Hedge funds that are focused on cryptocurrency trades and strategies are launching at the fastest pace since the 2021 bull market, according to data from Crypto Fund Research.
The new crypto funds are emerging as regulators in the U.S. approve spot exchange-traded funds (ETFs) and investors pour billions of dollars into Bitcoin (BTC), Ethereum (ETH), and other digital assets.
Crypto Fund Research says that this year’s first quarter saw 25 new hedge funds launch that are focused on cryptocurrencies, the most since the second quarter of 2021.
The new crypto funds that launched in Q1 of this year is nearly triple the nine funds that emerged in the first quarter of 2023.
The new hedge funds that launched in 2024 include Frachtis, which means “hedge” in Greek, and Topology, which invests in crypto that’s tied to artificial intelligence (AI).
Existing crypto funds, such as Pantera Capital, are also raising new capital after several difficult years that included the 2022 bear market.
The crypto hedge fund market has grown to reach $21 billion U.S. today, according to data tracker Galaxy VisionTrack.
This year’s boom in crypto is largely due to the January launch of spot Bitcoin ETFs, and, more recently, ETFs based on Ethereum, the second largest cryptocurrency.
The ETFs represent competition for hedge funds as they offer cheap, simple, and safe opportunities for investors who are searching for passive exposure to digital assets.