Crypto hedge funds are witnessing a comeback after surviving the tumultuous conditions in 2022. With Bitcoin’s continual strong performance and a newfound interest in tokens, many are predicting a promising 2024.
What Happened: Bloomberg reported on Wednesday that crypto hedge funds that endured the challenging landscape of 2022 are not just recovering, but flourishing. Pantera Capital, one of the oldest and largest crypto hedge funds, saw its liquid-token fund surge nearly 80% this year, rebounding after an 80% slump in 2022. Chainview Capital, operated by Dan Slavin, has doubled after an 18% dip last year.
The crypto market is showing signs of a revival, despite the fall of FTX last year and subsequent closure of about a third of all crypto hedge funds. Funds that withstood this turbulence are gearing up for a hopeful 2024, bolstered by a high Bitcoin price and anticipation of the U.S. approving exchange-traded funds (ETFs) investing directly in Bitcoin.
“It’s looking like there’s going to be another token mania coming,” Slavin observed. On average, crypto hedge funds delivered a 44% return this year, bouncing back from a 52% loss in 2022. Nevertheless, they lagged behind Bitcoin’s 2023 gains by about 120 percentage points.
Of the 712 crypto hedge fund firms tracked by Galaxy Digital’s VisionTrack, roughly 250 closed down over the past 18 months. However, the latter half of 2023 marked a turnaround as the crypto markets rebounded, partly fueled by expectations of the US greenlighting its first spot in Bitcoin (CRYPTO: BTC) ETFs.
Why It Matters: This resurgence of crypto hedge funds comes after a pivotal year for the global cryptocurrency market, which more than doubled its value since the beginning of 2023. A new report from PriceWaterhouseCoopers (PwC) revealed that 42 countries made significant progress in crypto-focused regulations and legislation in 2023.
Key legislative achievements, like the Markets In Crypto Assets (MiCA) legislation established in Europe in 2023, have contributed to a more regulated trading environment, indicative of the growing global acceptance of digital assets. This shift to a more regulated market is a stark contrast to the…
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