Cryptocurrency hedge funds recover in 2023, returning 44% on average

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Cryptocurrency hedge funds had returned an average of 44% this year through Dec. 20, recovering from a 52% loss in 2022 and ranking the best among the 29 strategies tracked.

They have weathered a challenging 2022 and are heading toward recovery, with many looking forward to a prosperous 2024.

The resurgence of cryptocurrency hedge funds

Pantera Capital, led by industry veteran Dan Morehead, has experienced a remarkable recovery, with its Liquid Token Fund growing nearly 80% in mid-December after falling 80% in 2022. Similarly, Chainview Capital Slavin, managed by Dan Morehead, doubled its performance after falling 18% last year.

Stoka Global LP, which specializes in altcoin business, also rose as high as 268% as of November 30, according to founder Naveen Choudary, a former Goldman Sachs Group technology investment banker.

While the average performance of cryptocurrency hedge funds has failed to keep up with Bitcoin’s more than 150% gain this year, the positive reversal is seen as a good sign for an industry still recovering from recent turmoil. Year. The impact of FTX, redemptions, and banking challenges led to the bankruptcy of approximately one-third of crypto hedge funds.

However, despite the recovery, its average performance still lags around 120 percentage points behind Bitcoin’s impressive 2023 gains. Additionally, the index’s performance lagged passive crypto funds, which averaged returns of around 265% last year.

Cryptocurrency hedge fund managers optimistic about 2024

Alt-Tab Capital co-founder and COO Greg Moritz predicts a positive trajectory for the cryptocurrency market. He predicts that this momentum is driven by a combination of macroeconomic and industry-specific factors, including stabilizing inflation, no more rate hikes by the Federal Reserve, and Bitcoin’s impending halving, which is expected to reduce the cryptocurrency’s supply.

Chainview Capital founder Dan Slavin expressed optimism about the possibility of a resurgence in token mania in the cryptocurrency market, a sentiment similar to that seen three years ago when Bitcoin rose to all-time highs. As the flagship token continues its upward trend and potential investors increasingly approach fund managers, hedging strategies remain cost-effective.

Describing this year as a “dream”, Slaven plans to expand his team and change the existing “two-man scheme”. The Pantera Capital Liquid Token Fund, led by Cosmo Jiang, expects gains in 2024, especially for altcoins. Historically, altcoins have performed better during the later stages of market recoveries following Bitcoin breakouts.