Multicoin Capital, a hedge fund with a focus on cryptocurrencies, has provided its investors with exceptional returns, surpassing 9,000% since its establishment in 2017.
In its annual investor letter dated February 16, the fund disclosed a remarkable turnaround in its fortunes. After enduring substantial losses in 2022 that nearly eradicated its value, Multicoin Capital’s performance has seen a dramatic upswing. The investor letter highlights that the Multicoin Capital Master Fund has achieved an astonishing return of 9,281% since its inception on October 1, 2017.
Amidst a market rebound, Multicoin Capital experiences a surge in gains.
The notable performance is largely credited to the resurgence of the cryptocurrency market, with the fund achieving an impressive 537% return solely in 2023.
The company is expected to submit a Form ADV, a regulatory obligation for advisors registering with the Securities and Exchange Commission (SEC), as well as exempt reporting advisors.
Based on the firm’s prior Form ADV filing, it disclosed managing assets totaling over $1.36 billion under regulatory oversight.
Without deep drawdown? Multicoin Capital’s hedge fund lost 91.4% in 2022. You need a 1000% (10x) return to be break even, even if 9128% since inception still not recovered for people invested at end of 22
— B3nj4min.eth (@B3nj4min_ETH) March 30, 2024
In their investor letter, Multicoin Capital’s executives, Tushar Jain, Kyle Samani, and Matt Shapiro, discussed the behavior of the cryptocurrency market. They emphasized that in 2023, cryptocurrencies exceeded expectations by staging a remarkable rebound. This enabled the hedge fund to capitalize on the market’s overreaction and achieve significant outperformance.
The impressive returns garnered by Multicoin Capital have more than offset the fund’s substantial 91.4% loss in 2022. The investor letter clarifies that the performance figures since the fund’s inception encompass various investments made through side pockets, which contributed to the overall outcome.
Despite enduring a challenging bear market cycle, the executives of Multicoin Capital perceive that period as ultimately inconsequential for the investment firm. They acknowledged the hurdles posed by macro tightening, targeted political retaliation, and the aftermath of a significant financial fraud. This includes allusions to the collapse of the embattled crypto exchange FTX, to which their firm had exposure.
Assets under management in cryptocurrency funds are experiencing a surge.
Earlier this year, Balance, a prominent digital asset custodian headquartered in Canada, proudly announced a momentous achievement: the attainment of $2 billion in assets under custody (AUC). This milestone coincided with a notable resurgence in cryptocurrency markets, reflecting the growing confidence and interest in digital assets among investors.
Similarly, Korea Digital Asset (KODA), South Korea’s premier institutional crypto custody service, has experienced a remarkable surge in the value of crypto assets under its custody. Recent disclosures from the company indicate an extraordinary growth trajectory, with the value of these assets soaring by an impressive 248% during the latter half of 2023.
Established through a collaboration between major Korean bank KB Bank, crypto venture capital firm Hashed, and blockchain technology firm Haechi Labs, KODA has solidified its position as a trusted custodial partner in the rapidly evolving crypto landscape. By the end of last year, the value of assets entrusted to KODA had skyrocketed to approximately 8 trillion Korean won ($6 billion), representing a substantial increase from the 2.3 trillion won recorded at the conclusion of June 2023.
Analysts at Bernstein Research have provided an insightful projection, suggesting that the collective valuation of crypto funds could surge to an unprecedented $500 billion to $650 billion within the next five years. This forecast underscores a remarkable growth trajectory for the industry, considering the current valuation stands at approximately $50 billion. Such exponential expansion reflects the increasing mainstream acceptance and adoption of cryptocurrencies as viable investment assets.
