The scores of cryptocurrency hedge funds setting up shop in late-2017, during the infamous bull run, are facing an existential crisis after plunging prices, low investor interest, and poor fundamental growth in the broader cryptocurrency industry.
Long-term Thinking vs. Short-term Boom
The year 2018 has been brutal for the digital assets market. Bitcoin is down 54 percent, Ether has plunged by 74 percent, while Bitcoin Cash proponents are finding their wallets lighter by 82 percent. Over $600 billion has left the market since January 2018, if the total market cap is considered, while global regulations for the asset class continue to be a stalemate.
While some investors like Tom Lee stick to their perma-bull predictions of the crypto market, BitMEX CEO Arthur Hayes believes the bear market could last another 18 months, based on his observation of the market.
Despite the mixed voices, July-launched crypto hedge fund New Wave Capital notes none of its early customers have closed their accounts even after falling asset prices. Instead, customers have invested more money in the market, indicating their long-term investment ethos rather than short-term gains hopefuls.
The fund’s USP lies in providing services to retail individuals with a minimum investment of $100, instead of accredited levels of $200,000 demanded by other businesses. New Wave offers investments across fifteen cryptocurrencies, including relatively lesser-known ones like Golem, Civic, and Numeraire, and rebalances client portfolios on a quarterly basis after a risk analysis and algorithmic weighted average survey.
Bitcoin Displays Quality Hallmarks
CEO Eric Campbell reveals the fund is heavily weighted on Bitcoin, the pioneer cryptocurrency while being personally bullish on altcoins that most people remain unaware of:
“The smaller-cap altcoins have the largest potential. In a bear market, everyone moves away from altcoins and they go back to what has been traditionally more resilient, which is bitcoin. They think it’s a safer asset. But when we come back to another bull market in the future, we think people will go back to altcoins.”
New Wave analysts believe the market saw “hasty speculators” who purchased cryptocurrencies at the peak of both hype and price; while selling low in panic.
Despite the market’s long-term uncertainty, New Wave thinks Bitcoin is the “only long-term winner” in the cryptocurrency market, courtesy its long-standing position as the world’s largest cryptocurrency. However, the business is focused on popularizing a longer-term investment approach for its investors with exposure to multiple coins, instead of the pioneer.