Topic: crytpto hedgefunds are shutting down massively (Read 333 times)

Agreed, that's why I think only a few will achieve some success. But with a hedgefund it's not so much about knowing what they're doing but having the right contacts to gain investment and then the right people to make the correct decisions when it comes to investments.

I wouldn't lump Pantera in with them. Pantera is just a hedge fund. They're not creating infrastructure for the Bitcoin ecosystem. They're just investors, like Tim Draper's fund.


It just goes to show you that hedge funds, even those formed by Wall Street institutions, can get caught up in the bubble hype like everyone else.

Keep it in perspective though. Fortress Investment Group (Novogratz) was the first Wall Street company to invest in BTC. They bought the top in 2013. They ended up rolling that stash into equity in Pantera, which became one of the industry's biggest success stories.

Where is Novogratz now? He was overly bullish early in the year, on ICOs no less, and Galaxy is down hundreds of millions USD on the year. That's just to say, there's blood in the streets wherever you look.

I wouldn't class places like Grayscale, Xapo and Pantera as 'this class of person'. They've had a hand in creating the Bitcoin scene. All these places crashing and burning are put together by comparative nobodies arriving from nowhere.

Don't really get how anyone with an operative mind could've expected anything other than the bubble burst from hell. $3 XRP? That's just beyond ludicrous, let alone the countless dog walking ICOs. It was the most classic and empty bubble imaginable and even more sensible ones come with a heavy bill that demands paying.

You're only thinking about the late entrants. There have been hedge funds in this space since 2013, some of which are incredibly successful. Pantera Capital said a few months ago they were up 10,136.15% after fees and expenses since they launched. If you look back at what Morehead was saying back in 2013, the guy was a visionary. Altana has been around since 2014 and made 1500% returns last year. There are others as well.

To be fair, nobody knew how prolonged this bear market would be. Conventional wisdom said a multi-year bear was possible, but you'd be a fool to assume it was going to happen. It's difficult to fully hedge a diversified portfolio against a prolonged bear market. In a global economic crash, every market contracts, meaning there is no safe haven. Cryptocurrency markets are the same, just on a smaller scale. People think "why don't they just short?" They can and do, but they can't just perpetually stay net short. They need to limit counterparty exposure and more importantly, they need to ensure proper liquidity to exit shorts...... not easy in super thin crypto markets, particularly altcoins.

Just like late bubble buyers, late entrant funds who were under-capitalized or didn't hedge properly are getting squeezed. I don't think that's characteristic of all hedge fund activity in the space though.

Gnaizda estimates that 35 crypto hedge funds have closed since the beginning on 2018, representing more than 5% of the 633 funds the company tracks.

This dont sounds to me massively.  They just had poor management. As can everywhere happen. 5% massive.

Crypto hedgefunds are really useless when it comes to making a difference in the market at the scale regular hedgefunds could do.

Right now, we are looking at hedgefunds like JP Morgans and so forth and see that the crypto hedgefunds we know are quite tiny and unimportant in a market this big. We need to get these incredibly big companies to get their money into bitcoin and crypto together so we could see a real increase in both the volume and the number of transactions plus the price that will be affected by this.

Normally in order to make any difference in crypto world there needs to be billions of dollars changing hands in order to make a difference and right now these crypto hedgefunds do not provide that type of amount at all and them shutting down doesn't make a dent in the market as well.

Probably, they have no knowledge to even be operating a hedge fund. Sure, a lot of people with the way things have been going will obviously not be able to go ahead with utilizing hedge funds, and probably that is the main reason they have pulled out their funds.

Not so sure how hedge funds operate, but I thought they are there to be managing risks and portfolio for investors in the first place, so why should a downtrend be a problem if they probably know how to manage themselves in the market situations like this. So, basically I felt this should have been their time to at least be shining unless I am mistaking.

Massively you say? Only 5% of the 633 crypto hedge funds have closed since 2018 based on what is written on the article so I don't think that it will bring that much impact but how the "TITLE" of that article was somehow shocking right? It was a clear market manipulation news which don't even bother providing a solid proofs or complete data to be presented. When creating a shocking news, a catchy headline is extremely important to bring the reader in to view or pull its interest, your mind will do the rest on how much impact it will cause you positively or negatively.

I somewhat agree. I wonder to what degree they have been stimulating investors to pump money into crypto even near the peak levels of last year. Do they ever say no when they think it's a horrible time to enter a market?

I remember how in January I managed to convince a good friend of mine that it wasn't the right moment to invest in crypto, regardless of how low the amount was, and while he wasn't happy initially, he certainly was months later.

