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, will highlight the best crypto funds for 2022, with focused recommendations for investors, large and small.
According to Crypto Fund Research, since the first bitcoin fund was launched in 2013, over 800 cryptocurrency funds have been established. And this new market segment of the fund management industry is growing at a frenetic pace in recent years.
According to PWC research, total assets under management (AUM) of cryptocurrency funds nearly doubled between 2020 and 2021, from $2 billion to $3.8 billion. The median fund returns have also increased – from +30% in 2019 to +128% in 2020.
We evaluated several of these top-performing funds for this review, looking at key performance indicators, including their AUMs, number of employees, and tenure. The data used was primarily supplied by Crypto Fund List and Crypto Fund Research.
The Best Crypto Funds, Based on Performance
|Fund Name||Description||Assets Under Management||Launch Date||Number of Employees||Score|
|500 Startups||Originally started as 500 Startups, the Silicon Valley-based early-stage VC capital firm has a portfolio of over 2500 firms across 75+ countries. Investing across a wide range of sectors, they have blockchain and cryptocurrency startups in their portfolio, including BlockCypher and Hijro.||$1.8 billion||2010||140+||4.70|
|AltaIR Capital||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 and has made several blockchain investments in recent years such as REGA Risk Sharing.||$600 million||2010||24||3.50|
|Altana Digital Currency Fund (ADCF)||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.||$92 million||2014||26||2.80|
|Grayscale||Founded in 2013, Grayscale has quickly evolved into the world’s largest digital currency asset manager. In 2021, they 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.||$55 billion||2013||46||4.60|
|Pantera Bitcoin Fund||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. With over 80 venture investments and 70 early-stage token investments, the fund has expanded significantly in size in recent years.||$6 billion||2013||53||4.20|
|CoinShares||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.||$5 billion||2014||54||4.20|
|Polychain Capital||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. Their latest investment was in the Ethereum challenger called Avalanche (AVAX) in September 2021.||$2 billion||2016||38||3.20|
|BlockTower Capital||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.||$150 million||2017||50||2.10|
|Alphabit Fund||This crypto hedge fund seeks to generate capital appreciation while reducing risk. Their strategy involves early-stage investments in over 20 crypto projects, automated trading on futures, and discretionary trading on higher liquidity cryptocurrency pairs.||$56 million||2017||22||1.70|
|1Confirmation||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 its third fund focusing on crypto startups and digital tokens.||$200 million||2017||4||1.90|
|Amentum Investment Management||Founded in 2017, Amentum Investment Management is a hybrid digital currency hedge fund that focuses on blockchain-based protocols and applications. The fund has invested in bitcoin, Ether, and other tokens, alongside crypto platforms like DexGrid, Connext, and NameBase.||(no current data available)||2017||23||1.50|
|Galaxy Digital Capital Management||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 has grown by almost 600% in a single year in 2021.||$3.1 billion||2018||200 – 500||3.80|
|3iQ Corp Digital Asset Management||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.||$1.5 billion||2020||11-50||3.40|
Sources: Press releases, Cryptofundintelligence.com, Aum13f.com, Crypto Fund Research, Crypto Fund List
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 30 tech unicorns and over 120 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 $50 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 ($1 million or more, excluding primary residence), or $5 million in assets/all beneficial owners as accredited investors.
Best Crypto Fund for Smaller Investors
There are plenty of other options aimed at individual investors from more modest backgrounds. 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 cryptos.
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:
- 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.)
- HODL for the long term: Constant trading in various cryptos 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.
- Build a portfolio: Consider combining crypto assets with traditional investments like stocks and bonds. (We call it the “Blockchain 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.
If you want to learn more about investment opportunities in the digital currency markets, subscribe to the Bitcoin Market Journal newsletter today!