Cryptocurrency-themed hedge funds outperformed Bitcoin, the world’s largest cryptocurrency by market cap, in November. While Bitcoin closed November with a loss of 6.5%, hedge funds exposed to a diverse portfolio of cryptos, including altcoins, lost just 2%, according to a report by Bloomberg who cited data from the Eurekahedge Cryptocurrency Hedge Fund index.
The world’s largest cryptocurrency has gone from an all-time high of over $ 69,000 reached in early November to less than $ 48,000 now, in just over a month. In early December, the Ether (ETH) / Bitcoin (BTC) ratio, or the number of bitcoins needed to buy an ether, hit its highest level in three years. It is also an indicator that investors may have shifted their focus to Bitcoin ether and other altcoins.
The rise of altcoins
Bitcoin has gained nearly 67% since the start of the year while the second largest crypto ETH has jumped over 400%. Another altcoin, Solana has recorded gains of over 10,000 percent and is now in fifth place in terms of market capitalization among all cryptocurrencies, according to data from Coinmarketcap. In fact, in terms of market cap gains, altcoins have significantly outperformed bitcoin.
The Bloomberg report noted that this trend is also true with crypto-based hedge funds. The Eurekahedge Cryptocurrency Hedge Fund Index, an equally weighted index of 18 constituent funds, has gained 170% this year.
Although the broader crypto market has started to rebound gradually over the past two weeks, there is still some pressure on the anticipation of multiple interest rate hikes by the US Federal Reserve next year, new comments on cryptocurrency regulation by SEC Chairman Gary Gensler and growing 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. Bitcoin may underperform other cryptos on profit taking after the strong rally.
Given the extreme volatility of cryptocurrencies, experts recommend keeping investments in them less than 5% of your portfolio. As Bill Noble, chief technical analyst at Token Metrics, a cryptocurrency analysis platform, pointed out to Time, if you’ve kept your cryptocurrency investments below 5%, it doesn’t There is no need to worry about fluctuations, as they will continue to occur. “
âVolatility is as old as the hills, and it’s not going anywhere,â Noble said. âIt’s something you have to deal with. “