Crypto hedge funds have posted their best gains since 2019, rising 35% in February alone. As the crypto bull market continues to make large upward movements, crypto hedge funds are outstripping hedge funds operating in traditional markets, but all are doing extremely well.
According to the largest hedge fund data provider Eurekahedge, total assets under management increased by $33 billion last month. Performance gains were $23.2 billion and net asset inflows were $9.8 billion. The total size of the hedge fund industry now stands at nearly $2.3 trillion.
Eurekahedge head analyst Mohammad Hassan told Markets Insider that the crypto hedge fund sector was young and relatively small. It only makes up around 0.2% of the global hedge fund business and amounts to $3.4 billion AUM.
The analyst said that the crypto hedge fund sector was growing strongly:
- “Strong performance in the underlying crypto-asset markets along with bubbling curiosity from institutions has been supportive of the space,”
The present bitcoin and cryptocurrency bull market has attracted a lot of hedge funds into the space. Mike Novogratz’s Galaxy Digital is a prime example. Novogratz is a huge bitcoin bull and likes to comment on how Bitcoin is out-performing the traditional markets:
- “Bitcoin will literally be like a report card for how citizens think the government is doing managing their finances,”
Novogratz’s view is that bitcoin is an inflationary hedge and a digital store of value. This is in contrast to regular fiat currencies. The Galaxy CEO remarked:
- “If people in the US believe Fed Chair Jerome Powell and Treasury Secretary Janet Yellen can facilitate full employment for the economy while avoiding inflation, they will stop buying bitcoin”
The current bitcoin surge sees the asset climb more than 740% over the last year. It is currently sitting at just over $57,000, 7.6% down from its all-time-high.
Many analysts are predicting a market top ranging from $100,000 to very much higher valuations. Crypto hedge funds will likely be making hay should these predictions come to pass.