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Crypto hedge fund industry is shrinking as coin prices fall


  • Taiwan seeks to regulate Bitcoin and other cryptocurrencies

  • Bitcoin (BITCOIN on xStation5) reversed sharply after touching $7400 mark

  • The crypto hedge fund industry is shrinking on the back of sharp drop in digital currencies’ valuation in early 2018

Many of the cryptocurrencies have seen their prices decline in today’s early trading with Bitcoin once again dropping towards $7000 mark. However, before we move on to the technical charts we will pay some attention to Taiwan as its authorities seek to regulate cryptocurrencies. At the end we will take a look at the crypto hedge fund industry as it is performing poorly in 2018.

Yang Chin-long, a newly appointed governor of the Taiwanese central bank suggested country’s Ministry of Justice that Bitcoin as well as other cryptocurrencies should be regulated under Taiwan’s Money Laundering Control Act. Yang also revealed that the institution he is in charge of has been monitoring cryptocurrency prices for some time already and has released several guides and warnings for the investors operating in this market. The move seems to be in line with region’s trend after Malaysia and South Korea took steps in order to ban anonymous crypto trading within their countries. Moreover, Yang said it is crucial to regulate cryptocurrency sphere as “87.5% of the Bitcoin transactions have been owned by only 0.61% of the trading accounts” thus the potential to manipulate this market is huge and this may be dangerous for the Taiwan’s domestic financial market.

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BITCOIN is approaching $7000 mark after failing to breach resistance level at $7400. Source: xStation5

Taking a look at the Bitcoin chart on H4 interval one can see that the digital currency has been respecting round psychological levels quite well as of late. After rebounding off the lower limit of the downward channel Bitcoin price made its way up towards $7400 handle that proved to be too strong for the market bulls. After failing to breach the earlier mentioned obstacle price sharply reversed to trade in the vicinity of $7000 at press time. With a lack of ground-breaking news we may see a downward move towards support level at $6500. Once this level is passed a potential test of the lower limit of the price channel may be on cards. One should keep in mind that the prices remain well below the 200-day moving average thus the bearish sentiment may prevail for a longer period of time.

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After a stellar 2017 the interest in the crypto hedge funds is shrinking. Source: Autonomous Research LPP, XTB Research

Last year’s surge in cryptocurrency market spurred increased interest among broad audience causing cryptocurrency fund industry to boom. In 2017 alone 167 new crypto funds have been launched up from 19 opened in 2016. This year is much more worse as the average performance of crypto hedge funds was a loss of 23.31% in the first quarter. Managers are complaining that the flow of new capital has slowed on the back of sharp drop in coin value. 2018 has seen 9 fund closures already with some citing potential regulatory risks as a main driver behind the decision. So far just 20 new crypto hedge funds has been launched in the first three quarters of the year.


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