Cryptocurrency Hedge Funds Struggle in 2018, Reporting 50% Losses This Year
Cryptocurrency Hedge Funds Record 50% Losses This Year
Most virtual currency hedge funds seem to be down over 50% in 2018 after the bull run that the market experienced at the end of 2017.
As per a report conducted by the fintech analysis firm Autonomous Research LLP, crypto hedge funds have taken an important hit since the beginning of the year. According to it, crypto hedge funds are down as much as 50% since the beginning of the year. Some of them are even now shorting the market to hedge their investments.
The firm has been analysing a wide variety of funds that it has in its database.
About it, Autonomous Research LLP, explained:
“Looking at the self-reported performance of some funds in our database shows the extent of the damage. We have two samples: July 31st and April 30th. In each case, we compare them to the BITA 50 index, which tracks the top 50 liquid coins. The first chart shows both the returns and the index, the second chart just shows the difference.”
There was an outperformance average of around 20%. Given the BITA 50 index, that is now down over 70%, the company believes that most of the virtual currency funds are, at least, 50% down.
The company performing this study informed that the negative sentiment among crypto hedge funds is in part because of the time in which they entered the market or were created.
Indeed, most of them entered in mid-2017. That means that the couldn’t be part of the early gains of the market. They were able to register big gains at the end of 2017, but these gains are already lost.
According to Autonomous, Ether could be the main reason why we are experiencing a negative cryptocurrency market. Although the number of developers using the platform and working on it has dramatically increased, the cryptocurrency community is creating the general negative sentiment.
It is important to mention that different Initial Coin Offerings (ICOs) and projects sold their coins in ETH in order to hedge against a falling market. This has also helped the price of Ether to lose part of its value.
At the moment of writing Ethereum (ETH) is the second most important virtual currency in the market. It has a market capitalization of $27 billion dollars and a price of $275 dollars.