According to Swiss investment advisor 21e6 Capital AG, a noticeable trend in the global cryptocurrency investment landscape has been the closure of 97 cryptocurrency funds this year, which reflects difficulties in the unpredictable market.
Despite these closures, a recent research from 21e6 found that the cryptocurrency funds that were able to survive the first quarter of 2022 showed an average return of 15.2%. This performance, meanwhile, is nothing compared to Bitcoin’s stunning increase of 83.3% during the same time span.
The investigation also showed that many of the closed funds had kept larger cash reserves than was typical. This circumspect stance was justified by the residual volatility brought on by the turbulent Bitcoin market in the previous year.
The Head of Marketing and Sales at 21e6, Maximilian Bruckner, discussed the difficulties certain, it have in finding new banking partners. Bruckner underlined that while directed fund’s performance was impressive, it fell short of Bitcoin’s outstanding gains.
Cryptocurrency Funds Navigate Challenges Amid Regulatory Changes and Market Volatility
Discretionary crypto funds appeared to have survived the regulatory uncertainty storm better than their directional equivalents. But other funds were obliged to scale back their operations due to legal uncertainties and worries about well-known banking partners and fund administrators.
The development of quantitative funds was hampered by the volatile cryptocurrency markets. While fund inflows and new launches signal improved investor sentiment, Bruckner notes that a full recovery has not materialized.
21e6 Capital AG’s analysis underscores Bitcoin fund’s challenges in navigating changing regulations and maintaining competitive returns. Investors and funds continue to struggle with finding the ideal ratio between risk and reward as the Bitcoin market develops.
Frequent closures underscore the need for improved regulatory frameworks and stable markets to support Bitcoin fund’s growth. Both market participants and regulatory organizations closely watch for a stronger and secure cryptocurrency investment ecosystem. Their goal is enhancement.