Crypto hedge fund investors were not worried about the past digital currency bear market which ended at the twilight of 2020. This is aptly demonstrated in the volume of funds that flowed into the sector throughout the year.
The coin market saw most of the losses since the beginning of 2020 with some coins losing more than 70 percent of their value. On a general scale, the market lost 75 percent of capitalization at some points.
Hedge Funds Gain is Coin Market Loss
However, the losses of the coin market did not prevent Grayscale Investment, a subsidiary of Digital Currency Group from raising some $330 million from new and old investors according to a November 2 report.
The firm continued to raise such substantial funding from investors since 2017 which points to the fact that cryptocurrency bear market may actually favor hedge funds. This is contrary to expectations in a market that was mostly in red throughout most of last year.
The firm’s managing director Michael Sonnenshein said that the negative market has not affected the performance of the company in a remarkable way.
Grayscale maintained that despite the fact that Bitcoin lost 69 percent of its value in 2018, it seems not to have affected the perception of its customers towards investment in digital assets.
“Bitcoin prices doing nothing but go down the entire year has not deterred our existing clients from putting more capital to work. Asset inflows are really strong despite these price declines. Investors are taking the pullback as an opportunity to increase their exposure. The price has not slowed down the pace of investments — it’s actually caused us to broaden our relationships”
The company enables entities from the regulated stock market to invest safely in the cryptocurrency market. This is done without being exposed to the high volatility of the coin market.
The Same Result Across Board
Aside from Grayscale, a number of other hedging funds in the crypto market are seeing good business too. Pantera Capital and Ikigai Asset Management have raised more than $100 million in crypto-based investments in recent months.
It is apparent that since most users of the crypto hedge funds are traders from the stock exchange, they consider the 2018 coin market direction as a mere correction. There is a consensus among many that the crypto bear market is the right entry point into the market.
This is because these investors have a long-term view of the industry, so the 11 months of correction may not be considered the determinant of the direction of the market.
This should really not be surprising. In its 10 years history, Bitcoin has experienced four major corrections each of which recorded a drop in value of up to 80 percent. This cycle presumably being repeated makes many informed investors view 2018 as the right point of entry even for new investors.
Travis Kling of Ikigai explained,
“Same as that earlier invention, I believe crypto will create trillions of dollars along the way. Already the market for virtual coins is valued at hundreds of billions of dollars. And it’s all just getting started. So I left Point72, billionaire Steven A. Cohen’s hedge fund, in December to continue my investing career, but in a new asset class.”
What we have concluded is that the perception of investors is what matters irrespective of the market trend as far as are concerned. Crypto hedge funds may just be the option available in bear market for investors who do not know how to trade the