Crypto Funds Can’t Recover After Bitcoin Falls

  • Crypto funds are trying to recover from the fall

  • Bitcoin has won back 36% of the value since the beginning of the year

  • The fall in the market did not scare away investors

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The March sale of bitcoin is still making itself felt: crypto funds lost an average of 26% of funds, and some had to close altogether. Despite the fact that the value of bitcoin has grown by 36% since the beginning of the year, this did not help to compensate for the failure.

More stable than index S&P


The financial crisis caused by the coronavirus epidemic has brought down several markets at once, including the cryptocurrency.

Crypto Funds Can't Recover After Bitcoin Falls

However, unlike the stock markets, cryptocurrencies recovered quickly. For example, after “Bloody Thursday” and the sale on March 12, Bitcoin has already managed to win back its value and has grown by 36% since the beginning of the year. At the same time, the S&P is 8%. According to the resource Coinmarketcap.com, the capitalization of the cryptocurrency market is $ 265 billion.

Nevertheless, crypto funds, which suffered significantly during the sale, still cannot recover and enter their usual mode of operation..

“In March, crypto funds lost an average of 26.2%. It was the second worst month for companies since 2015.

Crypto Funds Can't Recover After Bitcoin Falls

Hedge funds have lost only 8.4% of their funds, ”says Hedge fund research group HFR in a statement..

But a 19.5% gain last month has lifted crypto hedge fund returns this year to 13.4%..

Crypto Funds Can't Recover After Bitcoin Falls

That’s much better than the average 6.7% annual loss across the hedge fund industry..

High volatility prevents crypto funds from recovering


One of the main sources of volatility was the large amount of leverage taken by some traders, which led to increased price fluctuations. Some exchanges offer derivative contracts that can be used up to 100 times and automatically liquidate losing positions beyond a certain point, which could aggravate the fall in the value of bitcoin.

“Some futures exchanges offer almost insane amounts of leverage. Bitcoin is such a high-octane thing that you don’t need to put on any leverage, “commented Dan Morehead, former head of macro trading at Tiger Management and founder of California-based Pantera Capital..

Before its collapse, Cryptolab told investors that it is developing new trading strategies for profit during periods of high volatility and is seeking to provide “better terms”.

London-based Cambrial Capital also closed its crypto-focused fund after the March sell-off, although a statement said the company had decided to focus on advisory work..

However, market volatility has not deterred the largest players in the hedge fund industry. Paul Tudor Jones, founder of Tudor Investment Corporation, recently announced that his funds will be able to trade bitcoin futures, while flagship fund Renaissance Technologies Medallion is also eyeing crypto.


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Crypto Funds Can't Recover After Bitcoin Falls

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