Cryptocurrency hedge funds returned an average of 44% this year through Dec. 20, marking a rebound from a 52% loss in 2022, ranking as the best among 29 monitored strategies.
They have overcome a difficult 2022 and are enjoying a recovery, with many expecting a prosperous 2024.
Crypto Hedge Fund Recovery
Pantera Capital, led by industry veteran Dan Morehead, has seen a significant rebound, with its liquid token fund surging nearly 80% by mid-December. This follows an 80% drop in 2022. Similarly, Chainview Capital, overseen by Dan Slavin, 31, doubled its performance after an 18% drop the previous year.
Stoka Global LP, which specializes in altcoins, also saw an impressive 268% gain as of November 30, according to founder Naveen Choudary, a former technology investment banker at Goldman Sachs Group Inc.
Although the average performance of cryptocurrency hedge funds has not matched Bitcoin’s more than 150% rally this year, the positive reversal is seen as encouraging news for a sector still recovering from challenges including the collapse of FTX the previous year. The fallout from FTX, buyouts, and banking woes led to the demise of about a third of all crypto hedge funds.
However, despite this resurgence, the average performance still lags Bitcoin’s impressive gain in 2023 by around 120 percentage points. Additionally, the index lags passive crypto funds, which recorded in average returns of around 265% over the past year.
Crypto Hedge Fund Managers Optimistic for 2024
Greg Moritz, co-founder and COO of Alt-Tab Capital, foresees a positive trajectory for the crypto market. He forecasts a surge driven by a convergence of macroeconomic and industry-specific factors, including stabilizing inflation, the Federal Reserve abandoning rate hikes and the upcoming Bitcoin halving, which is expected to reduce the cryptocurrency offering.
Dan Slavin, the founder of Chainview Capital, expressed optimism about a potential resurgence of token mania in the crypto market, drawing parallels to the mood felt three years ago when Bitcoin hit record highs . As the leading token continues its upward trajectory, potential investors are increasingly engaging with fund managers and hedging strategies remain profitable.
Describing the year as a “dream,” Slavin plans to expand his team, transforming the existing “two-man show.” Pantera Capital’s liquid token fund, led by Cosmo Jiang, is positioning itself for a rise in 2024, particularly with altcoins. Historically, altcoins have outperformed during the latter stages of a market rally following the rise of Bitcoin.
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