The Truth Behind Crypto Hedge Funds
12 February 2019 - 4:46AM
InvestorsHub NewsWire
Bitcoin Global News (BGN)
February 11, 2019 -- ADVFN Crypto NewsWire -- How does a bear
survive a long winter? What about a crypto hedge fund?
According to CoinDesk, crypto hedge
funds are not what they seem to be on the surface. The reason why
has to do with what they do to survive during significant market
downturns as well as with the fact that overall, the blockchain
industry is far less regulated than other, more established
industries.
To understand this, first think
about the fact that there is a difference between a venture capital
fund and a hedge fund. Hedge funds are usually tracked over brief,
clearly defined periods of time, while VC funds are nearly
impossible to track without insider knowledge due to the fact that
they are privately traded.
CoinDesk’s article today even
goes so far as to say that most crypto hedge funds are structured
like VC funds while being marketed as if they were almost the same
as traditional hedge funds. Their conclusion on why this happens
boils down to the fact that the crypto market is much more volatile
in the short term and therefore, much easier to invest in for the
long haul.
While there is nothing wrong with
taking a long term view of things in this respect, misleading
investors is never a good plan, especially while just about every
government agency in the world is watching the industry
closely.
If crypto hedge funds continue to
be allowed to attract investors by claiming that they are something
that they are not, then the industry will continue to be seen as
“the Wild West” of the greater finance world. CoinDesk claims that
the solution to this is to wait until the market sorts itself out,
though with almost no regulatory framework to help it to do so, it
is hard to see how that is possible.
By: BGN Editorial Staff
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