Crypto Hedge Funds Underperform Bitcoin in First Half of 2023
Crypto hedge funds have underperformed Bitcoin by a significant margin in the first half of 2023, with about 13% of funds shutting down. On average, these funds generated a 15.2% return, much lower than the 83.3% return from holding Bitcoin. The underperformance is attributed to funds holding cash after last year’s industry turmoil and missing out on price gains this year. Market neutral strategies performed the worst, with an average return of only 6.8%. Additionally, crypto funds are struggling to find new banking partners due to the closure of crypto-friendly banks and facing regulatory uncertainty.
Key Points:
- Crypto hedge funds have underperformed Bitcoin in the first half of 2023.
- About 13% of funds have shut down.
- Funds held cash after last year’s industry turmoil.
- Missed out on price gains this year.
- Market neutral strategies performed the worst.
Struggles for Crypto Hedge Funds
Crypto hedge funds are facing several hurdles in addition to their underperformance. With the closure of crypto-friendly banks, finding new banking partners has become a challenge. Regulatory uncertainty and the need to find safe trading venues and custodians are further complicating matters for these funds.
Hot Take:
Crypto hedge funds have had a rough start in 2023, with underperformance and closures. The industry turmoil and the dominance of Bitcoin over altcoins have been significant factors. The challenges of finding banking partners and navigating regulations add to the struggles these funds face. As the crypto market continues to evolve, hedge funds will need to adapt their strategies to stay competitive.
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