In the first half (H1) of 2023, the buy and hold strategy for Bitcoin (BTC) outperformed the majority of crypto funds by 68.8%. Data from Switzerland-based investment adviser 21e6 Capital AG revealed that on average, crypto funds generated returns of 15.2% in the first half of 2023, compared to the approximately 84% price gain BTC experienced in the same period.
This outstanding performance of the buy and hold strategy was highlighted by Maximilian Bruckner, the head of marketing at 21e6 Capital AG, in a report published on August 2. Bruckner emphasized that crypto funds have historically been able to significantly outperform Bitcoin during bull runs.
The underwhelming performance of crypto funds in 2023 can be attributed to the challenging market conditions and the significant amount of cash they held in late 2022. After the collapse of FTX and several other crypto projects in the previous year, many funds decided to play it safe and accumulate cash reserves. As a result, they missed out on the significant BTC price rally in the first half of 2023.
The report states that funds with substantial cash positions are likely to underperform Bitcoin in a bull market, unless their assets perform significantly better than Bitcoin. The sentiment at the end of 2022 led to larger-than-normal cash positions for many funds. Additionally, most major altcoins also underperformed Bitcoin, creating a tough environment for crypto funds.
At the time of writing, BTC is priced at around $29,000 and continues to struggle to hold above the $30,000 region. This level has only been briefly surpassed a few times this year. Despite the current challenges, BTC has still gained about 75% in price since the beginning of the year.
The report also highlighted that all crypto fund strategies achieved positive results in 2023. However, compared to Bitcoin, they underperformed, especially those with significant exposure to altcoins, futures, or those strongly dependent on momentum signals. The report will closely monitor the leading futures providers and the funding rates in crypto futures markets. Additionally, it will observe the ability of quantitative funds to capture trends in the markets.
While investor sentiment has slightly improved in the first half of 2023, indicating potential increased investment in the crypto sector, the report noted that a full recovery of sentiment has not yet occurred based on current data relating to inflows and outflows.
Overall, the data from 21e6 Capital AG’s report demonstrates the superior performance of the buy and hold strategy for Bitcoin compared to crypto funds in the first half of 2023. The challenging market conditions and cash accumulation in late 2022 impacted the performance of crypto funds. However, there are indications of improved investor sentiment and potential inflows into the crypto sector in the coming months.
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