Bitcoin Forum

There were lot of them and many havent survived the crypto winter. But as the thaw is probably coming, is crypto hedge fund a good business to start?

It probably depends on what you're trying to do and how trusted/well insured you are.

There's probably a market for basket funds and managed funds targeting towards the older generations that may not be accustomed to technology but you might be more usable and trusted if you can get someone to insure you or sell your idea to a company instead of going it alone. A lot of the previous funds were probably scams in a lot of cases.

You can start but it wont really be an easy path for you to gain trust.Basing on what happened in the past which involves scams and failures then it wont really be that surprising when in the talks of hesitance.

Try to read up above's sentiment which is indeed an on point one.

Probably. Starting a hedge fund now is probably like starting one in 2016. We're definitely in a strong bull market. Capital will continue flowing into altcoins, and there will definitely be some 10-1,000x+ opportunities in the next year or two depending on current level of market cap.
https://bitcointalk.org/index.php?topic=5196072.msg53823048#msg53823048
https://bitcointalk.org/index.php?topic=5196072.msg53805081#msg53805081

I wasn't aware there were such things, but I agree with you about the above.  I'm not sure if we're starting another huge bull market or not, but bitcoin and altcoins are both up quite a bit compared to where the market's been the past two years. 

I don't know what crypto hedge funds do exactly (aside from holding/trading coins), but starting one now might be a bad idea but if someone had started one in 2018-19 they might be poised to make some decent money.  Not sure how many people would have had the intestinal fortitude to do so after everything looked dead for a long time--especially the altcoin market.

Oh yeah, there were a good few of them that had actually started up before crypto boomed. Only one that I know off hand is TAAS. They shut down sometime ago, though they used customer funds to manage a portfolio of crypto assets and returned profits to the owners of the their coin -- TAAS -- and they took a share of the profits for handling all the security, smart contracts (on ETH), etc.

Starting one is going to be a regulatory nightmare in my mind, you're going to have to get licenses in the US (and not sure how this works, but maybe every state in the US), other countries, etc. Then you can start, you have to setup a good deal of cold storage, security on your website for deposits and withdrawals. This is going to be a very involved process.

Plus you're not just going to let customers withdraw their funds without any sort of issue -- like a real hedge fund, you'd have to make them wait a few days so you can ensure you have the amount of BTC/ETH/whatever coin they request their withdrawl in.

Sounds like a great idea right off the bat, but your customers are only going to want to pay you if you make them profit. Which you can't control at all. This is literally the wild west.

That's pretty much all they do: buy (usually with lots of exposure to altcoins) and periodically re-balance their portfolio.

In the old days, "hedge fund" used to refer to funds that would regularly hedge their stock exposure by shorting. Nowadays, it basically just means "high risk/high return investment fund." That applies to hedge funds in both the traditional markets and crypto.

Don't start a crypto hedge fund just for the sake of it. People wouldn't invest in your hedge fund if you have no credibility in the market. So it is not a good business to start by an individual.

Secondly, don't overlook the power of Gold here. From decades, Gold have been used by the common mass to hedge against the weak economy. Make sure to add a good percentage of Gold in your portfolio. It will definitely make your hedge fund more secure than others. Because crypto market is mainly controlled by bitcoin's pricing trend due to it market dominance. So adding a lot of altcoins to your portfolio wouldn't make much sense either.

Hope this helps!

Mostly turned into hedge funds that already exist that has a side crypto hustle as well. There was no need to have "crypto hedge fund" type of deal so they basically got less and less people and some probably closed down or maybe just exists until all their customers leave. When there are billion dollar corporation who can offer you assistance on this and have been around for 30+ years for stock market purposes that means you could trust them more.

Certainly, they are the whole reason why the world is in a such deep financial crisis as well but if they have ruined the world for more profits, you might as well take up that profit yourself and get your share of the ruinage, otherwise you only have the ruins and absolutely nothing else to show for it.

The process might be long if you plan to make one including permits, et. al and thus, it's no longer needed IMO if people already learned from these wavy years.

And those that haven't survived and still thrive to get into crypto market, they will do whatever it takes to recover and learn from those bad years.

The thing is everything is a good business as long as you know how to handle it and make a good use of it , it is long and complicated and even I won't try it because I know it would be not as easy for me.
You need to actually get like a crash course or something before going in it , look at your profit and losses and finalize whatever you are going for before doing it.
Do everything in advance , you need to calculate how much you are going to borrow and how much you can afford to loose before hand .
If you know and you are confident then go for it .

Have they ever been a good business?

I'll guess that the 'actively managed' ones have done much worse than the ones that simply sat out the crappy times. Traders rarely beat the market in mature markets, let alone one as deranged as this one.

Hedge funds have long been a popular choice for risk-averse investors. But it can't be a good business idea for individuals. There is a plenty of such funds, what feature can make your enterprise unique?

