Market Slow Down Results in 30% Drop of Crypto Funds' Performance in March

Amid the massive downturn in the cryptocurrency market since the beginning of this year, crypto funds in the market have taken a massive hit. In March alone, funds went down by 29.2 percent, while the year-to-date depreciation is 43.1 percent, according to the cryptocurrency funds' index by BarclayHedge.

The consecutive slump of the cryptocurrency market since January, in which the total market cap came down from $835 billion to the current value of around $343 billion, according to CoinMarketCap’s data, has resulted in the damping performance of the crypto funds. Bitcoin, which touched $20,000 at its peak in last December, is now trading at $8,170, after plummeting to as low as $5,920, a few weeks earlier.

Commenting on the performance of the crypto funds, BarclayHedge’s founder and President Sol Waksman said: “Within days of the launch of Bitcoin futures, Bitcoin rose to its all-time high of just under $20,000 on December 18 last year. Today’s prices are just over $8,000. Folks have their opinions, but no one really knows if it’s a bubble or a correction.”

The Cryptocurrency Traders Index, the crypto index maintained by BarclayHedge, was started in January 2018. It is an equal-weighted index of the monthly returns of 19 funds that trade Bitcoin and other Cryptocurrencies .

“Based on the knowledge gained from our 32 years of experience in collecting, compiling, analyzing, and indexing performance data from alternative investment funds, we wanted to minimize statistical biases which can distort historical index returns. We chose a January 2018 start date to avoid survivorship bias, backdating and selection bias,” Waksman added.

The rise of funds

With the boom in the prices of cryptocurrencies in 2017, the market has consecutively seen a massive influx of fund managers with crypto funds. The introduction of Bitcoin futures by two leading exchanges in the United States - CME Group and CBOE Global Markets - had cleared the way for the institutions to enter the volatile market as well.

However, the falling prices of Bitcoin and other cryptocurrencies in 2018 did not allow the funds to make a windfall profit as they did in the previous year. It rather reversed the trend, however, the number of funds increased moderately.

A week-old report published by the London-based fintech data tracking firm Autonomous NEXT noted: “There has been a slow-down in ICO (initial coin offering) proceeds that we track ($1 million and over), with a dip in February and a slight pick-up in March in terms of fundraising.”

“The number is not growing as quickly as we’d expect - partly because it’s a more difficult environment to raise, and partly because folks are being less vocal about what they’re doing,” the firm added, which tracks 251 crypto funds.