No need to beat yourself up if your cryptocurrency portfolio exhibited less than stellar performance in May. Even the professional traders employed by the big hedge funds active in the space have suffered double digit declines during the previous month.
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Crypto Hedge Funds Show Weak Performance in May
Data provided by three different industry trackers reveals that crypto hedge funds achieved considerable negative growth in the bear market of May 2018.
The Eurekahedge Crypto-Currency Hedge Fund Index estimates the losses made by crypto funds to have been 11.66% during May, and 2018’s year to date (YTD) performance to be -22.71%. Market analysis firm, Hedge Fund Research Inc. (HFR), estimates crypto funds to have suffered a decline of 15.48% during May, bringing the YTD performance to -33.3% per the company’s HFR Blockchain Index. And the Cryptocurrency Traders Index of hedge fund data specialist Barclay Hedge shows that the performance of those it is tracking dropped by 19.09% in May, and down 34.57% YTD. The differences between the three benchmarks are due to each following a different number of funds.
The weak May figures are in sharp contrast to the strong rebound performance seen the previous month, as Eurekahedge reported an increase of in 52.83% and Barclay Hedge a similar 44.86% in April 2018.
Reasons to Remain Positive in the Long Term
Despite the setbacks in May and high volatility from month to month analysts believe there are reasons to remain optimistic such as the recent SEC statement and new institutional money coming in. “I expect the crypto markets to remain volatile for the foreseeable future,” said Henri Arslanian, cryptocurrency lead for Asia at PwC. “Whilst retail investors may see volatility in the crypto markets as a downside, many crypto funds see it as an opportunity.” He added that the “long term positive impact of the number of institutional players entering” is more important than short-term price changes.
And interest among Asian investors is surging, according to Josh Gu, director of quantitative research at the HFR index division. “Cryptocurrencies have been very volatile, the topic is still hot in China and Japan.” He explained to the FT that cryptocurrencies appealed to individual investors with a large risk appetite. “However, the [Chinese] regulator has banned some of the crypto trading platforms because of risk, so some investors might have panicked.”
Is such a performance justifies paying for portfolio management? Share your thoughts in the comments section below.
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