Case Study - Cryptocurrency Hedge Fund

A group of high net worth, early adopters of cryptocurrencies who were in the process of creating a hedge fund for cryptocurrencies approached Avvale Consulting to acquire professional help to develop their business plan and Go-To Market Strategy.

Hedge funds are managed investment pools whose managers use a wide range of strategies, often including buying with borrowed money and trading esoteric assets, to beat average investment returns for their clients. They are considered risky alternative investment choices (Source: Investopedia)

The UK is moving swiftly towards taxing cryptocurrency and with the developments that have happened in the industry since the past two years, the financial outlook of the industry looks promising. They had a total portfolio of around $5 million and were in the process of officially setting up their operations with a physical office in London. They wanted to understand the market in more detail. Particularly their positioning and the status of their competitors in the market. They also wanted to research the success rate for crypto hedge funds in the region to and how many of them had to succumb to the deviations and the volatility of crypto.

For this purpose. Avvale conducted in-depth market research that covered the following areas:

• Market Trends and size
• PESTEL Analysis
• Competitor Analysis
• TAM TOM SAM SOM
• SWOT Analysis
• Consumer Analysis

Through research we found out that the worldwide cryptocurrency market size was esteemed at $1.49 billion in 2020 and is predicted to reach $4.94 billion by 2030, rising at a CAGR of 12.8% from 2021 to 2030.  Currently, around 2 million adults in the UK own cryptocurrency amounting to 3.86% of the country’s total population over 18 years of age.

The SWOT Analysis depicted that the business could leverage opportunities such as the growing interests of the public in cryptocurrency and the growth in crypto-asset users. There has been an almost threefold increase in crypto-asset users between 2018 and 2020. This number is expected to rise even more over the coming years, but the business also needs to look out for certain threats such as volatility in cryptocurrency values and poor performance of crypto hedge funds.

We also defined the Serviceable Available Market and Serviceable obtainable market for the company. Research suggested that the cryptocurrency market cap has been projected to reach as high as $1-2 trillion. Cryptocurrencies have come a long way regarding both technological advancement and popularity.

A look at cryptos usage statistics in the UK also helped us gain an insight into the trends and behaviours of consumers in the area. Close to one-fifth (19%) of people bought or want to buy cryptocurrency because they see it as an easy way to make money. Observing blockchain statistics considering gender differences gives an interesting perspective. Cryptocurrency figures for October of 2020 show 27.6% of men older than 18 own a cryptocurrency, in contrast to 17.1% of women.