June 7, 2023

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Best Performing Cryptocurrency Funds for 2023

Best Performing Cryptocurrency Funds for 2023
<p>Cryptocurrency funds, which are similar to mutual funds or ETFs, consist of portfolios of digital tokens. </p> <p>The post <a rel="nofollow" href="https://www.bitcoinmarketjournal.com/cryptocurrency-funds/">Best Performing Cryptocurrency Funds for 2023</a> appeared first on <a rel="nofollow" href="https://www.bitcoinmarketjournal.com">Bitcoin Market Journal</a>.</p>

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Executive Summary

Cryptocurrency funds, which are similar to mutual funds or ETFs, consist of portfolios of digital tokens. Since the first bitcoin fund was launched in 2013, over 840 cryptocurrency funds have been established.

Crypto funds experienced unprecedented investor interest at the peak of the crypto market in Q4 2021, with a total AUM of $62.5 billion, but took a significant hit in 2022 due to a severe bear market. The total value of assets held by crypto funds declined by 66% to $20 billion in 2022, and inflows decreased by 95% compared with 2021.

However, there are signs of resurgence as of this writing, with major crypto funds rallying by up to 50%.

Crypto Funds Explained

A cryptocurrency fund is a new investment vehicle similar to mutual funds/ETFs, containing a portfolio of digital tokens and cryptos instead of stocks, indices, or commodities.

In this piece, we’ll highlight the best crypto funds for 2023, with focused recommendations for investors, large and small.

According to Crypto Fund Research, since the first bitcoin fund was launched in 2013, over 840 cryptocurrency funds have been established. And this new market segment of the fund management industry is growing at a frenetic pace.

As cryptocurrencies enjoyed mainstream recognition and acceptance after 2020, investment funds started recording unprecedented investor interest. At its peak in Q4 2021, crypto funds had a total AUM of $62.5 billion, according to CoinTelegraph.

Those numbers took a significant hit in 2022 as the crypto market entered a severe downturn, with major cryptos like bitcoin and Ethereum falling by 72%. The crash of Terra/Luna and FTX further affected the fortunes of crypto funds in a turbulent 2022.

According to CoinShares, the total value of assets held by crypto funds declined by 66% to $20 billion and inflows decreased by 95% when compared to 2021. However, there are signs of resurgence in 2023, as major cryptocurrencies funds rallied by up to 50% in value.

We evaluated several of these top-performing funds for this review, looking at key performance indicators, including their Assets Under Management (AUM), number of employees, and tenure. The data used was primarily supplied by Crypto Fund List and Crypto Fund Research.

The Best Crypto Funds (2023 Rankings)

Fund Name Assets Under Management Launch Date Number of Employees Score
Grayscale $23,240,000,000 2013 92 4.70
Pantera Bitcoin Fund $3,800,000,000 2013 80 4.70
500 Global $3,000,000,000 2010 140 4.60
CoinShares $2,236,000,000 2014 89 4.00
a16z crypto $4,560,000,000 2018 103 3.80
Galaxy Digital Capital Management $1,900,000,000 2018 300 3.00
Polychain Capital $2,000,000,000 2016 45 3.00
MultipleCoin Capital $2,800,000,000 2017 17 2.80
Alphabit Fund $1,000,000,000 2017 50 2.60
AltaIR Capital $600,000,000 2010 18 2.60
Altana Digital Currency Fund $33,000,000 2014 30 2.20
1confirmation $1,000,000,000 2017 5 2.00
3iQ Corp The Bitcoin Fund $700,000,000 2020 37 2.00
Amentum Investment Management $0 2017 23 1.90
BlockTower $140,000,000 2017 31 1.90

Sources: Press releases, Cryptofundintelligence.com, Aum13f.com, Crypto Fund Research, Crypto Fund List

AUM: $20.8B

Founded in 2013, Grayscale quickly evolved into the world’s largest digital currency asset manager. In 2021, the firm achieved 73.4% coverage of the digital currency market, with a wide range of investment products including single-asset trusts and diversified crypto DeFi funds. At their peak, Grayscale had a total AUM of $43.5 billion. Despite experiencing a decline of over 50% in 2022, this fund remains the single largest crypto asset manager in 2023. (BMJ Score: 4.70)

panteraPantera Bitcoin Fund
AUM: $3.8B

As the first US-based institutional asset manager to focus exclusively on a blockchain, Pantera Capital has been a pioneer in crypto funds since 2013. Over the years, they have launched four different crypto-focused funds and has led more than 100 out of 210 investments. From $23 million invested in 26 companies, Pantera has realized over $125 million. (BMJ Score: 4.70)

