What are Cryptocurrency Funds

crypto-fund estoniaSo far, digital currency-based funds are the best solution for investors who have no experience with crypto assets but want to make a profit.

The interest in cryptocurrency is growing these days rapidly. However, if an investor doesn’t have experience with crypto assets but wants to start making money from them, the best solution is to use cryptocurrency funds. It will be the best way to enter the market. 

LKS Consult OÜ explains how the funds operate.

Cryptocurrency funds can be compared to conventional exchange funds linked to a certain sector of the economy, but in this case, they are linked to digital money.

Such funds purchase mainly bitcoin and other liquid promising cryptocurrencies. The profit, in this case, will depend on the growth of cryptocurrency quotes. These funds may have a margin of flexibility in cash to actively manage their position in the cryptocurrency market. Once the purchased assets have grown in value enough, they are sold, and investors get their share of the profits.

Short- and long-term investments in cryptocurrency funds now seem reasonable. However, LKS Consult OÜ reminds you that it also involves risks. When investing in a large cryptocurrency fund, all key risks are predetermined, and the investor may be more comfortable with their funds.

Large crypto-funds predict a certain risk management policy, which outlines the levels of risk capital (potential losses) and the level of balance that will be returned to the investor. Still, please remember, cryptocurrencies, like all assets, can not only grow but also fall.

When choosing a cryptocurrency fund, it is essential to explore the market’s reputation and the history of how it works. One sign of fraudulent funds is the promise of guaranteed high returns to investors.

Large crypto-funds

Large cryptocurrency funds are an essential part of the crypto-infrastructure. They act as intermediaries between the cryptologist and institutional investors whose entry into the market has become a critical factor in its growth. The more funds and the larger they are, the more mature the entire crypto-scope becomes.

Grayscale Investments is the largest cryptocurrency fund. It is owned by Digital Currency Group (DCG), which also owns CoinDesk crypto-media. Grayscale now manages assets worth over $45 billion. In 2019, that amount was $0.6 billion, and in early 2020, it was $1.8 billion. In addition, the foundation has several trusts, focusing on a single coin — for example, Grayscale Bitcoin Trust and Grayscale Ethereum Trust.

Polychain Capital is the premier investor in cryptocurrency protocols and companies with more than $1.100 billion of assets under management. It is an American fund with an active management strategy, invests only in cryptocurrencies, not crypto-companies. It has been operating since 2016.

Pantera Bitcoin Fund was founded in 2003 in the United States as a traditional investment fund. In 2013, he focused on cryptocurrency and venture capital investments in the blockchain company. It has $810 billion of assets under management.

CoinShares was launched in 2014, and it became Europe’s first and largest bitcoin investment fund. Having offered the world’s first bitcoin-based securities in 2015, the company has gone on to command investment firms outside of crypto with more than $1 billion of assets.

CoinCapital is a hedge fund specializing in cryptocurrencies, ICO and blockchain startups. The threshold of entry for individual investors is from $2.1 million.

Multicoin Capital is an active trading fund that invests in more than 10 cryptocurrencies and about two dozen blockchain startups, among which is the largest cryptocurrency, Binance.

BlockTower was founded in 2017 and is based in Stamford, CT. It is a crypto and blockchain investment firm applying professional trading, investing and portfolio management to this digital asset class. It focuses on event-driven trading strategies and investments and has $100 billion of assets under management.

BitSpread is a distinctive feature of the fund that is very active in trade. He performs several thousand operations during the day, trading cryptocurrencies for about $1 billion a month.

Galaxy Digital Assets Fund is a fund known primarily through its founder Mike Novogratz, the former chief investment director of Giant Fortress Investment Management. Galaxy Digital invests in digital currencies, ICO and related companies.

Alphabit Fund is a crypto hedge fund that seeks to generate capital appreciation while reducing risk. On its website, the company claims: “We aim to advance the overall development of the sector by investing in and sharing our expertise with the most visionary and innovative projects we can find” and has about $25 million of assets under the management.


LKS Consult OÜ can help you to start your own cryptocurrency fund and provide accounting services.