Understanding Cryptocurrency Funds: Part 1 – The State of the Market – Bitcoin & Crypto Guide

Introduction

2017 had seen a massive inflow of investments into cryptocurrencies. The all-time high Market Cap was more than 800 Billion in January 2018. Complementing the same, new investment models have emerged, gained momentum, or, have percolated from existing traditional models. The cryptocurrency market is still in the nascent stage and very volatile. The technology itself is complex for a traditional investor, thereby making it difficult to judge the high promises (Moon!) of individual projects. Cryptocurrency funds give a sense of relaxation! Or, does it?

Introduction of new crypto funds into the market is on the rise, the number is exceeding every year.

Source: Cryptofundresearch

So, what are cryptocurrency funds?

Cryptocurrency funds pool money from investors and invest them into a group of assets focusing entirely, or partially, on cryptocurrencies or other decentralized digital assets. The funds are managed by dedicated experts or insider investors. The funds charge fees for their work on analysis and selection of investment opportunities and sometimes, also on performance. It is understood that some traditional funds also hold a small percentage of cryptocurrencies.

Benefits of Cryptocurrency Funds

With masses of new investors getting involved in cryptocurrencies every day, it becomes important to have a structured approach towards investment, and cryptocurrency funds promise to be a torchbearer. With an increase in liquidity and governments bringing in regulations, this is the right time to give some importance to these funds. The funds have the below benefits compared to direct investments:

  • Time Savings: For traders who have less time to research on cryptocurrencies.
  • Knowledge: For traders who do not know how to profitably trade in cryptocurrencies.
  • Fund Manager: The fund managers are usually experts and have done this for their living for a long time. Their experience counts.
  • Safety: Using a crypto fund means you can avoid risks of transacting on exchanges,…

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