Like regular hedge funds, a crypto hedge fund trades in cryptos and invests in crypto derivatives and futures and venture capital and private equity for blockchain startups. These hedge funds employ complex investment strategies to yield financial returns that surpass the general market. Complex portfolio-building procedures and composite risk management methods allow investors to invest without needing proficiency in finance and cryptocurrencies. Understanding a Crypto Hedge Fund Crypto is an investment instrument that is relatively new and still in its infancy. It is a very high-risk and speculative asset that isn’t backed or regulated by governments like a fiat currency. Cryptos are also very volatile, making hedge funds based on them even more volatile than hedge funds focussing on other investment instruments. However, it is a very lucrative investment making it attractive to hedge fund investors. Novelty and lack of regulation cause new crypto tokens to pop up constantly. Bitcoin persists as the standard, followed by Ethereum in market establishment and utility. Dogecoin is an outlier with a unique fan base driving its growth and volatility. Experienced managers run the crypto hedge funds, re-adjusting investments contingent on prevailing market conditions. Exclusive and Non-Exclusive A crypto hedge fund may invest exclusively in crypto-assets or make cryptocurrencies part of its investment strategy and traditional instr...
