Virtual volatility

Losses don’t deter bitcoin hedgies

Hedge funds focused on trading cryptocurrencies have struggled to eke out returns this year amid a sharp sell-off in the volatile market, in spite of a flood of new funds setting up to deploy investor cash.

The number of crypto hedge funds more than doubled in the four months to Feb. 15, data from fintech research house Autonomous NEXT showed on Thursday.

The research firm re- corded a record high of 226 global hedge funds with such a strategy, up from 110 global hedge funds as of Oct. 18. That itself was up from 55 funds at Aug. 29 and just 37 at the start of 2017.

Assets under management hit between $3.5 billion and $5 billion, according to the Autonomous NEXT.

The surge in funds comes at a volatile time for the cryptocurrencies they trade in. After hitting a record high close to $20,000 in December, bitcoin lost 70 percent of its value to slip below $6,000 in January, posting its worst monthly performance in three years.

Bitcoin has since recovered some of those falls, but at just below $10,000 is still worth only around half what it was a month ago.

Rival cryptocurrencies have also seen sharp declines. The so-called “market cap” of all virtual currencies — their price multiplied by the number of coins issued — currently stands at around $465 billion, according to trade Web site Coinmarketcap, down from more than $830 billion in early January.

“While the softer prices of crypto assets does create a more difficult environment for investors, I do not think it will pause the influx of funds and other financial institutions building products in the space,” Autonomous NEXT partner Lex Sokolin said.

Cryptocurrency-focused hedge funds lost an average of 4.6 percent in January, according to data from industry tracker Eurekahedge.