Bloomberg: Decrease in number of crypto funds, retail investors becoming market drivers

According to the latest research report, the number of cryptocurrency funds has been decreasing since last year. This phenomenon has raised many questions, including the slowing interest of institutions in the crypto market, with retail investors being the main drivers of the cryptocurrency market.

Cryptocurrency Fund Closure Wave

Bloomberg recently reported statistics on cryptocurrency funds. According to a report, nearly 70 cryptocurrency-related hedge funds have closed down in just this year alone.

In addition, the number of newly launched cryptocurrency funds has also significantly declined. Compared to the same period last year, less than half of the new funds were launched in 2019.

It is reported that the main reason is related to the volatility of Bitcoin and the overall cryptocurrency market, causing fear among some institutional investors in the second half of the year. Bitcoin started the year at $3,700, surged to nearly $14,000, and then dropped to $7,000 after several sharp fluctuations.

Is the Institutional Involvement Process Too Slow?

Institutional participation in the cryptocurrency market is undoubtedly one of the hot topics in the cryptocurrency community, and there are several factors to consider when determining the level of institutional involvement.

Institutional investors have a variety of choices for fund projects, not limited to specific ones. One of the pioneers of cryptocurrency funds is the Grayscale Bitcoin Trust (GBTC) launched by Grayscale Investments in 2013.

According to a previous ABM report, the inflow of this trust fund was $171.7 million in the third quarter of 2019, growing 375% since February this year.

Additionally, the Intercontinental Exchange (ICE)'s Bitcoin futures trading platform, Bakkt, launched in September 2019, also targets institutional investors. Despite a slow start on the first day of trading, the platform's trading volume has significantly increased in recent weeks, reaching a historical high at the end of November with a daily trading volume of over $42.5 million, equivalent to 4,443 Bitcoins.

Taking all these factors into consideration, Spencer Bogart, a partner at venture capital firm Blockchain Capital, also presented a more objective argument:

Some may find the level of institutional adoption disappointing, but this view entirely depends on expectations. To me, the fact that we've seen substantial institutional adoption within a decade of Bitcoin's existence is massive success, far beyond what anyone could have imagined three or four years ago.

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