Students Creating a Cryptocurrency Hedge Fund
Four Harvard University students are diving into the cryptoverse with their very own crypto-centric hedge fund, Plympton Capital. Will their fund sink or swim in the increasingly saturated cryptocurrency hedge fund space?
Bushra Hamid, a 19-year-old lady, leads the Plympton Capital team and is joined by three others — Scott Sussex, Omar Sorour, and Junaid Zubair — in starting up the hedge fund for virtual currency investments.
A timeline of six or, at most, eight weeks have been given before the fund’s official launch as the team is still in the fundraising phase. To start, the team is planning to raise a $1 million USD and has already been able to raise $700,000 from family and friends.
“If it’s not grounded in reality and compliance, the project will get eaten up by the increasingly sophisticated competition,” noted Lex Sokolin, the global head of fintech strategy at Autonomous Research, saying it could cost as much as $50 million to run a successful fund.
According to a recent reporting, lightning growth among crypto hedge funds changed to stagnation during the Q1 2018 cryptoeconomy downturn. Moreover, Securities and Exchange Commision (SEC) is in the middle of probing upwards of 100 crypto hedge funds. So far, many of these funds have received subpoenas, with some even closing up in the interim. Per the Eurekahedge Cryptocurrency Hedge Fund Index, crypto funds’ returns for the year 2018 have dropped to 40 percent.
For the year 2017, hedge funds enjoyed fruitful returns of up to 1,700 percent in the space. Moreover, per Sokolin, more than 10 percent of all cryptocurrency hedge funds could close their operations by end of this year.
Just like every other project, the team of young entrepreneurs at Plympton Capital will need to learn from others in the industry and implement strong policies to ensure the fund stays running.