The co-founder of the venture capital firm Morgan Creek Digital, Anthony Pompiano, predicts the closure of cryptocurrency hedge funds. Pompiano believes that the situation in the digital asset market gets worse.
According to Pompiano, cryptocurrency hedge funds will close down for 2 main reasons: at first, fund managers will stop making profits, and second, the US Securities and Exchange Commission (SEC) will tighten policy towards ICO projects.
Fund managers receive an average of 20% of the income from customer investment. In 2018, the Bitcoin rate dropped almost 4 times, therefore, no profit from cryptocurrency hedge funds is out of the question. So, we can make a very sad conclusion: managers will have to work for free or quit their job.
SEC has fined Paragon and Airfox startups for $ 250,000 recently. The agency also began checking the activities of several ICO projects, and if the SEC penalizes many crypto companies, some of them will have to declare themselves bankrupt. This will have a negative impact on hedge funds, as the rate of coins sold during the ICO will drop to almost zero.
But not everything is as sad as it may seem at first sight. Pompiano believes that the bearish trend will help improve the cryptocurrency market. The “tourists” will left it, but professional blockchain startups with talented employees will take their place. Hedge funds will close for several months, however, when panic, fear and insecurity subside, new funds will be opened, with new names, but with old managers.