One of the first companies to establish a Bitcoin fund, Pantera Capital, marked an 87,7% value increase since the end of the crypto winter of 2018. The gains were made in 2019, in a market analysis by CoinDesk. However, its three hybrid crypto funds, created in 2017 are down with double-digit numbers.
In particular, Pantera Capital’s mixed crypto fund – with currencies like Ethereum (ETH), ZCash (ZCH), and Ripple (XRP) lost 73% from 2017 to 2019. Pantera’s ICO fund is also down 42,2%, losing three times more than the decline of a long-term twin fund.
“Most of the ICO projects are relatively new, when comparing them to Bitcoin, for example. And since they are new, it may take time for those assets to stay on solid ground,” an investor in Pantera Capital’s crypto fund noted.
The majority of the investments in the digital asset fund are ERC-20 tokens, operating on Ethereum’s blockchain, as well as contracts on Augur.
Interestingly, Pantera Capital declared $470 million worth of crypto assets under management at the end of the 2019 fiscal year. The funds were split across seven funds with both venture and non-venture origin. Out of the seven funds, the passive Bitcoin fund recorded $110 million, while the three hybrid hedge funds settled to $90 million.
Pantera Capital is also relocating cash in its venture funds, as close to $95 million were put in ventures between 2013 and 2019. Among Pantera’s key investments are crypto futures exchange Bakkt, as well as Erisx, which is a crypto derivatives trading platform.
Nevertheless, crypto market dynamics shape the performance of crypto funds. For example, during Bitcoin’s peak momentum in 2017, the Bitcoin fund rose 1,565%, while the digital asset fund propelled with 145,6%. However, funds have seen some downturns, as in 2018, Pantera Capital’s Bitcoin fund collapsed with 87%, while the digital asset fund dropped with 83%.
The primary reasons behind the market swings may be regulatory havoc, as some ICO projects may have been a victim of regulatory barriers. For example, some ICO investments were arranged with a special Simple Agreement for Future Tokens (SAFT) contract. The contract gave obligation to the investments as if they were securities, without the assets being registered as such.
Meanwhile, the future for Pantera Capital’s ICO fund still remains unclear, as the U.S. Securities and Exchange Commission (SEC) didn’t agree with the SAFT contracts. The SEC halted Kik messenger’s $100 million ICO, which was backed with investments from Pantera’s ICO fund.
“Without a doubt, the ICO environment has suffered from regulatory pressure and misunderstanding”, a partner at Pantera Capital stated.