Cryptocurrency, Hedge Funds, Investing–Despite the ongoing bear market which has come to characterize 2018 for cryptocurrency, one newly developed hedge fund is remaining bullish on the industry. While reports tend to center around the falling price (or sideways trading) of Bitcoin and the larger altcoin market, adoption and development for cryptocurrency is reaching a historic level as the bear market continues. For the founders of Circuit Capital, this represents promising news for the outlook of the industry while also creating the conditions for a market that could be severely undervalued at present–particularly in light of price levels experienced at the beginning of this year and end of last.
Circuit Capital, based out of San Francisco and Singapore, is planning to launch by January with the focus of building a fund around cryptocurrency. The founders of the fund, including a former Deutsche Bank trader and two Silicon Valley veteran venture capitalists, have come up with the idea of an index fund to track the digital assets.
Partner Eugene Ng is particularly bullish on the outlook for the marketplace, using the growth of Bitcoin adoption throughout this year as a more appropriate gauge for the health of the industry rather than fluctuating prices. Speaking with Bloomberg, Ng explained,
“Despite what is happening with prices, we’re seeing adoption growing and a lot of people are looking to scale crypto businesses. We are starting to see talent moving into this space and institutional infrastructure developing.”
Circuit has ambitious plans for the minting of its hedge fund, with the goal to raise $30 million by January’s launch and grow assets to $100 million–a far cry from the billions controlled by most traditional market funds but one that could make a lot of noise in the relatively small sphere of cryptocurrency. Circuit is intending to utilize its index measure as a way to keep tabs on growth in the crypto space and hone in on projects that provide the best ROI. According to Bloomberg,
“Circuit has developed an index that measures mainstream adoption of the blockchain technology that supports digital assets. The benchmark is based on more than 10 data points including the number of active crypto wallets, transaction volumes, the hash rate -– the speed at which digital currency mining machines make computations -– as well as web searches for articles on crypto and hiring of technology and financial professionals in the industry.”
At present, the index reflects what many investors and analysts in cryptocurrency have come to expect from current market conditions: crypto adoption is on the rise even if prices for Bitcoin and other large name altcoins continue to flounder throughout the year. Despite 2018 seeing many coins fall over 90 percent in value, the year may be looked upon fondly for the growing the industry in terms of development and broadening the horizon for blockchain and cryptocurrency.
For investors such as those backing Circuit Capital and the crop of cryptocurrency-based hedge funds that have appeared over the last two years, the current market could provide a ripe opportunity ahead of more widespread institutional investment following the approval of a Bitcoin Exchange-Traded Fund.