Crypto hedge funds post worst performance since 2022, says Bloomberg

Crypto hedge funds are experiencing their worst year since the 2022 bear market, also known as the "crypto winter," Bloomberg reported. Despite expectations that 2024 would mark a mainstream breakthrough for the asset class—driven by a clearer regulatory environment, favorable White House policies, and billions in institutional capital—the market has proven challenging even for professional investors. Funds focused on directional trading have posted a negative 2.5% return year-to-date, their poorest showing since 2022. Strategies centered on altcoins fared even worse, with returns of approximately negative 23%. In contrast, market-neutral funds performed well, achieving returns of around 14.4%. The report suggests that the influx of institutional capital has weakened the competitive edge of hedge funds, while a sharp market drop on Oct. 10 exposed structural vulnerabilities. In response, many funds are shifting toward risk management by reducing altcoin exposure and strengthening their focus on DeFi and yield-generating strategies.