Is Crypto Hedge Fund Bubble Already Deflating?
Main page Analytics, US Market, Cryptocurrency, Bitcoin
Hot topic
3 April

Outstanding surge of Bitcoin (Bitcoin) last year caused more than 150 crypto hedge funds to appear. Some of them managed to gain more than 1000 percent in 2017, due to which a number of investors went euphoric. This year seems to be different.

According to Eurekahedge Crypto-Currency Hedge Fund Index, returns are already down 23%. New capital has slowed even for high-profile funds, said Kyle Samani, a co-founder of Milticoin Capital which is based in Texas and manages about $50 million in assets.

At least nine funds have already been closed. Some of them deleted their websites and accounts in social media. Others made a decision to hold off.

Like Polychain Capital which is probably the largest hedge fund in a sector with about $250 million under management. In January this fund decided not to go public in Canada.

By the end of 2018, up to 10% of all crypto funds could close, claims Lex Sokolin, global director of fintech strategy at Autonomous Research LLP. And many of them will be in trouble, says Rick Marini, founding partner at Protocol Ventures which invests into crypto funds including Multicoin and Polychain.

However, despite receding prices, new funds continue to appear. Dan Morehead, the CEO of Pantera Capital is still optimistic about investors’ profits. He assures that the crypto market is going to produce far higher returns than mainstream financial markets. In his letter to investors last month the Pantera CEO described quite a positive scenario. He assured that the investors “still enjoyed massive gains”.

At the same time, he underlined the importance of a diversified crypto investment portfolio. For instance, advised investors to have some percentage of their crypto portfolio invested in blockchain projects.

Rick Marini’s optimism for the nearest future is much more cautious: “We are going to see it by the end of this year. People are able to leverage good returns last year to try to raise money this year, but this year is going to be different.”

By Emiliya Dieniezhna

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