Altcoins offer investors superior performance compared to Bitcoin
As the cryptocurrency industry continues to gain legitimacy, more and more institutional investors are flocking to the sector for significant profits. However, the complexity and ever-evolving nature of digital assets has also led to the emergence of crypto hedge funds. These activities aim to offer investors diversified and safer investment products.
Diversification is the key
The popularity and popularity of crypto hedge funds is reflected in the fact that they outperformed Bitcoin in November, according to a survey. report Bloomberg recently. While Bitcoin closed November down 6.5%, hedge funds that offer exposure to a variety of cryptocurrencies are only down 2%.
In fact, Bitcoin has been struggling for almost a month as it continues to face resistance at $ 50,000. Since hitting a new ATH above $ 69,000, the top cryptocurrency has moved into a downtrend, losing 31.9% of its value.
One factor that determines the benefit of hedge funds is portfolio diversification. This allows exposure to some promising altcoins.
The most obvious example is ETH – up more than 500% in the last year, compared to Bitcoin’s 67%. Similarly, there are other emerging altcoins like SOL – which is currently the fifth largest cryptocurrency after growing 10,650%. Even LUNA is up 14.748%, adding extra returns to these funds.
An NFT-focused fund
With the growing demand for these products and their continued success, asset managers are expanding their offerings in more innovative ways. Bitwise launched a new NFT-focused fund earlier this week to complement its growing suite of newly launched crypto products. Cryptocurrency investment firm Pantera Capital also recently raised $ 600 million for its fourth fund, with about 75% of the capital coming from institutional investors.
Recently, crypto hedge funds saw another major milestone when they achieved record weekly inflows of $ 1.5 billion thanks to the launch of the first Bitcoin Exchange Traded Fund (ETF) in the US.
The source: CoinShares
However, the pace of growth has stagnated since then, with the latest CoinShares report showing a cash inflow of $ 88 million for the week leading up to December. The report adds that some suppliers are seeing outflows of up to 11% of total assets under management (AUM) while others are seeing inflows of nearly 14% of total assets under management.
“Investors always have mixed opinions. While some panicked at the recent decline, others saw it as an opportunity to buy … All panic selling over the past week has been in Bitcoin. ”
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