Cryptocurrency Investment Fund Industry Graphs and Charts
Crypto funds go by many names – cryptocurrency funds, blockchain funds, or digital asset funds. Whatever you call them, the number of crypto funds is on the rise. With rising prices and rising public awareness, there were almost 200 crypto funds launched in 2017. For comparison, there were about 700 total traditional hedge fund launches in this same time. While accounting for a quarter of new hedge fund launches may not seem like much, consider that crypto funds had less than .1% of total hedge funds assets. In fact, crypto hedge funds are the fastest growing segment of the hedge fund industry. In addition, several of the top performing hedge funds in 2017 were cryptocurrency funds. In 2021, many crypto hedge funds are among the top performing funds worldwide.
More than 200 hedge funds launched in 2018. The pace of new crypto fund launches slowed significantly in 2019 and 2020, but increased somewhat in 2021 before slowing again in 2022 and 2023.
Below we use charts and graphs to examine the cryptocurrency investment fund industry in greater detail.
# of Crypto Hedge Funds
# of Crypto Venture Capital Funds
Total # of Cryptocurrency Funds
How many crypto funds are there? There are currently more than 870 cryptocurrency/blockchain investment funds. The majority are set up as venture capital funds, while a large number are hedge funds or hybrid funds. There are also a handful of crypto ETFs and crypto private equity funds.
Venture funds have now surpassed hedge funds as the most common type of crypto investment funds. Existing tech/FinTech VC firms are expanding investments into blockchain startups and launching their own blockchain funds. As some blockchain companies mature, private equity funds are beginning to get involved. Hybrid funds – those funds investing in liquid cryptocurrencies like Bitcoin, as well as initial coin offerings, are listed above as hedge funds although they take on some characteristics of venture funds.
2017 was a record year for the launch of new cryptocurrency funds with over 290 new funds including hedge funds and venture capital. This was more than triple the number of funds launched in 2016. 2018 sustained the high pace of new crypto funds launches seen in 2017 in terms of crypto fund launches with more than 230. In addition to the launch of new VC and crypto hedge funds, we expect existing hedge funds to incorporate cryptocurrencies in their portfolios. Likewise, existing VC firms will continue to add blockchain investments as well as launch separate blockchain funds. As expected the number of crypto funds launched in 2019 slowed from the rapid pace in 2017 and 2018. 2020 also saw a much slower pace of new fund launches than in ’17/’18. The pace of new fund launches picked up in 2021 before slowing again in 2022 and 2023
The vast majority of crypto investment funds are small by typical hedge fund criteria. 39% have less than $10 million in assets under management (AUM). However, there are a number of crypto funds with over $100 million in assets including Pantera Capital, Galaxy Digital Assets, Grayscale, Bitwise, and Polychain Capital, among others.
Current crypto fund assets are still quite small. All crypto funds combined make up about 1% of total hedge fund assets.
The overall crypto fund industry has been growing rapidly. Changes in assets are a result of three primary factors: the launching of new crypto funds, net inflows to existing funds, and changes in the value of portfolio assets. The latter factor was particularly prevalent in the last half of 2017 when Bitcoin, for example, increased in value nearly fourfold. Prices for leading cryptocurrencies fell sharply in 2018. Despite this, the growth of new funds and fund inflows contributed to rising AUM for the crypto fund industry as a whole. Since mid-2020, crypto fund assets under management have continued to grow quickly and surpassed $50 billion by Q1 of 2021. As of Q3 2023, crypto funds managed $56.4 billion in assets.
Crypto Funds have slightly outperformed Bitcoin and most other cryptocurrencies since 2016. Typically, crypto funds have underperformed cryptocurrencies in bull markets and outperformed in bear markets. In addition, crypto fund have collectively outperformed Bitcoin since 2016 and done so with substantially less volatility than the cryptocurrency market as a whole.
Most blockchain/crypto investment funds are small. Many are run by their founder and one or two additional professional staff. Most crypto funds have between five or fewer employees. Only a little over 5% have more than 25 employees (these are generally VC funds that do not exclusively invest in digital assets/blockchain companies). Overall, crypto funds employ approximately 5,500 people.
Net flows measure the amount of capital investors are investing or withdrawing from crypto funds. This is different from assets under management, in that fund flows are not directly impacted by fund performance. A positive number indicates net investment into crypto hedge funds, while a negative number indicates net redemptions.
Crypto funds are now based in more than 80 countries. However, nearly half of all cryptocurrency investment funds are based in the United States. The United Kingdom, China/Hong Kong, Singapore, Switzerland, Canada, Australia, and Germany all have a significant number of funds. New crypto funds are also beginning to pop up in Eastern Europe and Russia, as well in offshore jurisdictions like the Cayman Islands (those these funds typically have offices onshore).
