Crypto Hedge Funds’ Recovery Experience, Optimism for 2024 Growth

The cryptocurrency hedge fund has returned an average of 44% this year through Dec. 20, marking an improvement from a 52% loss in 2022, the best among the 29 strategies tracked.

They have weathered a challenging 2022 and are recovering, and many are looking forward to a prosperous 2024.

Recovering Crypto Hedge Funds

Pantera Capital, led by industry veteran Dan Morehead, saw its liquid token fund soar nearly 80% in mid-December. This is the year After an 80% decline in 2022. Similarly, Chainview Capital, controlled by 31-year-old Dan Slavin, doubled its performance following an 18% decline from the previous year.

Stoka Global LP, which specializes in altcoins, posted an impressive 268% gain on November 30, according to Naveen Choudary, founder of Goldman Sachs Group Inc.'s technology investment bank.

While the average performance of cryptocurrency hedge funds has not matched Bitcoin's more than 150% rally this year, the positive reversal is seen as encouraging news for an industry recovering from problems including last year's FTX crash. The collapse of FTX, ransoms and banking challenges resulted in the loss of one-third of all crypto hedge funds.

However, despite this resurgence, the average performance still lags behind Bitcoin's impressive gains by roughly 120 percentage points in 2023. What's more, the index is short compared to passive crypto funds, which have returned an average of about 265% over the past year.

Crypto Hedge Fund Managers Are Optimistic About 2024

Greg Moritz, co-founder and COO of Alt-Tab Capital, expects a positive direction for the crypto market. He predicts stimulus driven by a combination of macroeconomic and industry-specific factors, including stabilizing inflation, the Federal Reserve's move away from rate hikes, and the upcoming bitcoin halving.

Chainview Capital founder Dan Slavin expressed optimism that token mania could be revived in the crypto market, similar to the sentiment he experienced three years ago when Bitcoin hit record highs. As the leading token continues its upward march, prospective investors will increasingly engage with fund managers, and hedging strategies will remain cost-effective.

Describing the year as a “dream,” Slavin plans to expand the team, replacing the current “two-man show.” Pantera Capital, a liquid-token fund led by Cosmo Jiang, launched in 2018. He has positioned himself for a bull run in 2024, especially in altcoins. Historically, altcoins have performed best in the latter stages of market rallies following Bitcoin's breakout.