Some times you have to protect people from hurting themselves, even if they think they are right, and that's what these hedge funds should be doing as well. Crypto or legacy market, bull runs never last endlessly. Fact.

Does anyone know what they're doing? Since this class of person has arrived in cryptoland I'm not sure I can remember a single one of them making a statement on this area that I found remotely insightful. It's the peeps who've been here forever who have a better idea of what's what.  

I don't think arriving with conventional market experience is going to put you ahead as this ably proves.

Good riddance, they are part of the problem imho.

that is what happens when newbie idiots enter a business that they have no understanding of or experience in and then claim to be "experts" in it. obviously their business fails and then they have to blame it on something else like bitcoin price!
the thing is, all these hedge funds nonsense were useless to begin with and majority of them would have failed and shut down eventually even without bitcoin drop.

I thought you only had gold and silver as investments.

there's a saying that's pertinent here: "in a bull market, everybody's a genius". in 2017, you could have held virtually any cryptocurrency and made good returns. a lot of these fund managers got caught up in the hype just like retail investors. even experienced managers like mike novogratz posted huge losses this year. when it came to the crypto bubble, the only real difference between them and us retailers is how much more capital they put on the table.

it's good to see them getting shaken outta the market. this is a necessary part of the market cycle.

I doubt there was that much demand for these hedgefunds in the first place. At least not from sophisticated investors. I'm sure that a few funds will continue to exist and they'll post huge profits because they're run by people who know what they're doing but it seems that most just decided to take the buy and hold approach.

when I read this post I remembered to have seen somewhere where they said they had profits, so I went to do a little research and I found this:

This Cryptocurrency Hedge Fund Has a Lifetime Return of 10,136%

were not these hedge fund managers supposed to be experts? so if they are having bad results because some of them are making high absurd predictions? I begin to think that the experts are making absurd predictions because they want people to buy for the price increases and the experts will save their own reputation and hedge fund

Thank you for posting the topic, Bitmain shill.  I am right now preparing to dump on your fake recovery pump that you're trying to get people to sell before it happens.

This is what happens when you're in it only for the best parts but not on the worst ones. I never thought there were so many crypto hedge funds until now, and I thought hedge fund managers can stay afloat and still make money despite the bad conditions of the asset/market they are involved with. Anyways, it's just about time to weed out the overly-optimistic middlemen and let the small traders and those who know what they're doing reside within the cryptospace. They thought that crypto would always be a pot of gold, turns out they were wrong. :

This stuck out to me, perhaps it's because so many of these fund managers are still optimistic that crypto is going to be a big thing in the future. It's worth the loss and suffering right now so that they can still be set up and ready for people to invest as soon as the market makes a turn for the better. 500 funds can't all be wrong.

Well, that is their cup of tea. I thought basically their job is to pool capital from accredited individuals or institutional investors and invests in a variety of assets, often with complex portfolio-construction and risk-management techniques, so it is either they did not do their job well in that portfolio construction and risk management to have shut down, as I do not know how this could have happened with the market tanking down anyway.

It just seems a lot of them do not even have the experience or the know how when it comes to managing money, but because they want to make money and thought there is money in opening an hedge fund, they just ran into it.

This is bad but expect that in years to come many good news are going to hit the market that the market is going to recover in any high volatile ways.  Though what we are seeing in the market now was not expected but let keep hope that the future is bright.

This is good news.We don't need crypto hedge funds.They are just a middleman,who gets commisions from new customers,who deposit crypto into the hedge fund.That's how they make money.I really doubt that they have any return of investment from crypto trading.No crypto noobs getting into the market>no fresh money for the hedge funds,hence bankrupt.

Interesting article, though I thought there was another thread about this somewhere.

I had no idea there were so many crypto hedge funds in existence, but they must be pikers and not doing much hedging if they're headed toward shutting down as this article suggests.  Would have been nice had the article provided more information about the names of these funds and how much capital they are/were managing.

Some people have no business trying to manage money.  Frankly if you can't stay solvent throughout a bad year in crypto, it's probably best not to have other people's funds under your control.  It has been one hell of a year for bitcoin.  Couldn't these funds have shorted the market?  Obviously that's not very pro-crypto, but given the downward trend it would seem like money managers could have foreseen some of this coming and actually did some hedging with short sales. 

Ah well, Darwin always wins in the end, just like entropy.

More and more hedgefunds are shutting down because of the tanking bitcoin prices: https://www.marketwatch.com/story/how-bitcoins-meltdown-is-ravaging-hedge-funds-2018-11-21