Nearly 100 crypto funds shut in 2023

Since the start of 2023, 97 of the 700 existing crypto funds have closed — about 13%. The Bloomberg report cites 21e6 Capital AG.

For the first half of the year, the average return of such funds stood at 15.2%. Over the same period, Bitcoin’s return was 83.3%.

The worst performers were funds with market-neutral strategies — only 6.8%.

Analysts say that during the crisis at the end of 2022 many crypto funds held assets longer than usual, thereby missing much of Bitcoin’s rally in 2023.

Some funds closed after losing assets held on collapsed platforms. In particular, FTX exchange was a favourite for hedge funds and professional crypto traders.

According to Maximilian Brukner, head of marketing at 21e6, some firms “are still trying to find new partners” in the banking sector after the closure of crypto-friendly Silvergate and Signature Bank.

Along with “regulatory uncertainty, the scramble for safe exchanges and custodians,” this situation created many hurdles for venture capital outfits, Brukner added.

“Investor confidence has improved somewhat, but inflows and the launch of funds have not yet signaled a full restoration of sentiment,” he said.

The United States remains the dominant jurisdiction for crypto fund managers.

As reported by CoinShares, outflows from cryptocurrency investment products from July 29 to August 4 amounted to $107 million, up from $20.9 million the previous week.

Earlier reports said a cut in Sequoia’s crypto fund valuation by 66% — from $585 million to $200 million. Sources said the move was to reflect changing market conditions.