A new report out from Bloomberg today claims that nine crypto hedge funds have shuttered in 2018. It is only April 3, in case you forgot. It seems that the opening and closing of crypto focused funds is just as volatile as the assets that they invest in.
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 received, 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.
One could make that case that any fund that can’t withstand an initial bear market is poorly managed in the first place, or not well capitalized. Either way, they weren’t long for the space.
Hearing that Alpha Protocol will at least be returning funds to shareholders is a good development. Our guess is that some closures will fail to do the same – so buyer beware.
Would it be the worst time in the world to start a fund now? Prices are depressed, the froth has been skimmed off of the top, and the only investors left are probably highly committed to long-term crypto profits. Time will tell.