500500 Global
AUM: $3B

Originally started as 500 Startups, the Silicon Valley-based early-stage VC capital firm has a portfolio of over 2700 firms across 75+ countries. Investing across a wide range of sectors, they have blockchain and cryptocurrency startups in their portfolio, including BlockCypher and Hijro. As of 2023, 500 Global has funded 51 unicorns each valued over $1 billion, and more than 140 centaurs (startups individually valued at more than $100 million). (BMJ Score: 4.60)

coinshares logoCoinShares
AUM: $2.23B

Launched in 2014, CoinShares is Europe’s first and largest bitcoin investment fund. They provide diversified exposure to digital assets through a wide array of crypto ETFs, ETPs, and other multi-asset portfolios. In 2021, CoinShares International became a public company listed in Sweden and featured on the Nasdaq First North Growth Market. (BMJ Score: 4.0)

a16za16z Crypto
AUM: $4.56B

a16Z is the abbreviation for Andreessen Horowitz, the well-known Silicon Valley VC firm led by software engineer/entrepreneurs Marc Andreessen and Ben Horowitz. Founded in 2009, a16z launched its dedicated crypto fund in 2018. Since then, the fund has moved very aggressively in the crypto bear market, raising $4.5 billion in 2022. In total, a16z has four separate funds investing in digital assets, Web3, and blockchain startups. (BMJ Score: 3.80)

galaxyGalaxy Digital Capital Management
AUM: $1.9B

The New York-based investment firm is focused on digital assets and blockchain technology. The firm uses a hybrid hedge fund/VC fund model. Founded by Michael Novogratz, its AUM grew by almost 600% in 2021, during the last crypto bull run. As of 2023, the firm has invested in over 229 companies across the crypto ecosystem, and is involved in everything from trading to mining, investment banking, asset management, and VC funding. (BMJ Score: 3.0)

polychain capitalPolychain Capital
AUM: $2B

Polychain Capital, founded by Olaf Carlson-Wee, the first employee at Coinbase, seeks to provide its investors with “exceptional” returns through active management strategies. The fund invests in digital currencies and not companies. The fund has made over 144 investments since its launch, including Ava Labs, Coin DCX, and Dfinity. In 2023, Polychain Capital led SPACE ID’s strategic funding round and Cubist Inc’s seed round, respectively worth $10 million and $7 million. (BMJ Score: 3.00)

multicoin capitalMulticoin Capital
AUM: $2.8B

Founded in 2017 by Kyle Samani, Multicoin Capital is a thesis-driven investment firm based in Austin, Texas. The firm invests primarily in cryptocurrencies, tokens, and blockchain startups across Layer 1, Layer 2, infrastructure, enterprise, mobile, and other categories. Notable investments in the Multicoin portfolio include Algorand, Flow, Ethereum, Lido, and Tagomi. (BMJ Score: 2.80)

alphabitAlphabit Fund
AUM: $1B

This crypto hedge fund seeks to generate capital appreciation while reducing risk. Their strategy involves early-stage investments in over 25 crypto projects, automated trading on futures, and discretionary trading on higher liquidity cryptocurrency pairs. Since 2020, Alphabit has made major investments in NFTs, blockchain gaming, and DeFi in particular, with startups like Yield, Archax, and GamiFi. (BMJ Score: 2.60)

altair capitalAltaIR Capital
AUM: $600M

AltaIR Capital is an Israel-based venture capital fund that was founded in 2010 to focus on investments in the technology sector. The fund invests in startups covering FinTech, InsurTech, Blockchain, SaaS, MedTech, AI, Cyber, and Consumer Internet. There are over 300 companies in the Altair portfolio, including crypto-focused firms like  REGA Risk Sharing, Unifimoney, and Anytype. (BMJ Score: 2.60)

altana digital currency fundAltana Digital Currency Fund (ADCF)
AUM: $33M

Part of Altana Wealth, ADCF has been trading in major cryptos in proportion to their market capitalization. Active since 2014, it has achieved phenomenal success with a combination of long and short strategies, deploying up to 50% of its assets trading cryptos. (BMJ Score: 2.20)

AUM: $1B

1Confirmation is an investment fund founded by Nick Tomaino with backing from Peter Thiel, Marc Andreessen, and Mark Cuban that invests in blockchain startups and digital tokens. Investments have included BTC, ETH, BAT, MakerDAO, and Augur. The fund raised over $125 million in 2021 for crypto startups and digital tokens and followed it up with another $100 million in 2022 for NFT projects. As of 2023, the fund portfolio has 39 projects, including major cryptos, Coinbase, OpenSea, and Nexus Mutual. (BMJ Score: 2.00)

3iQ3iQ Corp Digital Asset Management
AUM: $700M

Founded in 2012 by Jean-Luc Landry and Fred Pye, 3iQ is Canada’s largest digital asset manager. It has multiple fully-regulated multi-asset crypto investment funds that provide accredited investors with exposure to digital assets such as bitcoin, Ether, and Litecoin. (BMJ Score: 2.0)

amentumAmentum Investment Management

Founded in 2017, Amentum Investment Management is a hybrid digital currency hedge fund that focuses on blockchain-based protocols and applications. The Florida-based fund has invested in bitcoin, Ether, and other tokens, alongside crypto platforms like DexGrid, Connext, and NameBase.As of 2023, Amentum is invested in 7 crypto projects, including Mattereum and Cent Network. (BMJ Score: 1.90)

blocktower capitalBlockTower Capital
AUM: $140M

Originally funded by VC firms Andreesen Horowitz and Union Square Ventures, BlockTower Capital is a crypto asset investment firm based in New York. The firm deploys a wide array of strategies, including DeFi yield farming, funding rate capitalization, and more. (BMJ Score: 1.90)

Best Crypto Fund for Large Investors

For investors looking at overall consistency, 500 Global is a fantastic choice. Their Global Fund has an incredible track record, nurturing over 50 tech unicorns and over 140 startups valued at over $100 million. But they are not a “pure crypto” fund.

