Crypto Hedge Funds Fell Sharply in March as Volatile Markets Hit Blockchain
The volatile markets hit the blockchain space hard in March as cryptocurrency-focused hedge funds sharply dropped during the month, reported data provider Hedge Fund Research in its monthly report.
The HFR Blockchain Composite Index fell 42.9% last month and closed the first quarter of the year down 52.6%. The poor showing of the crypto funds was in sharp contrast to the 2,774% gain recorded in 2017, making the blockchain space the most profitable strategy last year.
HFR president Kenneth J. Heinz commented:
“March and the first quarter of 2018 have already defined a significantly divergent financial market and hedge fund performance environment than prior years, with the shift and volatility punctuated by the escalation of trade and tariff politics and economics.
“As most equity markets declined, hedge funds quickly adapted to low and non-correlated exposures across asset classes, and to capital protection and preservation positions, en route to producing a first-quarter gain. It is likely that these trends will not only continue but accelerate into mid-year, driving uncorrelated gains and industry capital growth.”
HFR said that the growing concerns about the trade and tariff tensions between China and the US contributed to the decline in global equities.
Nine crypto hedge funds shuttered
Last week, it was reported that at least nine digital currency-focused hedge funds shut down so far this year after demands and profits for dried up following the spectacular growth in the virtual currency space last year which saw prices of Bitcoin nearing $20,000.
As of 3:00 am UTC Monday, Bitcoin was trading at $7,160, according to data from CoinMarketcap.com.
Kyle Samani, co-founder of Austin, Texas-based Multicoin Capital, told Bloomberg: “New capital has slowed, even for a higher-profile fund like ours.” Multicoin was launched in August last year with nearly $50 million in assets under management.
George Soros to trade crypto
In a stunning reversal of policy, billionaire and hedge fund investor George Soros announced his plans to launch a new strategy, through his Soros Fund Management, that will trade on cryptocurrency, three months after describing the new asset class as a “typical bubble”.
Soros’ move was a complete turn-around from his statement at the World Economic Forum in January when he stated that digital currencies were “based on some kind of misunderstanding” and dismissed their potential to displace fiat currencies.
The 87-year-old investor was quoted as saying then:
“Along as you have dictatorships on the rise, you will have a different ending because the rulers in those countries will turn to Bitcoin to build a nest egg abroad .”
This article appeared first on Cryptovest
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