Heatmap of Crypto Funds by City
The top cities for crypto funds are all cities that have significant existing hedge fund and venture capital industries. Topping the list of cities with the most digital asset funds are San Francisco, owing to it already having the dominant VC industry in the world, and New York, the undisputed hedge fund capital of the world. London, Singapore, Hong Kong, Zurich, and Chicago all also have a significant number of crypto funds. Chicago in particular is likely to see significant growth in new funds as commodity exchanges begin to allow trading of cryptocurrency options and futures.
California has more crypto funds than any other state. Led by San Francisco and Silicon Valley, California represents nearly half of all crypto funds in the US.
Most US-based crypto funds are not registered with the SEC. Some will file a form D, but not be required to file for an SEC registration number under The Investment Company Act of 1940. Since most crypto fund launches have been small, most qualify as an exempt advisor and are not required to register. The CFTC has given guidance that it considers cryptocurrencies like Bitcoin and Ethereum to be commodities and may therefore have certain jurisdiction over crypto funds. The SEC has also suggested it considers most IPOs, security tokens, and even utility tokens to be securities.
NOTE: Totals for the various charts will not always have the same total as varying information is available.
Andreessen Horowitz announced in May it had raised its fourth crypto fund. At $4.5 billion the fund is easily the largest crypto fund ever raised.
When a16z announced its $2.2 billion fund last summer the glory was short lived – just a few months later Paradigm revealed it had raised $2.5 billion for its fund. With its $4.5 billion raise, a16z keeps itself atop the crypto fund leaderboard.
Launched by cryptocurrency exchange FTX, FTX Ventures’ inaugural fund will be led by former Lightspeed Venture Partners’ Amy Wu.
The fund is launching with $2 billion in capial. Check sizes are reported to range from as little as $100,000 to tens or hundreds of millions.
Pantera Capital raised two funds in 2021 totaling nearly $1 billion. Its $1.3 billion Select Fund announced in April, 2022 is the firm’s largest blockchain fund launch to date.
Pantera had initially set out to raise only $600 million. The current size of the fund reflects growing investor appetite for crypto funds in Q4 2021 and Q1 2022.
The $645 million Dragonfly Ventures III fund is Dragonfly’s largest fund to close and is more than twice as large as the firm’s prevoius two funds combined
With the large size of the new fund, Dragonfly hopes to lead rounds in later stage blockchain companies.
Venture capital giant Sequoia Capital is no stranger to making crypto and blockchain investments. However, the firm’s $600 million Sequoia Crypto Fund is their first dedicated crypto fund.
The fund will focus on digital assets and liquid tokens including in Web 3, DeFi, NFTs, payments and gaming.
Like Sequoia, Bain Capital is an active venture investor, but its new $560 million fund is its first dedicated blockchain or crypto fund.
Broadly speaking, the fund, called BCV Crypto Fund I, will invest largely in DeFi and Web3 with a specific focus on protocols and native tokens.
Binance Labs, part of the largest cryptocurrency exchange, announced last October it would launch a $1 billion fund. It followed that up in June 2022 with a new $500 million fund.
The fund will invest in a variety of blockchain and crypto projects with a focus on Web3 and blockchain adoption.
London-based Blossom Capital raised $432 million for its new crypto and technology fund. Blossom had previously invested in Moonpay.
Though the fund will not exclusively invest in crypto, it will be focused on payments solutions, for which crypto presents numerous emerging opportunities.
Variant Fund announced its third crypto fund in late-July – a $450 million fund that includes both a seed fund and a so-called opportunity fund – together called Variant Fund III.
The seed fund will invest in NFT protocols, stablecoins, and other financial products within DeFi.
Austin, TX-based Multicoin Capital announced a $250 million crypto fund in 2021. Multicoin followed up that fund with its 4th fund, a $430 million fund, in 2022
Earlier in 2021, Multicoin Capital was reported to have received a significant investment from Binance.
Framework Ventures announced its third fund in April, FVIII. The $400 million fund was reportedly oversubscribed.
The fund will invest in gaming, Web3, and DeFi startups. Framework has made more than 40 investments in crypto and blockchain startups since its founding in 2019.
Castle Island Ventures
At $250 million, Castle Island Venture’s third digital asset fund is also its largest. Castle Island Ventures III will target various startups, particularly financial services in Web3.
Castle Island has previously invested in Bitwise, Casa, Moonpay, and BlockFi.