How do crypto funds work?
Strictly speaking, crypto funds are crypto investment funds and an exciting opportunity for fans of Bitcoin, Ethereum & Co. to benefit from developments on the crypto market. However, there were problems with the first attempt to create a crypto fund. The reason for this is that Bitcoin, the largest cryptocurrency in the world by market capitalization and other cryptocurrencies as well, are largely unregulated. The Securities and Exchange Commission (SEC) in the US has long hesitated to allow a fund focused on the new and largely untested cryptocurrency market to make its way to the public. Because of this, crypto funds work differently than their traditional counterparts.
A crypto fund is an investment vehicle: it reflects the performance of a specific group of assets. Unlike a cryptocurrency index fund, ETF, or exchange, a hedge fund is a different way for you to invest in a large group of underlying securities. They are managed by expert teams and are rebalanced from time to time. In addition, they are constantly analyzed.
As an investor, you receive profits from the market maneuvers of the experts. There are currently two types of cryptocurrency hedge funds. On the one hand, there are those that manage portfolios and contain only cryptocurrency. Second, there are those who have added some cryptocurrency to a mix of other asset types.
The goal of hedge funds is to use crypto funds to maximize returns by adding new coins.
Tip: In our guide to investing in blockchain technology, we show you how you can participate in the megatrend with shares and certificates.