2019 Crypto Hedge Fund report

[alyssa85]

This is an 18 page report by PriceWaterhouseCoopers:

https://www.pwc.com/gx/en/financial-services/fintech/assets/pwc-elwood-2019-annual-crypto-hedge-fund-report.pdf

It has a number of gems within: there are a 150 active crypto hedge funds. Most have AuM (assets under management) of about $22 million.

They use various different strategies - in 2018 a lot of them invested in ICOs and lost money (though some made money by exiting these early). They're not just focused on bitcoin, they look at alts and bitcoin related start-up service companies too.

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[The Sceptical Chymist]

It has a number of gems within: there are a 150 active crypto hedge funds. Most have AuM (assets under management) of about $22 million.

Holy crap, that's a lot of crypto hedge funds!  I wasn't even aware that there were any.  On the other hand, it doesn't really take much to start a hedge fund, and I do believe they're less regulated than things like mutual funds because they generally attract high net worth investors who presumably know the risks before they invest.  At least that's what I've read.

$22 million for a hedge fund dealing with crypto isn't a lot of money, at least compared to other hedge funds I've heard of.  They must be pretty small, boutique-type ones.

in 2018 a lot of them invested in ICOs and lost money (though some made money by exiting these early).

Jesus Christ, I would never, ever put money into a fund that was investing in ICOs.  Are they crazy?  And I think I just found my answer to the question I've been asking myself for a long time now: who are the suckers that keep pouring money into ICOs and keep getting scammed time after time.  I can't believe it's actually hedge funds that are doing this.  I bet if they stopped, the whole ICO space would collapse in a heartbeat.

[alyssa85]

On the other hand, it doesn't really take much to start a hedge fund, and I do believe they're less regulated than things like mutual funds because they generally attract high net worth investors who presumably know the risks before they invest.  

The only regulation is that they can't market themselves to ordinary people. I think they have to accept investments of $500,000 or larger. The thinking being that people with that kind of money don't need the protection of the government, and if they lose money, tough.

As to their strategy - it's similar to the one venture capitalists use: throw money at loads of projects, and you find the one diamond that makes you big money.

[candy27]

Let's hope the hedge funds continue to invest in crypto (allowing ordinary users to cash out). It's a great transfer of wealth from the extremely rich to the ordinary geek!

[alyssa85]

Let's hope the hedge funds continue to invest in crypto (allowing ordinary users to cash out). It's a great transfer of wealth from the extremely rich to the ordinary geek!

They seem to have slowed down their investments and enthusiasm for cryptocurrency - probably because they've made serious losses, and some of the bitcoin start-ups they've invested in haven't done that well (even Coinbase has had to raise it's fees to cover it's costs).

[bitsurfer2014]

I think I just found my answer to the question I've been asking myself for a long time now: who are the suckers that keep pouring money into ICOs and keep getting scammed time after time.  I can't believe it's actually hedge funds that are doing this.  I bet if they stopped, the whole ICO space would collapse in a heartbeat.

I think these crypto hedge funds did partake and and may have helped fuel the ICO boom of 2017-2018 but at the same time, may have also helped in forming the ICO bust in which ICO's had already lost its credibility among investors.

By liquidating their stakes immediately once a token has been listed on an exchange, these  hedge funds are mostly guaranteed of a profit even if they sell their stakes at ICO price because most of these ICO's have implemented bonuses mostly in favor of early investors and as a result, most of these ICO tokens suffered heavy dumping on the first days of an exchange listing - which is quite abnormal especially if the project has very good fundamentals.

It even got worst as ordinary investors tend to follow suit and did also dumped their tokens and opted to take smaller loss than lost their entire portfolio if they had chosen to go long on those assets. These ICO dumping patterns has been observed repeatedly over the ICO scene of 2017 -2018  which maybe partly attributed to hedge funds!

As a final thought, I agree that some of these crypto hedge fund may have been a victim of ICO scams but I think that those who have suffered heavy losses are the ordinary individual investors who had been "takin for a ride" either by the core team having an exit scam or these hedge fund managers who always take profits mostly by shorting their positions resulting to heavy dumping and ultimately crashed the tokens price! Imho.

[Baofeng]

This is an 18 page report by PriceWaterhouseCoopers:

https://www.pwc.com/gx/en/financial-services/fintech/assets/pwc-elwood-2019-annual-crypto-hedge-fund-report.pdf

It has a number of gems within: there are a 150 active crypto hedge funds. Most have AuM (assets under management) of about $22 million.

I'm not surprised by the number of active crypto hedge funds. However, $22 million? it just a decent amount of money to flow into the crypto ecosystem. I'm expecting close to a $100-$300 million at least, may perhaps due to the bear market, investors are reluctant, I guess.

They use various different strategies - in 2018 a lot of them invested in ICOs and lost money (though some made money by exiting these early). They're not just focused on bitcoin, they look at alts and bitcoin related start-up service companies too.

Oh well, we have a boom in 2017, but by mid 2018 we already have signs of the market turning into a bearish one so maybe just a few who exited early and make some big money, however, those who chooses or blindly not seeing all the signs will eventually lost. Another lesson for them is that stick with bitcoin, simply as that.

[mu_enrico]

2018 Media Crypto Fund Performance: -46%
2018 Bitcoin Performance: -72%

Source: https://www.pwc.com/gx/en/financial-services/fintech/assets/pwc-elwood-2019-annual-crypto-hedge-fund-report.pdf

I just realized we were rekt so bad in 2018 lol. It's interesting to see how the fund managers achieve this +26% advantage compared to BTC only performance. I think it was only from shorting and then buyback multiple times. I remember how "rebalancing portfolio" was a thing back then.