Crypto Funds Reporting ‘Impressive’ Performance This Year
Bitcoin had a good start in 2020, starting the year at around $7,200. During the market-wide crash in March, the digital asset crashed to $3,800 but only to surge to the yearly high of $12,630 in mid-August.
Up until August 31st, bitcoin recorded a return of 66.6%.
During the same period, Pantera unveiled returns of over 100% across various funds the firm manages, with its bitcoin fund gaining 61%, revealed the firm in its September 2020 investor letter. It was the company's digital asset fund that recorded 168% returns and the ICO fund having a whopping 323% uptrend while the long-term ICO fund had a 270% return.
The outperformance of other funds has been primarily because of DeFi tokens that rallied hard between May and September of this year. The firm had invested in about 40 ICOs over the years.
Pantera’s Chief Investment Officers also pointed to DeFi as the main driver behind their portfolio performance. “We’ve been positioning the funds towards decentralized finance,” which they started acquiring some years back.
One of the largest digital currency funds in the space, Pantera, has reportedly nearly $500 million in AUM, compared to the largest asset manager Grayscale’s $5 billion AUM.
Promise for value investing in crypto
Off The Chain Capital is another one that saw returns of 93% YTD compared to 57.2% returns posted by crypto funds during the same period.
The $40 million fund is also in talks to purchase about 1% of crypto-payments processor BitPay and another stake in the crypto exchange Kraken. Back in March, the Florida-based company bought 1% of Polychain Capital and then a year ago a stake in Digital Currency Group.
Additionally, Off The Chain has been buying claims of creditors of Mt.Gox every week and is its largest buyer.
“I learned about Bitcoin” in 2014, said Brian Estes, who runs the fund. “Coming from traditional finance, I thought it was just a scam. After the Mt. Gox hack, my value instincts kicked in, I started doing due diligence. I read the Satoshi white paper, and it clicked with me.”
It was when he started investing in bitcoin and crypto startups like Coinbase. His son actually grew his money from $500k to almost $10 million at the end of the 2017 bull run, which Estes then bought and opened to outside investors last year.
Additionally, it is packaging Bitcoin and Ether into equity-like investments to sell them through brokerage firms.
“Even if Bitcoin doesn’t move, we are making 40-60% a year on harvesting these premiums,” Estes said.
“Off The Chain’s reported performance this year has been impressive and may indicate promise for value investing in the crypto space, even as it has fallen out of favor with traditional equity investors,” said Josh Gnaizda, CEO of CryptoFundResearch.