Crypto hedge funds struggle to keep pace with Bitcoin’s 120% surge in 2024

Several crypto hedge funds saw positive returns last year, but none could match Bitcoin’s remarkable performance, which surged 120% to surpass $100,000 for the first time.

In 2024, many crypto hedge funds achieved double-digit returns, with the VisionTrack Composite Index, which tracks the performance of 130 crypto-dedicated hedge funds, jumping 40%, according to data provided by Galaxy’s VisionTrack. Still, those gains fall short compared to the progress achieved by the leading crypto.

Hedge funds struggle to outperform Bitcoin’s record-breaking surge 

Several hedge funds strive to distinguish themselves with proprietary or innovative investment strategies that don’t always involve purchasing the largest digital coin. This means those who didn’t invest in Bitcoin missed out on its record-breaking returns. 

David Kalk, founder and CIO of Reflexive Capital, said: “2024 was a challenging year for many crypto funds because it was a Bitcoin and memecoins year — those were the best assets, and everything else trailed behind.”

David Jeong, CEO of Tread.fi, an algorithmic crypto trading platform for institutional investors, believes that outperforming Bitcoin is tough for crypto hedge funds, as “it’s really hard to time these things.”

Directional and quantitative strategies drive strong performance for crypto hedge funds

Nevertheless, according to VisionTrack data, hedge funds focusing on directional and quantitative strategies in the digital asset space posted the best average performance last year. 

The VisionTrack Quant Directional Index gained over 53%, while the VisionTrack Fundamental Index grew over 40% in the same period. The VisionTrack Market Neutral Index added about 18.5%.

Galaxy Digital’s Alpha Liquid Fund increased by 76.6% in 2024, according to a person familiar with the performance.

David Tawil’s ProChain Master Fund, a multi-strategy crypto fund, gained approximately 70% last year. This follows an 80% surge in 2023 thanks to substantial positions in larger tokens, including Bitcoin.

Fundamental research and macro funds, which have strong convictions in crypto assets based on in-depth research of the tokens or blockchain technology, generally performed well. Reflexive Capital, based in San Francisco, saw a net return of 106% in 2024, according to a source familiar with the performance.

The Tephra Digital Asset Fund LP, led by former Wall Street professionals Ryan Price and Raghav Chopra, posted approximately 100% gross returns by year-end, compared to 41% the previous year, according to their December letter to investors, dated Jan. 6.

According to Galaxy’s data, most crypto hedge fund gains occurred in the final quarter of 2024. President-elect Donald Trump, once a crypto skeptic, became one of the industry’s most vocal supporters. His victory in the US presidential election sent Bitcoin and other cryptocurrencies to new heights. Adding to Bitcoin’s stellar year was the successful launch of exchange-traded funds in the US that invest directly in Bitcoin. 

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