According To A New Analysis, Crypto Hedge Funds Have Struggled This Year And Underperformed Across The Board

Data from financial advisor 21e6 Capital AG in Switzerland shows that 13% of cryptocurrency hedge funds have closed their doors so far this year. The closures were brought on by subpar performance and challenges in obtaining banking services.

Furthermore, in the first half of 2023, returns from crypto funds averaged around 15%. Compared to Bitcoin, which increased by 77% during the same time period, they have lagged substantially.

The reality is significantly different for many crypto hedge funds, despite stories to the contrary suggesting that most banks are crypto-friendly.

According to 21e6, numerous funds have larger-than-average cash positions after 2022's market upheaval. They as a result missed out on Bitcoin's significant price increases earlier that year.

Maximilian Bruckner, 21e6's head of marketing and sales, claimed that many funds are "still struggling to find new partners" for banking services. The failure of crypto-friendly banks Silvergate Capital and Signature Bank earlier this year added to the banking issues. Their causes haven't benefited from regulatory pressure or the SEC's fight against cryptocurrency in America.

According to the company, 97 of the 700 cryptocurrency hedge funds it was tracking closed in 2023. After the FTX crash, several of the locations where many people had their funds stored shuttered.

With only a 6.8% return for the first half of this year, "market-neutral strategies" underperformed the rest. The study's findings were as follows:

“All crypto fund strategies achieved positive results this year. But relative to Bitcoin, they underperformed, especially those with significant exposure to altcoins, to futures, or those strongly dependent on momentum signals.”

"Investor confidence improved slightly, but fund inflows and fund launches are not yet signaling a full recovery in sentiment," it noted.

This weekend, digital assets have remained stable, with very little change in their overall capitalization, which is still $1.2 trillion as of this writing.

This week, BTC and ETH both made a small decline, both falling by a few percentage points while maintaining their respective range-bound channels.

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