Cryptocurrency-oriented hedge fund Pantera Capital has a tough period ahead as the market shows a long-term bearish trend. Its Digital Asset Fund fell almost 50% last month, as shown by an investor letter that came out on Tuesday. The hedge fund, which became popular after generating a 25,000% return by the end of 2017, found its crypto fund losing 45.7% in March alone.
Joey Krug, co-chief investment officer of the hedge fund, reportedly said: “This was a really rough month for the Digital Asset Fund and the space in general. We're in a market with around 100 percent annualized volatility and this month was the worst month in our model's 27-month history.”
Pantera Capital, which has about $724 million under management, stressed that since the first day of December last year, its crypto fund fell only 3.1% net of fees, compared to BTC’s decline of 37.4% for the same period. However, last month, Digital Asset Fund dropped over 45% while Bitcoin lost 34%.
Anyway, as Krug put it:
“This performance is basically in line with our expectation — given the huge move in the market as a whole.”
Bitcoin has had a strong bearish inclination amid several regulatory announcements from South Korea, India, and The Netherlands among others, and unfavorable news such as the Coincheck hack.
According to Pantera’s letter to investors, Digital Asset Fund fell 54.9% year-to-date but is still up 10.3% since its launch. Pantera’s ICO Fund has lost over 50% YTD but is up 92.7% life-to-date. Its long-term ICO fund is in a better position – it fell 1% this year and has gained 5% since its inception.
In the US, crypto trades are taxed as capital gains, and the hedge fund noted that the current price is influenced by investors who have to pay their taxes.
Dan Morehead, CEO of Pantera Capital, said:
“A portion of the selling pressure on the market in general has been unintended tax positions. There were $300 billion of capital gains created last year. That could have caused a decent chunk of the sales.”
Bitcoin accounts for the greatest portion of Pantera’s negative performance, followed by Ethereum, Dash, and Waves.
Last month, Pantera announced the launch of its third blockchain-focused venture.