ICO News: Institutional Investors Raid Upcoming ICOs

on Oct 3, 2017
Updated: Mar 11, 2020

Upcoming ICOs and hedge funds may seem as though they operate in two different worlds, but increasingly those two worlds are overlapping. Hedge funds are behind the most sophisticated trades in the capital markets and most recently they’re targeting upcoming ICOs for profits, according to a recent article in Bloomberg. The problem is that some investors are taking advantage of their status as mega investors and riding the ICO train only for a quick profit before exiting the deal.

Multicoin Capital’s Kyle Samani is crying foul, telling Bloomberg this behavior is unhealthy for the ecosystem and going so far as to calling it abusive. ICOs are getting into deals during the ICO pre-sale stage, and doing so at a discount. Blockchain Capital, Polychain Capital and Pantera Capital kicked in a combined USD 50 million to the recent Kik ICO at a 30% savings. There’s no mandated hold period, which means they can unload the tokens whenever they want and which they would be incentivized to do should the value of the Kin coin rise. 

Meanwhile previously covered the trend with the development of former Fortress trader Mike Novogratz reportedly  launching a USD 500 million hedge fund that’s dedicated to trading cryptocurrencies and investing in upcoming ICOs. 

Not to be outdone, the passive investment crowd, which are behind exchange-traded fund (ETF) products that track index performance instead of relying on the stock-picking skills of a money manager, are dabbling in cryptocurrencies.

Bitwise Asset Management is reportedly set to introduce a cryptocurrency index fund comprised of the leading 10 coins based on market cap. At the present time the fund would reflect trading in cryptocurrencies ranging from bitcoin at the top with a market cap of USD 71 billion and Monero rounding out the top 10 with a market cap of USD 1.3 billion. The fund will be rebalanced every month, and only accredited investors can participate with a minimum threshold for investment of USD 10,000.

According to the company an ETF product could be in the works too, which would open the door for Main Street investors to participate. 

For information on how to buy and trade Monero, see our complete guide here.