Cryptocurrency Hedge funds in India

Now that the cryptocurrency market has caught the Indian investor’s interest, hedge fund managers are also thinking of ways in which they can grow their wealth. In traditional financial markets, hedge funds usually pool money to invest in equities, bonds, currencies and commodities to generate higher returns. When you actually look at the name, it means to hedge risks against market volatility. The crypto hedge funds work in a slightly different manner.

A firm called Autonomous Next recently discovered a record high rise in the number of global hedge funds:from 110 in 2017 to 226 as of March 2018 (source: https://news.bitcoin.com/number-cryptocurrency-hedge-funds-globally/).This has happened despite the erratic nature of cryptocurrencies and with the recent big fall in Bitcoin prices. Bitcoin lost 70% of its value after hitting a record high in December(source: moneycontrol.com). So where does India stand in all this?

Hedge Funds in India

At a time when India is seriously considering ways and means to tackle cryptocurrency, crypto hedge funds are slowly creeping up. There are hedge funds like Quadarch and Authorito Capital that are doing well for themselves. Authorito Capital, a new crypto hedge fund started raising money for their second fund earlier this month.

The laws surrounding cryptocurrencies are still unclear in India. On the one hand, the Finance Minister Arun Jaitley has declared it illegal while on the other hand the government is researching on uses of blockchain technology.

Although there’s a risk in investing in cryptocurrency hedge funds, experts are diversifying their investments among various cryptocurrencies and not just relying on Bitcoin. Other digital currencies such as Ethereum are also being seen as a smart investment option. As far as the security of your funds is concerned, Indian crypto hedge fund managers say that all their transactions are in virtual coins and they not accept any cash. They follow strict KYC policies and anti-laundering procedures to stay away from illegal money.

The CEO of Authorito says there is a lot of potential for these funds and this will become evident in the near future. For individuals, the minimum investment into these funds is Rs 10,000 and for family and other institutions it is Rs 2,50,000 says the CEO.

Why Hedge Funds?

These funds are mostly gaining popularity among the investors and institutions who are not risk averse.

These hedge funds offer more than just returns. They also include strategies like market making, early stage equity investing and bitcoin lending. Quadarch is another such hedge fund that focuses on investments in blockchain assets. However, they work a little differently. They diversify their investments: 50 per cent in top 10 cryptocurrencies, 25 per cent in ICOs, 22.5 per cent on daily trade based on market movements, and another 2.5 per cent in high frequency bottrading ( Source: economic times).

The government is looking into various regulatory frameworks for virtual currency in order to handle and track its illegal usage. Although the government has issued several notices urging the public not to invest in cryptocurrencies, it cannot necessarily land locals in trouble as long as they’re following all the rules without violation.

You can explore ways of investing in various cryptocurrencies. Update yourself with all the cryptocurrency updates from Unoversity News!