Bitcoin Forum

At least nine cryptocurrency-focused hedge funds were shuttered in the first three months of 2018, Bloomberg reported Monday.

The closures include the Crowd Crypto Fund and Alpha Protocol, the news service reported. While Crowd Crypto Fund shut down all of its digital platforms, including its social media presence, Alpha Protocol simply announced it was refunding its investors all of their funds. According to the fund's website, the refunds were completed on March 31.

Even hedge funds that are more firmly established have seen decreased interest from investors. Bloomberg cited as an example Multicoin Capital, whose co-founder, Kyle Samani, told the news organization that "new capital has slowed, even for a higher-profile fund like ours."

The news comes amid a broader decline in the returns these funds receive, the news organization said. Cryptocurrency hedge funds are seeing their returns drop an average of 23 percent, a figure which is not helped by a bear market which brought token prices down to some of the lowest levels since last year.

Indeed, only two of the top 25 cryptocurrencies by market cap saw gains in the first quarter of 2018, as previously reported. The overall market capitalization fell from $830 billion in early January to $251 billion last week.

Bloomberg noted that more than 200 cryptocurrency-related hedge funds have launched over the last several years. The article quoted Lex Sokolin, global director of fintech strategy at Autonomous Research LLP, as predicting that roughly 10 percent of these will shut down by January 2019.

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This doesnt look like a good sign for cryptocurrency prospectors. I am willing to hold on to my Bursts as a long term investment but if those hedge funds are cutting their losses and are closing, then maybe we should not expect the bull market to come back soon and we should let go of our coins too?

NO. WE WILL HODL!

yes!Only HODL!!! :D

I don't know how I feel about this. I kind of feel that Crypto should be for the little guy, and hedgefund sounds... I don't know. Like I like the idea of individuals doing their own homework and making decisions by themselves.

Have you heard of the monkey experiment? Basically they got a monkey to throw darts at a board of stocks and the monkey's portfolio outperformed most hedgefund managers. They might sound sophisticated but honestly, Im gonna bet that they probably don't know much more than we do, its just that their risk tolerance is much lower than ours because its their client's money.

As with futures, large hedge funds would be very healthy for Bitcoin. It is sad news that they decide not to operate in this market anymore. We need people and funds who think long term.

This might sound bad. But it is much more difficult to be successful running a hedge fund with a lot of capital than it is to manage smaller portfolios. The difficulty level rises sharply the more money a person has on hand to invest due to difficulties associated with higher transaction volume and needing to find a higher number of good investments to generate positive returns over the short term. It is true what some in this thread have said about darts and monkeys, according to studies the best hedge fund managers only manage around 5% returns. Hedge funds probably aren't the best financial paradigm for generating cash. The emphasis on short term returns and investors wanting to see results could have something to do with it.

On a slightly positive note, crypto hedge funds appear to be doing much better than crypto ICOs? Wasn't it said that more than 90% of ICOs fail? Crypto hedge funds might actually look good in comparison to that.

Thats true in a bull market because you will have more chances to pick winners. But in a bear market the "dart experiment" will not work. The best move would be avoid investing if you cannot stomach the paper losses.

What stopped them from playing short?

In bitcoin, maybe, but I'm not sure if that's even possible with these tokens--they've got thin markets to begin with, and usually you need liquid markets and people who are willing to let you borrow what you want to sell short.  But yours is a very good question, though there's no indication that they weren't selling anything short.  Bitcoin itself fell quite steeply but has been trading sideways for a while now.  You might have made good money shorting it when it was close to $20,000 but timing's the key.  Would you be comfortable shorting it now?  It's a tough call for anyone, including these hedge fund people.

I have to profess ignorance as to who these hedge funders are, but I question whether they're qualified to be managing other people's money in the first place if they've closed up shop so quickly.  You all have seen the "securities" section of bitcointalk, and pretty much anyone can sell "securities" on it, but that doesn't make them anything but scammers usually.  It would seem to me that you'd have to be an exceptionally shitty money manager to get into an asset as notoriously volatile as bitcoin/crypto, and then be driven out of business by a drop to a level that's still over 10x greater than the level two years ago.

