Pantera Capital Struggles Amidst Crypto Bear Market, Underperforms Bitcoin
Pantera Capital is undoubtedly one of the leading venture funds in the cryptosphere, but its status and fame haven’t helped Pantera’s Digital Asset Fund perform any better in 2018’s tumultuous bear market, which saw many crypto assets fall victim to an 80% haircut in prices.
Pantera releases some painful performance numbers for their new #crypto fund. #bitcoin #ethereum pic.twitter.com/Do6D8sxHla
— Collin Crypto (@CollinCrypto) October 5, 2018
According to statistics, which were first revealed by CollinCrypto, that have since been spread all across Crypto Twitter, Pantera’s Digital Asset Fund, which solely focuses on promising tokens, has posted a 72.7 percent loss year-to-date and was down 22.3 percent in August alone. The disappointing figures don’t end there, as it was also revealed that the San Francisco-based firm’s crypto fund was down 40.8 percent since its inception, in December 2018, resulting in a -50.3 percent compound annual growth rate (CAGR) statistic.
Although Pantera’s performance isn’t overly dismal, many found fault with the losses incurred, as many pointed out that the fund would have actually performed better if it consisted 100% of Bitcoin, as the leading crypto asset, largely dubbed “digital gold,” is ‘only’ down 50% from $14,000, which is the price level BTC was at on January 1st, 2018.
As such, many prominent members of the cryptocurrency Twitter community had a field day with the statistics contained in the report. Alex Kruger, a prominent cryptocurrency commentator, poked a bit of fund at the fund, seemingly building off the ever popular crypto meme of “funds are SAFU” and the now-infamous “funding secured” tweet from Tesla CEO Elon Musk, as seen below.
Pantera Capital. pic.twitter.com/Xzd6oyeZ6c
— Alex Krüger 🇦🇷 (@Crypto_Macro) October 6, 2018
Others, like Flood, a pseudonymous cryptocurrency trader and personality, claimed that the operational structure of the Pantera fund was flawed, as he alluded to the fact that deploying capital into “illiquid s***coins*, while still collecting management fees, isn’t a good combination.
Idea for a fund:
Name: Puntera Capital
Thesis: Deploy capital into illiquid shitcoins so if investors want to pull out they literally can’t.
Continue Collecting Management Fees
— Flood [Bitmex] (@ThinkingUSD) October 5, 2018
Others provided a bit more insight, including Joseph Young, a leading cryptocurrency commentator, analyst, and journalist, who claimed that diversification strategies only apply in traditional markets, like stocks, bonds, and hedge funds. Joseph explained that crypto’s nascency results in market conditions being unpredictable, therefore making it logical to cut down on over-diversification, adding that investors should regularly re-evaluate their investment thesis.
“Diversify crypto portfolio, invest in many assets!”
In a normal market yes, but crypto is not a normal market. It’s young & everything in unpredictable.
For a big firm (Pantera), it’s not easy but for individuals, I think it’s better to re-evaluate investment thesis regularly
— Joseph Young (@iamjosephyoung) October 6, 2018
Meltem Demirors of Coinshares said much of the same but went into a bit more depth, issuing a six-part tweet storm that highlighted her opinion on how the crypto market works at a fundamental level. She explained that “neutral” strategies don’t apply to crypto, along with “tactical trading” methods, but added that this is common in any emerging market and with any budding asset class. So, in closing, she pointed out that the performances of crypto-focused funds, in general, are unlikely to better any time soon.
If you think about it, Pantera’s Digital Asset Fund -72.7 percent year-to-date performance shouldn’t come as a surprise, as Mike Novogratz’s Galaxy Digital has seen its fair share of losses, losing $134 million in Q1 of 2018 alone, with 70% of those losses being connected to the trading of an unnamed variety of crypto assets. Grayscale Bitcoin Investment Trust, which goes by the ticker GBTC on public markets, has arguably been doing worst, as the Bitcoin-tracking fund had recently fallen to a year-to-date low, down 80 percent from when BTC temporarily breached $20,000 in late 2017.
Despite the disappointing performance of funds, and more importantly, the crypto market as a whole, industry leaders remain relatively bullish on the long-term time frame, with executives from Pantera, Galaxy Digital, along with many others, coming out to state that upside is in store for this market, so its time to accumulate and get settled for the long run.