January hedge fund losses

Recently, billionaire Mike Novograz postponed the launch of the crypto currency hedge fund. Perhaps he knows what he is doing. We are telling whether hedge funds are ready for the volatility of the market.

For years, hedge fund managers have not slept at night, worrying about bad results, weak volatility and wondering if it's worth changing jobs - and suddenly bitcoin appeared.

There is no doubt that a market with a thousand percent growth, full of non-professional players, is very healthy, but it may be close to the day when managers of crypto-currency funds will begin to wake up in a cold sweat.

In 2017 it was easy, investing in bitcoin, to overtake the stock market, but these times have passed - the cost of the first crypto currency fell from a record $ 20,000 to about $ 10,000 (on January 17).

Bitcoin has many alternatives, but it's not easy to find the next object that will bring hundreds and thousands of percent of profitability - in the last 10 days Ripple has fallen by 60%, and lightcoin (LTC / USD) - by 35%. Against this background, the growth of the S & P 500 index (INDEX: SPX) by a boring 2% does not look so bad.

Theoretically, hedge funds should be more secure compared to the average retail investor of the crypto currency market, as they hedge the risks, but it is not so easy to make profit in conditions of total sale in the market of crypto currency.

It is in the mature market that short positions and derivatives are available - there is no such thing here. The only exception is bitcoin, to which you can now draw up a futures contract and thereby make a profit in a recession.
Nevertheless, bulls lose money, and most hedge funds specializing in crypto currency, according to Bloomberg News, traded not only bitcoin - they could not stay away from the boom.
The next question is the mood of customers. The leaders of the Altana Digital Currency Fund last year warned customers that they should invest only a part of the capital - perhaps for them this fall will be relatively smooth.
But at what point investors are starting to wonder whether the fund will ever again bring 1496%, like last year. How to persuade customers not to withdraw money from the fund in a month or a quarter? Even if you have invested only part of your money and can afford to lose it, you are unlikely to want to put up with this state of affairs.
The industry of hedge funds for several years tried to seek excuses for its low profitability against the background of high commissions. At first glance, bitcoin and other crypto currencies are a way out: high profits, full of market fans and rich opportunities for arbitrage.
Arbitrage trade in crypto-currencies: Instructions for beginners
Perhaps hedge funds will be able to find the right path in this sea of ​​thousands of volatile crypto-currencies, but it is likely that the expected yield will not be worth the risks, especially when trading with the shoulder. Perhaps, Mike Novogratz, who last month postponed the planned launch of a crypto currency hedge fund, knows what he is doing.