Bitcoin may have slipped from its October highs during the month of November, but crypto hedge funds outperformed the major cryptocurrency.
The merit of crypto hedge funds relative to bitcoin’s performance goes to diversification. While the primary cryptocurrency is the leader in the digital currency space, it was the alternative coin exposure that helped crypto funds boost their performance in November.
âCryptocurrency-themed hedge funds outperformed Bitcoin, the world’s largest cryptocurrency by market cap, in November,â CNBC TV18 reports. While Bitcoin closed in 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 which quoted data from the Eurekahedge Cryptocurrency Hedge Fund index. “
Bitcoin’s entry into the universe of exchange-traded funds (ETFs) was supposed to make it the rising tide that lifted all boats. During a bullish October, that is exactly what it did, as all cryptocurrencies benefited from the launch of a US bitcoin futures ETF, but November painted a different picture. .
Volatility made a big splash in the digital currency space in November, especially on the post-Thanksgiving road when the Omicron variant knocked down the Dow Jones Industrial Average by more than 900 points. Cryptocurrencies have often been touted as uncorrelated to the stock market, but they have fallen in unison.
Bitcoin itself has traded below $ 50,000 lately after hitting nearly $ 70,000 in October. However, it was cryptocurrencies like Ether and Solana that were able to take over.
âBitcoin has gained nearly 67% year-to-date while the second largest crypto ETH has jumped over 400%,â adds the CNBC report, âAnother altcoin, Solana has recorded gains of over 10,000% and is now in fifth place 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 set to exit 2021 with a lot of uncertainties for the new year. The Omicron variant is still a wild card in the markets, and the rise in inflation that just pushed the US Federal Reserve to implement three rate hikes in 2022 remains a concern.
âAlthough 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, âthe report said.
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