In response to information from Switzerland-based funding adviser 21e6 Capital AG, round 13% of crypto hedge funds have shut down to date this yr. The explanations for the closures have been weak efficiency and difficulties in accessing banking companies.
Moreover, crypto funds generated, on common, round 15% returns within the first half of 2023. They’ve been underperforming Bitcoin, which gained 77% over the identical interval.
Crypto hedge funds undergo from lagging efficiency to Bitcoin and a set of operational difficulties, comparable to accessing banking companies.
About 13% of them shut down this yr, based on information tracked by 21e6 Capital. 1/https://t.co/L7ozmXW1G4 @crypto
— Yueqi Yang (@Yueqi_Yang) August 4, 2023
Crypto Hedge Funds Lagging
Regardless of reports on the contrary claiming that almost all of banks are crypto-friendly, the truth may be very totally different for a lot of crypto hedge funds.
21e6 reported that many funds held larger-than-normal money positions following trade turmoil in 2022. Because of this, they missed out on Bitcoin’s huge strikes earlier that yr.
Head of selling and gross sales at 21e6, Maximilian Bruckner, mentioned many funds are “nonetheless struggling to search out new companions” for banking companies. Banking issues have been compounded by the collapses of crypto-friendly banks Silvergate Capital and Signature Financial institution earlier this yr.
Regulatory stress and America’s SEC-led battle on crypto haven’t helped their causes.
97 of the 700 crypto hedge funds tracked by the agency have closed in 2023, it said. A number of closed following the fallout of the FTX collapse, the place many had saved their funds.
These with “market-neutral methods” carried out the worst, producing solely a 6.8% return for the primary half of this yr. The report concluded:
“All crypto fund methods achieved optimistic outcomes this yr. However relative to Bitcoin, they underperformed, particularly these with important publicity to altcoins, to futures, or these strongly depending on momentum indicators.”
“Investor confidence improved barely, however fund inflows and fund launches aren’t but signaling a full restoration in sentiment,” it added.
Crypto Market Outlook
Digital belongings stay flat this weekend with little or no motion in whole capitalization, which stays at $1.2 trillion on the time of writing.
There was a slight retreat for BTC and ETH this week, with each dropping a few percents however remaining with their respective range-bound channels.
Buying and selling volumes and volatility are at present at historic lows on this, the longest-ever crypto winter in trade historical past.
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