Crypto-focused hedge fund Multicoin Capital has delivered extraordinary returns to its investors, exceeding 9,000% since its launch in 2017.
In its annual investor letter, the fund revealed that after experiencing significant losses in 2022 that nearly wiped out its value, Multicoin Capital’s fortunes have dramatically turned around.
According to the investor letter, dated February 16, the Multicoin Capital Master Fund has recorded a staggering return of 9,281% since its inception on October 1, 2017.
Multicoin Capital’s Gains Surge Amid Market Rebound
The performance is primarily attributed to the resurgence of the cryptocurrency market, with the fund generating a remarkable 537% return in 2023 alone.
The firm is anticipated to file a Form ADV, a regulatory requirement for advisers registering with the Securities and Exchange Commission (SEC) and exempt reporting advisors.
According to the firm’s previous Form ADV, it reported over $1.36 billion in assets under regulatory management.
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
Multicoin Capital’s executives, Tushar Jain, Kyle Samani, and Matt Shapiro, also mentioned the crypto market’s behavior in the investor letter.
They highlighted that in 2023, cryptocurrencies defied expectations and rebounded in spectacular fashion, enabling the hedge fund to capitalize on the market’s overreaction and achieve significant outperformance.
The impressive returns achieved by Multicoin Capital have more than compensated for the fund’s substantial 91.4% loss in 2022.
The investor letter clarifies that the performance figures since the fund’s inception include various investments made through side pockets, which contributed to the overall outcome.
Despite enduring a painful bear market cycle, Multicoin Capital’s executives view that period as ultimately inconsequential for the investment firm.
They acknowledged the challenges posed by macro tightening, a directed political vendetta, and the fallout from a significant financial fraud, alluding to the collapse of embattled crypto exchange FTX, to which their firm was exposed.
Crypto Funds See a Surge in Assets
Earlier this year, Balance, a digital asset custodian based in Canada, has revealed that it has once again achieved $2 billion in assets under custody (AUC) amid the recent recovery in crypto markets.
Likewise, Korea Digital Asset (KODA), the largest institutional crypto custody service in South Korea, has seen a remarkable growth in crypto assets under its custody.
Just recently, the company revealed that the value of these crypto assets under its custody expanded by nearly 248% in the second half of 2023.
KODA, which was established through a collaboration between major Korean bank KB Bank, crypto venture capital firm Hashed, and blockchain tech firm Haechi Labs, said that the value of these assets reached approximately 8 trillion Korean won ($6 billion) by the end of last year.
This was a substantial increase from the 2.3 trillion won recorded at the end of June 2023.
According to analysts at Bernstein Research, crypto funds could reach a staggering $500 billion to $650 billion within the next five years, a significant leap from the current valuation of approximately $50 billion.
