Crypto events calendar

0
📰 News
157 views

Bear Market Prevents Crypto Hedge Funds From Earning Performance Fees

  • Alex Dovbnya
    📰 News

    Crypto hedge funds will close en masse due to a “double whammy” of the bearish market and the ‘highwater’ clause


Bear Market Prevents Crypto Hedge Funds From Earning Performance Fees
Contents

Multicoin Capital’s Anthony “Pomp” Pompliano took to Twitter to share his take on why more cryptocurrency hedge funds may go out of business at end of 2018. Notably, he believes that it is mainly attributed to their fee structure while the dramatic crypto remains a minor factor.   

👉MUST READ

Hedge Fund Manager Willing to Sell His $16 Mln Mansion for Bitcoin

Hedge Fund Manager Willing to Sell His $16 Mln Mansion for Bitcoin

A frontloaded success

Back in August, Crypto Fund Research pointed out the number of crypto-oriented hedge funds is expected to hit a new high in 2018. So far, as many as 198 hedge funds have been launched in 2018, and it is expected that this number will increase to 220 by the end of the year. This growth was supposed to be prompted by growing investor demand.

Later, U.Today reported about a study published by a fintech research startup Autonomous that vividly shows the decline of cryptocurrency hedge fund. 2017 was the high time to open a cryptocurrency hedge fund — especially during the market peak in December, — but the crypto crash was quickly followed by a decline in revenue. Despite the fact that Pantera Capital raked in a whopping $71 mln only this July, other funds suffered from an average 50 percent drop.  

A ‘highwater’ clause

Still, according to Pompliano, the decline in price is not the main factor why hedge funds will start closing their doors en masse. The majority of hedge funds charge AUM fees, which is usually set at 2 percent. Most of the revenue, however, comes from the so-called “performance” fee; some hedge funds may charge up to 20 percent.

Let’s do simple math: if a fund eventually had $5 mln assets under management and it eventually doubled their amount by the end of the year to $10 mln, it would pocket $1 mln in fees. In order to keep collecting performance fees from their clients, it would need to pass this $10 mln benchmark in 2018, which is pretty much impossible due to the 80 something drop in crypto prices.
 
Hence, hedge funds can either raise new capital or close their doors. Another option — waiting for better market sentiment in Q4 2018.

👉MUST READ

Chinese Hedge Fund CEO Sets Up Blockchain Network for Venture Investments

Chinese Hedge Fund CEO Sets Up Blockchain Network for Venture Investments

Cover image via u.today
The fastest way to get crypto news is to follow our Twitter. You won’t miss a thing! Subscribe.

About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with an extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets.

👓 Recommended articles
0
📈 Price Predictions
927 views

XRP Price On The Verge Of Breakout? Twitter Users Expect XRP Hit $1 This Year

  • Vera Yurina
    📈 Price Predictions

    Can Ripple touch the $1 level this year? Check out interesting opinions and XRP price predictions from Twitter users


XRP Price On The Verge Of Breakout? Twitter Users Expect XRP Hit $1 This Year

Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of U.Today. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.

Contents

Failing to sustain high price level, XRP is keeping around $0.30. It might seem that Ripple’s XRP stands still all the time, but Twitter users have the opposite opinion. They are sure that big changes are coming, and XRP is simply accumulating power for the price to explode. Can Ripple go to the moon in 2019? What will drive its overwhelming growth? Check out XRP price predictions from Twitter users. 

The history repeats

According to the long-term price charts, Ripple might be repeating its history, and the scenario of 2019 can actualize this year, too:

If XRP breaks out of the current resistance zones, its growth would exceed $1 easily. Some traders are sure it has enough potential to touch the $5 level, too.

Are there any certain triggers of XRP growth? There’s a bunch of theories. One of them claims that Ripple will burn its immense reserves of XRP for its price to rocket:

Although the petition is started, Ripple Labs itself does not plan to burn its tokens – it might have too serious outcomes. 

Card

 Here is the golden section pattern that proves XRP might soar:

However, it’s simply an amateur approach: what works with fiats might not work with altcoins at all. 

Better make mid- and short-term predictions based on traditional technicals, such as Fib levels:

XRP won’t grow overnight 

The short-term XRP price predictions are positive:

But simple moves to $0.4-0.5 won’t make any serious difference. As for higher XRP levels, there is no 100% confidence that we can reach them in 2019.

Don’t rush to the conclusions

All in all, time will show whether Ripple is able of groundbreaking moves. Right now, there are no signs of Ripple going to the ceiling. As one Twitter user ironically noticed, Ripple will discuss how liquidity has changed before they know the numbers:

👉MUST READ

Has #XRPArmy Turned Against Ripple? Not Really

Has #XRPArmy Turned Against Ripple? Not Really

The XRP conspiracy theory

This post simply could not stay unnoticed:

What we are witnessing now is how Ripple Labs manipulates its XRP stocks and buys/sells XRP in large amounts to shift the value of the coin. Will their efforts turn out to be fruitful? 

For some reason, XRP gets more attractive for other blockchains’ representatives:

Seems like they know something usual traders aren’t aware of. Does it mean Ripple is preparing for a major breakout? Everything is possible.

Meanwhile, Ripple’s bottom levels keep growing from year to year:

Thus, Ripple Labs keeps actualizing its plans, even though slowly. So even if it’s a non-profitable variant for shorts, it must be a great choice for long-term investors. Patience is the key. 

Cover image via 123rf.com
Only the most important posts per day. Infographics, analytics, reviews & summaries. Join our Telegram channel!

About the author

Crypto writer, blockchain geek & Bitcoin holder with a strong belief in the power of cryptocurrency. Veronika combines in-depth analytical approach with creative writing to deliver the texts that both inform and entertain. With hundreds of reviews, SEO articles and marketing texts under the belt, she has experience of working for blockchain Medium channels, Cryptodiffer site and ICOs. Part of U.Today team since 2018, she focuses on crypto price predictions and monitors the market to provide the most relevant info & opinions.

👓 Recommended articles

This site uses cookies for different purposes. Please set your preferences in Cookie Settings and visit our Cookie policy for more information on how and why cookies are used on this site. Click here for cookie policy

Cookie settings