Protocol Ventures LP, a US-based investor in crypto hedge funds, will close its doors and return cash following a slide in the digital asset market.
According to people familiar with the matter, Protocol Ventures LP, a US-based investor in crypto hedge funds, will close its doors and cash back after the digital asset market slide.
The resident said the notice was sent to investors in late October about the move, requesting anonymity because the information is not made public. The closure will likely be completed by the end of the year or the first quarter of 2023, one of the people said.
Investors in Protocol’s hedge fund may have lost up to 90% in the past year, the people said. Protocol declined to comment on developments at the company.
Protocol Ventures is a fund of crypto hedge funds that have invested in funds such as BlockTower Capital, Multicoin Capital, Pantera, and Electric Capital. Protocol’s decision to decline comes amid a massive shutdown of the digital asset sector, which has been reeling from $2 trillion over the past year.
Cryptocurrency hedge funds have skyrocketed in 2021 during a frenzy of speculation fueled by massive liquidity injections to tackle the worst of the pandemic.
But that success is quickly fading after central banks around the globe raised interest rates to fight inflation. The hawkish shift has dramatically tightened financial conditions and dented appetite for riskier investments.
The Bloomberg Electronic money The hedge fund index is down 45% this year, compared with a 9% drop in the Bloomberg All-Hedge Funds Index.
