According to a research report by 21e6 Capital, a Swiss cryptocurrency investment advisory company, in the first half of this year alone, the returns earned by investors from directly buying and holding Bitcoin far exceeded the returns earned from investing in crypto hedge funds. .
Cryptocurrency funds returned an average of 15% in the first half of the year, compared with an average return of 83% for investments in Bitcoin, according to 21e6 Capital. The average return of funds using directional strategies is 22%, which is much lower than that of Bitcoin, but higher than the 6.8% return of market neutral strategy funds. These strategies usually try to follow the market trend, but in a market with high volatility, , it is difficult to grasp the market trend.
The above-mentioned cryptocurrency investment funds are struggling after the sudden collapse of cryptocurrency exchange FTX last November, the collapse of three banks supporting the cryptocurrency field earlier this year, and ongoing regulatory concerns.
Jan Spörer, due diligence manager and Maximilian Bruckner, head of sales and marketing at 21e6 Capital, said in the report:
Clearly, simply buying and holding Bitcoin has outperformed this basket of funds. Bitcoin gained about 80% in value in the first half of this year.
The report stated: “In previous bull markets, the performance of cryptocurrency hedge funds has often been significantly better than that of Bitcoin itself. Why has the underperformance of professionally managed cryptocurrency funds become such a common phenomenon?”
The complex answer to the above question involves the fact that cryptocurrency hedge funds have retained larger cash positions this year than in the past to mitigate risks following the collapse of FTX. The cash position is larger, which also makes the trader's reaction time slower. In addition, poor investment performance in alternative coins and small coins also drags down the trading performance of these hedge funds.
The report pointed out that after the failure and collapse of FTX and other cryptocurrency projects in 2022, many cryptocurrency funds chose to avoid risks and retain cash buffer positions, thus missing out on Bitcoin’s surge in the first half of this year.
“Funds with large cash positions will underperform Bitcoin in a bull market unless these funds’ assets significantly outperform Bitcoin,” the report said.
With market sentiment generally subdued at the end of 2022, many funds have higher than normal cash positions. Additionally, most major altcoins have also lagged Bitcoin, making it a difficult environment for funds.
This article makes you more profitable by buying BTC directly! Bitcoin’s return in the first half of the year reached 83%, far better than that of crypto funds. The post appeared first on Blockchain.
