What Is Covered In This Chapter?
List of funds
Who invests in crypto funds?
“Bitcoin is cash with wings” – Charlie Shrem
One of the best ways to minimize risks from Bitcoin is to invest in funds that track cryptocurrencies. In the recent times, many cryptocurrency funds have soared in value compared to traditional assets. In 2017, 84 crypto hedge funds have already been launched. Here are a few important ones.
List of Funds
Grayscale Bitcoin Investment Trust
Grayscale Bitcoin Investment Trust (GBTC) is a fund run by Barry Silbert of the Digital Currency Group (DCG). GBTC shares trade at a premium when compared purchasing Bitcoin traditionally through an exchange and have gained 220.59% this year. As GBTC is publicly quoted, it is one of the easier ways for investors to get exposure to Bitcoin. GBTC can be purchased through traditional self-directed IRAs.
BK Capital Management
Created by CNBC host and investment analyst Brian Kelly, the BKCM investment asset fund focuses on “liquid exchange” digital assets. BKCM was up 68% in April and 172% YTD and has a Bitcoin allocation of 50% to 85%.
Ark Investment Management
Ark Innovation (ARKK) invests in innovative companies, technologies as well as funds like GBTC. ARKK has four ETF’s available. They are Industrial Innovation ETF, Web x.0 ETF, Genomic Revolution Multi-Sector ETF, and the Innovation ETF.
There are many self-directed IRAs available. California-based Bitcoin IRA Company allows the purchase of BTC with traditional IRAs or a 401K. Some other companies include the Millennium Trust, Entrust Group, and Pensco.
The approach of each crypto fund is also different. For instance, market-neutral funds offered by the London-based BitSpread trades on price differentials while many others bet on new coins issued to raise funds via initial coin offerings (ICOs) and price direction.
Who Invests In Crypto Funds?
Due to the pronounced price swings in cryptocurrency, many of the pension funds, insurance companies, and large mutual funds across the globe are currently hesitant to invest in these funds. There are also liquidity concerns. In addition, most of these funds are currently worth between $5 million to $20 million range which is well below the threshold most institutional investors would consider.
For now, the ones investing in crypto funds are companies managing money for wealthy families, high-net-worth individuals, private wealth managers, and some venture capital investors.