That started to change in the second half, when crypto markets rebounded in part because investors expect the US to allow its first spot Bitcoin ETFs. Grayscale Investments LLC won a key legal fight in August in its push to launch a Bitcoin ETF. Fundraising for active funds also picked up, and new fund managers have come to market, especially in Singapore, Hong Kong, Dubai, London and Switzerland, York said.
In November, after FTX founder Sam Bankman-Fried was convicted of fraud in his monthslong trial, there was a “collective sigh of relief,” said Sadie Raney, co-founder and chief executive officer of Seattle-based crypto hedge fund Strix Leviathan. From there she noticed that interest from prospective investors, such as funds of funds, spiked.
Pantera Capital’s liquid-token fund hopes it is positioned for a bullish ride next year with altcoins — tokens other than Bitcoin and Ether. That’s because altcoins historically outperform in the second part of a market rally, following the rise of Bitcoin, Cosmo Jiang, a portfolio manager at Pantera, said in an interview.
“We may be in the second part of the cycle where token selection actually matters,” Jiang said. “Our LPs go to us for exposure to the crypto landscape and technology as a whole, not just Bitcoin. Our core thesis is, if you believe this industry is going anywhere, there have to be protocols that actually generate revenue.”
One of its biggest positions is dYdX, the token of the eponymous decentralized crypto exchange. Bitcoin and Ether together make up less than 40% of the fund, according to Jiang.
Some funds are moving past the scars brought by FTX’s downfall. Greg Moritz, co-founder and chief operating officer at crypto hedge fund Alt Tab Capital, said his fund had 2% of assets stuck on the platform, and it’s in the process of liquidating its claim on the secondary market.
Alt Tab, which manages about $21 million, expects the fund to end the year up about 30%, Moritz said, adding that his fund was “cautious” this year. “Now we’re in a position where we are super aggressively positioned for the upcoming bull run,” he said.
Moritz predicted the crypto market will get a boost from a combination of macro and industry-specific factors, including stabilizing inflation, the Federal Reserve’s pivot away from rate hikes, and Bitcoin’s halving, which will reduce supply.
“Overall we feel like this year was the recovery,” Moritz said. “Next year is really to knock it out of the park and celebrate.”
This article was provided by Bloomberg News.