Crypto hedge fund merchants weren’t resistant to bitcoin’s downright frigid bear market. Just have a look at Polychain Capital, whose property underneath administration (AUM) fell to $591.5 million at year-end 2018, according to a regulatory filing cited within the Wall Street Journal.
Investors Stay Put in Polychain Capital’s Fund
The San Francisco-based crypto hedge fund boasted $1 billion in assets as of February 2018, which along with cryptocurrency included unspent money pledged by buyers and fairness holdings in firms, Fortune studies.
The worth of Polychain’s AUM, nevertheless, tumbled almost 40% between April and December 2018 when the bear market gripped bitcoin. Importantly, Polychain’s AUM shrunk as a consequence of a drop within the “value of its holdings,” not due to investor withdrawals, the submitting factors out. The decline was additionally much less extreme than the broader crypto market, whose “aggregate value” narrowed by 70% in the identical interval.
Crypto Hedge Fund Suffers a Bitcoin Bear Market Casualty
Polychain, which is led by Olaf Carlson-Wee, entered the crypto hedge fund market in 2016. It was one of many earliest funds to put money into cryptocurrency as a substitute of firm fairness.
The agency oversees 5 funds: Polychain Ventures, Dfinity Ecosystem Fund, Polychain Master Fund, Polychain Master Fund II, and Polychain Opportunities Fund I.
Meanwhile, Polychain’s weak efficiency in 2018 didn’t come with none casualties, reportedly costing founding principal Ryan Zurrer his job, in keeping with The Block.
Bitcoin’s Bull Market Could Be a Game-Changer
Polychain Capital’s AUM crash comes at a foul time for a crypto hedge fund business that’s nonetheless within the early levels of progress. An October 2018 report by Crypto Fund Research stated that of the 600 hedge funds that had been anticipated to hit the market final yr, 20% would give attention to cryptocurrencies.
In 2017, 16% of recent hedge funds had been devoted to crypto property, up sharply from 3% in 2016. The report went on to state that there are a complete of 303 crypto hedge funds with AUM of lower than $four billion.
It wouldn’t be stunning to see a slowdown within the variety of crypto hedge funds launched. Investors may look to conventional funding autos to keep away from burning their palms if the bears regain their footing.
On the opposite hand, the bitcoin value has shot up remarkably year-to-date.
Another upside to the bitcoin value rally is that the worth of Polychain Capital’s property might seize a few of that upward momentum. All will not be misplaced for this crypto hedge fund regardless of troubling occasions final yr.