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Crypto Funds, Lending and Market Manipulation ->https://www.coindesk.com/crypto-funds-lending-and-market-manipulation
Its not easy being a crypto fund manager. As well as unruly markets and elusive valuations, theres the increasing competition and pressure on fees. And performance has been lackluster: Vision Hills Q1 report showed that, on average, active funds have underperformed bitcoin so far this year.
The bear market of 2018 triggered the closure of many crypto funds, and a report released last week by PwC and Elwood Asset Management showed that there are far fewer active funds in existence than we had been led to believe.
The report also pointed out that, given a median management fee of 2% and a median fund size of $4 million, operational sustainability is tough: $80,000 recurring income is not enough to cover salaries and other overheads, especially given the likelihood of increasing compliance requirements.
The PwC/Elwood report mentions some steps that funds are taking to boost recurring income, such as market making and advisory roles.
It overlooks one potentially significant source of revenue, however: crypto lending. Funds could lend out the assets they hold, for a fee.
Given the growing demand for crypto lending services, this potential income stream could be enough to give a number of funds a greater chance of survival, as well as inject liquidity and diversity into the sector.
It could also, however, add hidden risk to the market overall.
Crypto Funds, Lending and Market Manipulation ->https://www.coindesk.com/crypto-funds-lending-and-market-manipulation
Its not easy being a crypto fund manager. As well as unruly markets and elusive valuations, theres the increasing competition and pressure on fees. And performance has been lackluster: Vision Hills Q1 report showed that, on average, active funds have underperformed bitcoin so far this year.
The bear market of 2018 triggered the closure of many crypto funds, and a report released last week by PwC and Elwood Asset Management showed that there are far fewer active funds in existence than we had been led to believe.
The report also pointed out that, given a median management fee of 2% and a median fund size of $4 million, operational sustainability is tough: $80,000 recurring income is not enough to cover salaries and other overheads, especially given the likelihood of increasing compliance requirements.
The PwC/Elwood report mentions some steps that funds are taking to boost recurring income, such as market making and advisory roles.
It overlooks one potentially significant source of revenue, however: crypto lending. Funds could lend out the assets they hold, for a fee.
Given the growing demand for crypto lending services, this potential income stream could be enough to give a number of funds a greater chance of survival, as well as inject liquidity and diversity into the sector.
It could also, however, add hidden risk to the market overall.