In the first half (H1) of 2023, the classic buy and hold strategy for Bitcoin (BTC), represented by the ticker symbol $29,033, outperformed the majority of crypto funds by an impressive 68.8%. Data from Switzerland-based investment adviser, 21e6 Capital AG, revealed that on average, crypto funds generated returns of 15.2% during the same period (Jan. 1 to June 30). In comparison, BTC recorded a substantial price gain of approximately 84%.
In an Aug. 2 half-year report, Maximilian Bruckner, the head of marketing at 21e6 Capital AG, emphasized the significance of the findings. He pointed out that crypto funds have historically been able to outperform Bitcoin significantly during previous bull runs.
Bruckner attributed the underwhelming performance of crypto funds in 2023 to the challenging market conditions and the large amount of cash they held in late 2022. This cautious approach was taken after the implosion of FTX and several other crypto projects the previous year. As a result, many crypto funds decided to reduce risk exposure and build up cash buffers, which led them to miss out on the substantial BTC price rally observed in H1 2023.
The report points out that by the end of 2022, many funds had larger-than-normal cash positions due to the prevailing sentiment at that time. Additionally, most major altcoins had underperformed Bitcoin, creating a challenging environment for funds.
As of the report’s writing, BTC was priced at approximately $29,000, struggling to maintain levels above $30,000, which had only been briefly surpassed on a few occasions in the current year.
Looking ahead, the report emphasizes monitoring the leading futures providers in the exchanges and paying attention to the funding rates in crypto futures markets and the ability of quantitative funds to capture trends.
Although investor sentiment has slightly improved during H1 2023, the report cautions that a full recovery of sentiment has not yet been evident based on the current data related to inflows and outflows. Despite this, it suggests that some funds might begin increasing their investments in the crypto sector in the near future.