Breaking News

Coin Traded Funds: New Investment Funds Specialize In Cryptocurrencies

By Viktor ShpakovskyForexAug 02, 2017 03:24AM ET
Coin Traded Funds: New Investment Funds Specialize In Cryptocurrencies
By Viktor Shpakovsky   |  Aug 02, 2017 03:24AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

As we watch the world go nuts over cryptocurrencies, many entertain bullish expectations while some say digital coins are merely a new bubble, soon to burst with the rest of blockchain craze. How to chart out these new lands and not get lost? In “real” world, it’s the job of hedge funds to manage and balance risks. In the world of cryptocurrencies, there are so called CTF (Coin Traded Funds) to perform the task.

Buying and safely storing a diverse bulk of digital assets presents a daunting task, especially for beginners. It’s not so much the technical side of things that 's hard to figure out, but rather the hard work of keeping constant tabs on the fast-evolving market, including tracking new currencies. Every altcoin is based on a unique business model, and the initial goals and business strategies define its market dynamics, prospects, and the corresponding attention from the investors. Lately, the market has witnessed a plethora of “empty’ crypto-coins with no definitive business model or substantial growth potential. A clearer understanding of the situation, in turn, requires a deeper dive down the coin market: keeping tabs on the latest news and at the same time, deep, careful analysis of every new opportunity.

Performing a technical analysis of the market is a time waste in the eyes of traders. The market of cryptocurrencies today is mostly irrational and strongly driven by psychology, leading to the high volatility of individual currencies. It’s hard or impossible to automate the management processes: standard algorithms, like those borrowed from stock traders, simply don’t work at the current stage of the evolution of crypto-currencies - this means no automated trading of crypto-coins for now. Is there a strategy out there to mitigate the risks of volatility?

One way to do that would be forming a diverse portfolio of many digital assets. A particular kind of funds, Coin Traded Funds, or CTFs, offer just that option. CTF is a new form of an investment fund which fills its portfolio exclusively with tokens, such as bitcoin, ether, Dash, ripple, and others.

Such funds offer balanced portfolios that alleviate the risks of investing in specific currencies, enabling investors to profit from the growth of the blockchain ecosystem as a whole.

Why they’ll grow

When we say, we believe in the long-term potential of crypto-currencies we don’t mean the short-term hype but rather the natural, more organic spreading of the blockchain. The society will long remain fascinated by the tides and ebbs of the crypto-coins, but at the fundamental level, we see an overflow of money from the more traditional segments of the economy and out into the wider digital world. This is largely enabled by blockchain, a technology of distributed ledgers that transmits any value, from money to shares, to land titles. This is why crypto-economy is the new stock market.

When our fund invests in a portfolio of crypto-currencies, it essentially invests in the new paradigm. A token fund is an index for the entire blockchain economy. Believe in particular currencies or don’t, nitpick on their limitations and the scalability of their business models, but the overall growth of blockchain is a fact you can’t deny.

CTFs vs. ETFs and hedge funds

CTFs possess certain attributes of both ETFs and hedge funds. ETFs are traded, that is their whole point. Coin Traded Funds are cryptocurrencies themselves, so generally, they are listed on the principal exchanges. Unlike traditional ETFs, CTFs have more flexibility in shaping their investment strategy. ETFs compose their indexes from a fixed set of stocks that further down the road prevents the fund from actively managing its assets, like buying futures or drastically overhauling the portfolios. CTFs, in this regard, are more like hedge funds, enabling a lot more proactive managing approach.

There are many varied investment strategies in the cryptocurrency market. E.g., we at The Token Fund are very active when it comes to ICOs. Hedge funds have financial thresholds that bar small time investors from partaking. Unlike that, ETFs and CTFs have no such obstacle and thus can serve both experienced and beginner investors.

As a rule, hedge funds charge a share of profits when he strategy yields said profits. CTFs charge fixed % upon the purchase of shares.

Investment process

A fund composed of crypto-currencies, CTF is itself a crypto-currency. Buying initial shares in a CTF means purchasing a certain number of the fund’s tokens (coins). Usually, CTF tokens (like ETFs) are publicly traded, but in some cases, it can be as easy as opening a wallet in the system and topping it up with ETH or BTC to buy the tokens.

The largest part of the assets is stored in “cold” wallets while the volume of publicly traded coins is minimal. CTFs tend to stick to the most reliable crypto exchanges. Such measures enable funds to retain responsibility for the security of its assets instead of relying on third parties’ goodwill.

All movements of assets are performed via wallets using multi-signatures. Each action needs to be approved by at least two managers. This allows funds to minimize such risks as human error and hacking.

Funds’ capitalization is calculated in USD, BTC, and ETH, with the USD figure being the key indicator. This decision has the customers’ best interests at heart: so long as the money comes from and goes back into the classic economy, we need a unified performance indicator that everyone can agree on.

CTFs' balanced portfolios help investors alleviate the higher risks of investing in individual crypto-currencies. This means investors benefit first and foremost from the growth of the blockchain as a whole. Higher volatility of this market is one of the primary hindrances for new investors, and CTFs (The Token Fund, Satoshi Fund, TaaS) are focused on fixing that issue.

Coin Traded Funds: New Investment Funds Specialize In Cryptocurrencies
Coin Traded Funds: New Investment Funds Specialize In Cryptocurrencies

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Nona Me
Nona Me Aug 05, 2017 4:08PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
What exchanges are these CTFs traded on?
0 0
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email