Crypto hedge fund Neural Capital has lost half of its money since launching during the bull run of 2017. The firm is now in the process of refunding money to investors, reported CoinDesk citing three people familiar with the matter.
Neural Capital managed over $13 million by 2019, and by the end of December, its digital assets were liquidated. The company that raised $250,000 from over 40 investors still has some cash held in their escrow.
This year the company stopped submitting its filing to the state of California and the federal agency. At the same time, it has already withdrawn its registration with the US Securities and Exchange Commission (SEC) in December.
Neural Capital isn’t the first crypto hedge fund to collapse; in 2020, several funds have closed.
Just last week, Tetras Capital called it quits after it posted a 75% loss since its launch in 2019. The New York-based fund was managing north of $33 million for over 60 investors who contributed $100,000 apiece.
A Crypto Fund Research report had stated that at least 68 of cryptocurrency hedge funds closed internationally last year, almost double from 2018.
Bitcoin meanwhile is back into action as it continues to make new 2020 highs, driving its store of value narrative, especially after it hit $10,000, which is yet against fueling a speculative frenzy just like in 2017.
Earlier this year, in February, Bitcoin hit $10k only to crash just like all the other assets due to the coronavirus pandemic.
The mad rush to trade digital assets for cash at that time got worse as people were using large amounts of debt to back their trading, leading many crypto hedge funds to close.
But since March crash bitcoin has been recovering spectacularly with names like billionaire investor Paul Tudor Jones calling bitcoin a hedge against inflation. The hedge fund shark has 1% to 2% of his assets held in the digital currency. Also, bitcoin’s volatility makes it a winner to some risk-hungry hedge funds.
Thanks to all the money printing the US Federal Reserve is doing; it only makes Bitcoin more attractive to the investors — retail and institutions alike.