Crypto Hedge Funds Slip in Monthly Performance but Outperform on the Year

Share Article
In Brief
  • Cryptocurrency hedge funds took it on the chin in September 2020 but are up for the year.

  • The Vision Hill Composite Index, which is a reflection of the performance of a trio of crypto hedge fund strategies, was down nearly 6% in the month of September.

  • The Vision Hill Composite Index is up 114% year-to-date.

  • promo

    Want to learn how to trade? Get a beginners guide from _BeInCrypto Academy_ now!

The Trust Project is an international consortium of news organizations building standards of transparency.

Cryptocurrency hedge funds took it on the chin in September 2020 but are up for the year, according to the latest data from Vision Hill Group, which on Nov. 3 published its latest results.



The Vision Hill Composite Index, which is a reflection of the performance of a trio of crypto hedge fund strategies, was down nearly 6% in the month of September, the latest data that the firm has available. The hedge fund strategies include fundamental, quantitative and opportunistic, while the composite index is meant to reflect “the breadth of crypto hedge fund performance across all strategies.” The performance was in line with the bitcoin price, which fell about 10% in September.

Year-to-Date Crypto Hedge Funds Shine

Over a longer time horizon, the results better reflect the bitcoin bull market. So far in 2020, the bitcoin price is up a staggering 88%, outpacing rival store-of-value gold, whose gains hover at 23%, Messari pointed out. Hedge fund managers are sophisticated traders and are paid lofty fees to outperform the market. So far this year, they’ve done their job.

The Vision Hill Composite Index is up 114% year-to-date. The fundamental hedge fund strategy has been the best performing hedge fund strategy by far, gaining 230% on the year. Quantitative and opportunistic strategies follow with 58% and 32% gains, respectively, in the same period. They have navigated a tricky year in the cryptocurrency market in which bitcoin’s correlation with the stock market has ebbed and flowed, most recently moving in the opposite direction of the S&P 500.

Source: Vision Hill 

Venture-Like Crypto Hedge Funds

Similar to the traditional financial markets, hedge funds that operate in the cryptocurrency space don’t all survive to tell about it. On a recent Coinscrum episode, Novum Insights CEO Toby Lewis gave the lay of the land, saying there are about 300 crypto hedge funds trading in the market. Most of them trade the most liquidity cryptocurrencies, such as BTC, ETH bitcoin variants. Lewis likened the lifespan of crypto hedge funds to fireflies because “they can be pretty short sometimes.” 

He also described crypto hedge funds as “quasi venture capital,” pointing to mainstay firms such as Pantera Capital, DCG and Polychain Capital. While they each deploy their own hedging strategies, they also direct their capital toward buying new issues.

Incidentally, Spencer Noon, head of investments at crypto-native investment fund DTC Capital, noted how competitive the VC landscape is looking, saying that the onus is on the funds to “provide real value” or “they won’t survive long term,” which he views as bullish for the industry.

With the bitcoin price now hovering between $13,000 and $14,000 and the likes of household names like PayPal entering the fray, institutional investors are said to be finally coming off of the sidelines and dipping their toe into the cryptocurrency waters.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.
Share Article

Gerelyn caught wind of bitcoin in mid-2017, and after becoming smitten by the peer-to-peer nature of crypto has never looked back. She has been covering the space ever since. Previously, she wrote about traditional financial services, Wall Street and institutional investing for much of her career. Gerelyn resides in Verona, N.J., just a hop, skip and a jump from New York City.

Follow Author

Daily signals, Bitcoin analytics and traders chat. Join our Telegram today!

Let’s Go

What are Crypto Wallets? Everything You Need to Know

Learn now