Bitcoin may have slipped from its October highs during the month of November, but crypto hedge funds made out better than the leading cryptocurrency.
Credit for the crypto hedge funds relative to bitcoin’s performance goes to diversification. While the leading cryptocurrency is the head honcho in the digital currency space, it was alternative coin exposure that helped crypto funds up their performance in November.
“Cryptocurrency-themed hedge funds outperformed Bitcoin, the world’s largest cryptocurrency by market cap, in November,” CNBC TV18 reports. “While Bitcoin closed November with a loss of 6.5 percent, hedge funds with exposure to a diverse portfolio of cryptos including altcoins, lost only 2 percent, according to a report by Bloomberg that quoted data from Eurekahedge Cryptocurrency Hedge Fund Index.”
Bitcoin’s entry into the exchange traded fund (ETF) universe was supposed to make it the rising tide that lifted all boats. During a bullish October month, it did just that as all cryptocurrencies benefited from the launch of a U.S. bitcoin futures ETF, but November painted a different picture.
Volatility made a big splash into the digital currency space in November, especially during the post-Thanksgiving route when the Omicron variant pushed the Dow Jones Industrial Average down over 900 points. Cryptocurrencies have often been touted as being uncorrelated to the stock market, but they fell in unison.
Bitcoin itself has been trading under $50,000 as of late after reaching almost $70,000 in October. However, it’s been cryptocurrencies like ether and Solana that have been able to pick up the slack.
“Bitcoin has gained nearly 67 percent since the beginning of the year while the second largest crypto ETH has jumped over 400 percent,” the CNBC report adds, “Another altcoin, Solana has clocked gains of over 10,000 percent and is now on the fifth spot in terms of market cap among all cryptocurrencies, according to data from Coinmarketcap. In fact, in terms of market cap gains, altcoins have significantly outperformed bitcoin.”
What's in Store for 2022?
Investors are about to exit 2021 with a lot of uncertainty ahead in the new year. The Omicron variant is still a wild card in the markets, and rising inflation which just pushed the U.S. Federal Reserve to institute three rate hikes in 2022, remains a concern.
“Although the broader crypto market has started bouncing back gradually over the past two weeks there is still some pressure on anticipation of multiple interest rate hikes by the US Federal Reserve next year, fresh comments on cryptocurrency regulations by SEC Chairman Gary Gensler and rising uncertainty over the new omicron variant of the coronavirus, and President Joe Biden’s latest infrastructure bill that could have tax implications for crypto investors,” the report says.
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