This is right, there really was no need to have it. All they did was charge you a percentage (depending on your fund) of your profits or of your overall balance (overall balance is much more popular) and all they did for that money was to make sure your allocation was what they set it at.

You can do all of that yourself, and you'd also be able to control your keys. Why let someone else do all this? There's no reason, and these experts are probably going to pick the wrong cryptos anyway (as they're going to be actively managing the fund, instead of passive management)

Galaxy Digital seems to be treading water:


https://www.theblockcrypto.com/linked/48724/galaxy-digital-total-net-income-increased-by-133-from-q1-to-q3

It sounds like they're pretty well-positioned for massive gains in the next bull run. I recall them being heavily invested in EOS, which will probably pay off big on the next quarterly report.

The big question for a would-be crypto hedge fund operator is whether you can survive a long term bear winter or range market. If you can, there's a lot of money to be made during the eventual bull run.

If I saw my hedge fund was balls deep in that I'd be running for the hills. No doubt it'll pump like every piece of junk but its sheer incompetence makes me wonder about an institutional buyer's competence too.

All this stuff is still in the shit thrown at the wall phase. If I were entrusting my money to a professional I'd expect some diligence somewhere along the line.

High risk, high reward. That's pretty much all hedge funds imply these days.

EOS may look like garbage from the perspective of old school bitcoiners, but that's not a demographic that matters during an altcoin bubble. As someone who has been through 2 bubble cycles, I'd say EOS is a fairly safe bet just looking at the long term chart, the latent hype around its community, and the VC investments into its infrastructure.


In 2018, it was a good time to wait long term and see what survived. 2 years later, the coins still kicking near the top of CMC are there for a reason. They aren't going anywhere and will definitely pump during the next bubble. That's all that really matters.

It's not like blue chip investment for the long term. Galaxy just need to catch the next bubble. After that, the last two years treading water will have been worth it many times over.

Are you sure that they have not survived or that they have gone a bit underground and off the books for now to recuperate with losses projected from their investments? There are many individulas and private venture institutions having their hands in crypto but if there are less project to put money in they will be off the grid and the news. Get my point?

Eh, do you think investing in shitcoins will give you a big return? Maybe in short term but definitely not in the long term. The few good projects here are the ones who give out loans from their funds taking crypto as collateral. But of course that is not what the hedge fund's main objective is, rather it is to hedge the funds in times of bearish trends to markets that are still bullish.

I still believe that one of the less risk way to make money from the cryptocurrencies market is through hedges. I have succeed in it and that makes it to look worthwide. Because of the ways other currency fluctuate against bitcoin if you calculate very well there is no way you will not make money from the market.

it's all just a matter of exploiting opportunities. if we can read the direction of the market well, certainly hedge funds are very helpful to raise our assets effectively. but if we do the opposite, then this will actually erode the assets we have

You are wrong if you are thinking that giving your money to a hedge fund and allowing them to take care of your assets is a safer way to deal with the risks of a bear market. Remember that in cryptocurrency you cannot trust anyone with your money. If you own your coins then you should not share those because in case of theft, you have no legal grounds to fight and get back the money that you have sent.

Again there is no method to hedge your money by not giving the entire control of the funds to a third party. After all trust is always a issue here. But if you are hedging your funds on your own against other markets then it is not a problem.

I think crypto hedge may be a good business because doing business here may be a risky and reliable site  But each business will depend upon your ability to drive it If you would like to take a position within the market situation before doing business then you'll benefit.  The market always has got to come up with the name of the business to determine the business.

I believe, if you find a hedge fund in regular stock market, you can trust them more than you trust crypto because in the end you may lose your money the hard way of losing value but you are not going to get scammed there. Can you think places like JP Morgan ever saying "we got hacked, bye" and just leave? That will never happen, not in a billion chance. However in crypto, the hedge funds are riskier, they can do that and that is why they are not trusted so much.

Crypto is better than fiat, but fiat companies are better than crypto companies, that is the biggest dilemma about this subject. What could make this a perfect combination? The fiat companies finally going into crypto. Think of all the trillion dollar companies finally going into crypto, that would be the dream.

That would be a dream come true in that case but i dont really expect that much for fiat companies on totally adopting crypto space.Lots of factors to be considered first before they would do such consideration.

I agree to the fact when it comes to trust matters or security then nothing can beat out those fiat institutions yet there no way to run incase theres scam happens or shady acts.

So to answer or sum it up if crypto hedge funds is a good business then its still "NO" for now.

I dont think that is a logical approach. A hedge fund does not make money by just allowing the market to move. They basically cut down the risks by making money from the movements. I still am less knowledgeable about how they function but they convert to fiat and hold that before the market goes down and vice versa. I know there are capital hedge fund groups in fiat but those in crypto - I tend to not have faith in them much. I prefer to keep my coins to myself or trade myself instead of giving it to someone for taking care of risks.

Although opinions may vary here.