Hedge Funds Purchased Bitcoin During The Crash In 2018
Although there was a very hard bear market in 2018, hedge funds have purchased Bitcoin (BTC) throughout the year. Last year, Bitcoin dropped 72 percent and since its all-time high in December 2017, it fell over 82 percent. According to a recent report released by PWC, hedge funds reported a median assets under management (AuM) of $4.3 million in 2019, compared to $1.2 million last year.
Hedge Funds Purchased Bitcoin During the Bear Market
The report released by the company shows that hedge funds were able to attract new funds during a difficult period in the market. The funds that were surveyed have been very successful in fundraising.
As per the report, there are 150 active crypto hedge funds that manage a combined $1 billion in assets. Most of these funds handle less than $10 millions in funds with just less than 10 percent dealing with more than $50 million.
— Charles d'Haussy (@charlesdhaussy) May 13, 2019
Although these funds attracted new capital, most of them lost money during the bear trend. The report released by PwC shows a median loss of 46 percent across the board. Although they registered losses, that shows a significant outperformance against Bitcoin.
On the matter, the report explains:
“The majority of the managers we surveyed use Bitcoin as their benchmark. Therefore, it can be argued that these managers did manage to outperform their benchmark and add some alpha.”
This shows that during bear markets, hedge funds are able to implement trading techniques in order to limit the market’s downside and reduce losses. Now, as the cryptocurrency market turned positive, hedge funds are starting to invest even larger amounts into Bitcoin.
Grayscale informed that they have experienced a 2,400% increase in inflow to the Grayscale Bitcoin Investment Trust this first quarter.
Capital inflows rebound: In the first Q of 2019, Grayscale raised $42.7 million into its single-asset and diversified investment products, marking a 42% increase in quarter-over-quarter product inflows.
— Grayscale (@GrayscaleInvest) May 13, 2019