If you are looking for a more crypto-focused investing firm, Grayscale is the clear winner. The numbers speak for themselves. With over $20 billion AUM, they are the largest and most respected digital asset investment firm currently operating globally.

Both these firms only accept investments from accredited investors: high net-worth individuals (annual income of at least $200,000 for minimum 2+ years, or net worth of $1 million or more, excluding primary residence), or entities with $5 million in assets (or all beneficial owners as accredited investors).

Best Crypto Fund for Smaller Investors

There are plenty of other options aimed at individual investors with more modest holdings. If you want to invest smaller amounts in cryptos and digital tokens, the following are our top picks:

Bitcoin and Crypto ETFs: An exchange-traded fund (ETF) is an investment fund that tracks the value of a particular underlying asset. Usually, the asset is a commodity like gold/oil, a basket selection of stocks, or a major index. You can invest in ETFs just as you would in stocks – buy, sell, hold, and trade them as you please. In a crypto ETF, the fund tracks the price of a cryptocurrency (or multiple currencies). Thus, it gives individual investors easier access to cryptos without learning how to open and use bitcoin wallets, etc. (You can learn more about crypto ETFs on our Bitcoin ETFs page.)

Bitcoin and Crypto Stocks: These days, there are numerous startups active in the blockchain industry. We also have plenty of publicly traded firms that have strong connections to the cryptocurrency markets. The stock of such companies that benefit from the rise of blockchain and cryptos are called “block stocks.” For investors looking at an indirect exposure to cryptos, block stocks are an interesting choice. (To learn more about the topic, visit our Block Stocks page.)

Crypto Mutual Fund Alternatives: While we have plenty of crypto ETFs and stocks, mutual funds directly linked to cryptos don’t exist. The reason is quite simple – mutual funds have strict regulatory constraints that prevent them from looking at high-risk assets like cryptos. But if you want investment options that resemble mutual funds, alternatives do exist. Apart from ETFs, there are other exchange-traded investment products, crypto hedge funds, and tokenized funds. (See our page on Top Crypto Mutual Fund Alternatives.)

The Best Crypto Fund Alternative: Do It Yourself

The decentralized ethos of blockchain and crypto have always fostered a do-it-yourself spirit. If you are up for some extra learning effort, you can take charge of your crypto investments instead of leaving it in the hands of fund managers. Keep in mind some basic requirements and starting principles:

Think long-term: if you put money in something blindly without adequate research/preparation, it is gambling. Avoid chasing after the next meme coin in search of 100x returns; plan on buying a handful of high-quality digital assets, then holding on to them for 5+ years.

Pay off your debts first: before you start investing in high-risk avenues like crypto, clear all your existing short-term loans and debts, especially credit card debts. (Mortgages and student loans are considered “better” debt, because they tend to hold their value or increase your earning potential.)

Build a savings cushion: keep aside a fund of at least six months’ expenses, in case you need it in an emergency. After paying off all debts, start accumulating some savings before even thinking about investing in crypto.

Once you have followed these steps, we can proceed safely to the actual step of investing in cryptocurrencies. Follow these basic strategies to get off to a smooth start:

  1. Buy a handful of high-quality digital assets: As the most popular and valuable crypto, bitcoin is a great option for beginners. You can also opt for other altcoins if you want, but try to stick with the top ten coins – they tend to have the maximum liquidity and reliability. (See our Future Winners Portfolio for our top picks.)
  2. HODL for the long term: Constant trading is not recommended, especially for beginners. Long-term holding (or HODLing) has been the best way to generate excellent returns over time. See our Blockchain Believers Portfolio for the eye-popping returns that our crypto investor community has achieved in just a few years.
  3. Build a portfolio: Consider combining crypto assets with traditional investments like stocks and bonds. (We call it theBlockchain Believers Portfolio.”) In this approach, you could potentially outperform traditional investors by simply keeping 10% of your investment as crypto while maintaining 50-60% stocks and 20-30% bonds.

Related Articles:

Bitcoin Investing 101: What is Bitcoin? How Does it Work? How Can You Invest in It?

Blockchain Investing 101: How to Build Long-Term Wealth in the Digital Asset Markets

DeFi Investing 101: What Is It? Where Do You Start? What Are the Risks?

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The post Best Performing Cryptocurrency Funds for 2023 appeared first on Bitcoin Market Journal.

Source: bitcoinmarketjournal.com