According to 21e6 Capital AG, crypto funds have generally outperformed Bitcoin in previous bull runs, but they have struggled this year due to holding too much cash and playing it safe. In the first half of 2023, the buy and hold approach to Bitcoin outperformed most crypto funds by 68.8%, with BTC seeing gains of around 84% compared to the average return of 15.2% for crypto funds. The underwhelming performance of crypto funds in 2023 can be attributed to challenging market conditions and the large cash positions they held after the implosion of FTX and other crypto projects in 2022. Many funds opted to develop cash buffers, missing out on the significant BTC price rally in H1 of 2023. The report suggests that funds with large cash positions will underperform Bitcoin in a bull market unless their assets perform significantly better. Additionally, most major altcoins also underperformed Bitcoin, making it a tough environment for funds. Despite current struggles, BTC has seen a 75% price gain since the beginning of the year. The report highlights that all crypto fund strategies achieved positive results this year but underperformed relative to Bitcoin, especially those with exposure to altcoins, futures, or momentum signals. The report also mentions keeping an eye on leading futures providers and the funding rates in crypto futures markets. Investor sentiment has slightly improved, indicating potential cash inflows into the crypto sector, but a full recovery of sentiment has not yet occurred.
