The year is off to a rough start for cryptocurrency-focused hedge funds. On average, digital-asset hedge funds lost 14.2% in January, according to data from Bloomberg Hedge Fund Indices.
The funds were the only subset to post double-digit losses, their worst performance since June.
Those declines come after a more than 11% loss in December, also the worst performance among peers. Digital currencies have struggled to stabilize after a recent drop, with Bitcoin, the largest cryptocurrency by total market value, down 40% from an all-time high in November.
It continues to be weighed by expectations of central banks’ tightening monetary policy in recent months, which has also hit equities.
The drops among digital asset values raise more questions about whether crypto can be a useful hedge against inflation or can consistently generate returns uncorrelated to broader markets.
As a whole, hedge funds lost 2.3% in January. Commodity-centered funds saw the biggest gains with an average 0.7% return.
| STRATEGY | 1M % | YTD % |
|---|---|---|
| All Funds | -2.3 | -2.3 |
| Cryptocurrency | -14.2 | -14.2 |
| Currency | -6.8 | -6.8 |
| Stat Arb | -5.8 | -5.8 |
| Activist | -5.0 | -5.0 |
| Equity Long Biased | -5.0 | -5.0 |
| Equity Long Only | -4.4 | -4.4 |
| Equity Multi | -4.3 | -4.3 |
| Equity Long/Short | -3.4 | -3.4 |
| Special Situations | -3.4 | -3.4 |
| Distressed Debt | -2.3 | -2.3 |
| Event Driven Multi | -2.2 | -2.2 |
| Convertible Bond Arb | -1.6 | -1.6 |
| Volatility Arb | -1.5 | -1.5 |
| Quant Equity MN | -1.4 | -1.4 |
| Emerging Market Debt | -1.4 | -1.4 |
| Macro Discretionary | -1.2 | -1.2 |
| Credit Multi | -1.1 | -1.1 |
| Macro Multi | -0.9 | -0.9 |
| Fixed Income Arb | -0.7 | -0.7 |
| Fundamental Equity MN | -0.7 | -0.7 |
| Direct Lending | -0.4 | -0.4 |
| Credit Long/Short | -0.4 | -0.4 |
| Global Asset Allocation | -0.3 | -0.3 |
| Relative Value Multi | -0.2 | -0.2 |
| Merger Arb | -0.2 | -0.2 |
| Structured Credit | 0.3 | 0.3 |
| Insurance | 0.4 | 0.4 |
| Macro CTA | 0.7 | 0.7 |
| Macro Commodity | 0.7 | 0.7 |
Bloomberg Hedge Fund Indices are based on funds reporting to the Bloomberg Hedge Fund Database.
Note: MN stands for market neutral. Read full story on Bloomberg