers seem to be the biggest hurdle for the exchanges. In South Korea and the United States the biggest exchanges began to insure their funds against acts of cyber attacks. While IMF sees risks connected to cryptocurrencies as potential destabilizing for the international financial system there were also upbeat remarks in the report. Namely, the International Monetary Fund recognized cryptocurrencies as an emerging asset class.

RIPPLE broke above the resistance zone ranging $0.4350-0.4500 in the morning when it surged with other cryptocurrencies. However, a pullback occuring afterwards push the coin back into the aforementioned zone. However, RIPPLE continues to move slowly higher since then and we may see the coin finishing today’s trade above the zone. Source: xStation5

The hedge fund industry continues to embrace explore the potential that digital assets pose. According to report released by Crypto Fund Research as much as 90 new crypto hedge funds were launched in 2018. To put this figure into context let us mention that it constitutes around 20% of all hedge funds opened so far this year. Moreover, the report says that about 2/3 of all hedge funds operating on the cryptocurrency market were launched during the seven month period ended in September. Despite bearish trend on the market in the past couple of months cryptocurrency investments still attract attention among various categories of investors. For example, Yale University decided some time ago to devote part of its endowments to 2 crypto hedge funds. Assets of cryptocurrency funds (not only hedge funds but also private equity and venture capital) are at around $4 billion.

Similarly to Bitcoin LITECOIN surged in the morning and failed to break above the resistance zone. The coin pulled back below the 33-period moving average later on(green line on the chart above) and may be eyeing a re-entrance into the support zone ranging $50.50-51.50. Source: xStation5

However, not everywhere it is so rosy. Coinbase, the largest cryptocurrency exchange in the United States, is said to be considering ceasing its cryptocurrency index fund. The fund was announced in March and launched in June this year. Despite the buzz that accompanied the launch it looks like the fund did not cope too good. Among reasons cited behind such consideration one can name the lack of institutional investors interest in the investment vehicle. The fund was aimed at institutional investors as it was said to give them possibility to gain exposure on the broad basket of coins offered at Coinbase platform. However, the lacklustre performance of the cryptocurrency market since the launch of the fund could have scared investors and made them put aside plans of implementing coins into their portfolios. Nevertheless, it does not mean that Coinbase will drop crypto-related investment products entirely. Apart from that, the company will focus on crypto bundle products aimed at retail investors.