Crypto hedge funds struggle to recover from ‘bloodbath’

Vlad Matveev has learnt the hard way how volatile cryptocurrency hedge funds can be.

The 50-year-old Muscovite invested $250,000 last year with California-based Cryptolab Capital, which targeted double-digit gains from trading crypto regardless of whether the market rose or fell. But Mr Matveev said his investment fell 98.5 per cent in value when the fund folded in this year’s coronavirus-induced turmoil.

“I don’t really know what happened,” said Mr Matveev, a fund manager-turned-private investor. “They said they had a diversified set of strategies.”

Investors have been drawn to crypto hedge funds by the promise of big returns compared with the paltry or negative yields on offer from cash or bonds. This year, bitcoin has emerged from the big March sell-off as one of the best-performing assets: up 36 per cent for the year, compared with the S&P 500’s 8 per cent fall.

Price discrepancies between the same assets on different exchanges, which have long been…