Yes, they are closed, but as soon as we start to serious profit again we will see new hedge funds again.
It is an old circle of how things work, not just in crypto.

I already expected this after the fall in December given that it's obvious the fuel has already ran out and there's no way these hedge fund managers would take the risk to try and see whether they can still make something out of this downturn. It's quite unfortunate, really, but it's still is good seeing that they already gauged how much interest there is in bitcoin and how would they be able to enter in the next bull runs if there would be any. Right now, the winning horse is obviously not cryptocurrency, but some time in the future, these fund managers, alongside other investors and such would come swarming once another bull run is brewing.

i think so, bitcoin is a long-term project where there are many obstacles to achieving the goal that can be used by many people to make transactions, this is certainly very detrimental, because the future of bitcoin is very bright

People need to remember what a hedge fund actually is. They're opportunistic and aggressive so they pop up with the hype and disappear when it's over, and more than likely they totally destroyed their customers' money too.

They're not going to open or thrive when things are sideways.

It is happening due to countries negative stand on crypto currencies and big countries who once where the leaders like China have banned it due to which the effect could be seen in the market. Thus now people are moving away as may be their is no future for them to run it.

It;s no surprise they are closing. It's easy to give high returns in the bull market (as it was in 2017). Thus, a lot of those funds attracted investments without having real expertise. So closing is just a logical end.

I think that without a real bull run this year or next the number might be closer to 50%.

Most of those involvement funds were poorly run, investing in all the hyped projects that turned in just a few months to dust and even worse they took most of the money at the peak of the market.
Good luck surviving a bear season one year long.


I'm pretty sure that most people here are not that keen on seeing this circle again nor seeing hedge funds popping up like mushrooms after the rain.

These are the funds that expected bitcoin to grow to the moon. Normal funds will continue to increase the volume of cryptocurrency in their assets.

Of course they will see a decline in the cryptocurrency world. There is not enough interest right now due to highs near the end of last year. The world is taking a breather and will wait for the next bull run.

Yeah it seems that this is the implications being done by the one who posted the thread. I do not know if we can consider this a FUD because we do not really know what will going to happen in the near future. And you are right you should hold it until you feel the burst to sell it if it is really or badly needed. I guess we do not need to worry about this investment especially in the likes of you that had benefited already with bitcoin.

This may sound awful. In any case, it is significantly more hard to be effective running a fence stock investments with a considerable measure of capital than it is to oversee littler portfolios. The trouble level ascents strongly the more cash a man has available to contribute because of challenges related with higher exchange volume and expecting to locate a higher number of good ventures to produce positive returns over the here and now. It is genuine what some in this string have said in regards to darts and monkeys, as indicated by examines the best fence investments administrators just oversee around 5% returns. Mutual funds most likely aren't the best money related worldview for creating money. The accentuation on here and now returns and speculators needing to get results could have a comment with it.

It’s interesting to see the downfall of crypto hedge funds falling down. These funds don’t all utilize the same methodology, and there is broad strategic differentiation that mimics the traditional investment markets. It’s no surprise that hedge funds became so popular. It’s important to remember that crypto markets are still a new investment vehicle, and it’s easy to confuse singular events with broad characteristics. These hasty generalizations abound among industry pundits, but the reality is far more mundane. There isn’t as much strategy and intentionality in running a crypto hedge fund as some might think. In many ways, their genius is taking a financial stake in an asset that is just not beginning to mature.

Is that really so? A hedge fund is set up to assist investors, preventing the uncertainty of financing. Yet they could take over the money and disappear. There is nothing to say anymore. Future bitcoin is in the process of development which encountered this news is very detrimental to investors. Does that have a solution?

The OP is from April 2018, any updates on the Hedge funds involvement with cryptos in the following months until today? Things could have changed, the change all the time, especially when it's about crypto.

The market is volatile and bad news to Bitcoin so investors should be cautious during this period. I think that the news coming to cryptocurrency may cause the market to fall sharply, but at the same time it will get more attention from investors around the world.