Crypto Fund Performance in 2023: A Half-Year Review and Analysis by 21e6 Capital

21e6 Capital AG
7 min readAug 21, 2023


This comprehensive review analyzes the performance of various crypto fund strategies in the first half of 2023, drawing insights from the 21e6 Crypto Fund Database. From the (semi)success of directional funds to the struggles faced by quantitative and futures-related funds, the article delves into the key factors shaping the crypto investment landscape. With a focus on market trends, regulatory challenges, and investor sentiment, this report offers a valuable snapshot of the current state of crypto funds and a glimpse into the future of digital asset investing.
Authors: Jan Spörer, Maximilian Bruckner


Not long ago, we entered 2023 in a state of heightened uncertainty. With this article, we would like to review how the first half of the year turned out for crypto hedge funds, and what the main drivers were that led to different outcomes for different strategies.

*We define the terms of the 21e6 Strategy Classification used for our analysis in the table below this article.

1. Directional funds performed well, but underperformed Bitcoin

As covered in our recent article that compared Bitcoin’s returns and directional funds’ returns in 2023, directional funds underperformed Bitcoin so far this year. However, directional funds significantly outperformed non-directional crypto funds. Given the general upswing of the crypto market in 2023 until the end of June, this comes to no surprise.

While many funds had to slow down their operations due to regulatory uncertainties surrounding popular banking partners and fund administrators, discretionary crypto funds did not face this issue. Discretionary* crypto funds, the leading substrategy among directional funds, often have simpler requirements for their fund admins and banks. They were not distracted by, for example, needing to find a new banking partner.

Figure 1: Comparing performance of directional fund strategies in 1H2023.

2. So why did quantitative funds underperform?

The aforementioned uncertainties, along with so-called “choppy” markets, held quantitative funds down. The yellow dotted lines in the graph show how poorly these funds in particular performed relative to other directional strategies. From conversations with systematic quant crypto funds, we were able to draw the following conclusions:

  1. Unsteady momentum (“choppy” markets) gave false signals to the trading algorithms of systematic crypto quant funds, which very often perform trend-following strategies.
  2. The regulatory uncertainty, the scramble for secure exchanges and custodians, and the loss of banking partners at the beginning of the year was a difficult set of hurdles for these funds. Systematic funds have more operational complexity and may thus not be able to adapt to changes as quickly as discretionary funds.

3. The issue with funds in upmarkets in general

It is plain to see that a simple buy-and-hold investment into Bitcoin would have outperformed all of these fund baskets. Bitcoin added about 80% in value by the half of the year. In previous bull runs, crypto hedge funds were frequently able to significantly outperform the Bitcoin benchmark. How can underperformance among professionally managed crypto funds be such a widespread phenomenon?

Even in the best of times, crypto funds usually use cash as base currency. Incoming subscriptions arrive in fiat cash or in fiat-backed stablecoins. This means that redemptions require the sale of assets and also lead to temporary cash positions. Additionally, risk is taken out of a portfolio by increasing the cash buffer.

As a result, funds with large cash positions will underperform Bitcoin in a bull market, unless the funds’ assets perform significantly better than Bitcoin. Due to the general sentiment left behind by the end of 2022, many funds had larger-than-normal cash positions. Furthermore, most major altcoins also underperformed Bitcoin — a tough environment for funds.

Figure 2: Comparing Performance of non-directional funds in 1H2023

4. Struggles in all futures-related strategies and the aftermath of FTX

Not only the directional long-short futures* strategies presented earlier performed below expectations. Non-directional futures arbitrage* funds showed weak performance as well. Out of the market-neutral / non-directional group, these did the worst. However, all non-directional benchmarks ended 1H2023 positive with not too much of a margin between them. There are two factors that obstructed fund managers reliant on futures:

  1. FTX was the leading crypto derivatives exchange for perpetual swaps, futures, and options. As this venue unexpectedly disappeared from the marketplace, professional funds had to find new exchanges with lower liquidity. This also impacted them into 2023.
  2. Funding rates on crypto derivatives are still low. One of the main return drivers of crypto futures arbitrage is the basis trade, which locks in a return that is proportional to the funding rate. As funding rates stay low, these trades are not an option for managers currently.

5. Our view on the current market sentiment among crypto funds

In our regular conversations with crypto funds, we sense that the market sentiment among their LPs/investors is still lower than would be expected after a positive start to the year. Many funds certainly lagged the market and now have a harder time presenting a value proposition to their prospective investors.

As a result, our 21e6 Crypto Fund Database shows that the number of fund launches is moderate, and that many funds closed down early this year. Sometimes, even exceptionally well performing fund shut down due to lack of a new banking partner.

Conclusion & Outlook

All crypto fund strategies achieved positive results this year. But relative to Bitcoin, they underperformed, especially those with significant exposure to altcoins, to futures, or those strongly dependent on momentum signals.

Investor confidence improved slightly, but fund inflows and fund launches are not yet signalling a full recovery in sentiment.

Going forward, we are keeping a close eye on which exchanges will establish themselves as leading futures providers. Furthermore, the level of the funding rates in crypto futures markets and the ability of quantitative funds to capture trends will be areas of focus when we observe the markets.

Disclaimer: The information provided in this article is for informational purposes only and should not be construed as investment advice, endorsement, or recommendation. Consult with a qualified financial professional before making any investment decisions. Neither the authors nor 21e6 Capital shall be liable for any loss or damage arising from reliance on the information contained herein.

About 21e6

21e6 Capital is a Swiss investment advisor, connecting professional investors with optimal crypto investment products.

Please find more information about our authors on our homepage:


Jan Spörer is Due Diligence Manager at 21e6 and responsible for overseeing the content quality management of the 21e6 Crypto Fund Database.

Maximilian Bruckner is Head of Marketing & Sales at 21e6 Capital AG.


21e6 Crypto Fund Database,

Please find the strategy definitions in the table below:

Directional: Discretionary: Directional discretionary strategies rely on portfolio manager’s manual analyses. They do not follow an automatable pattern. An example of this would be non-systematic tokenomics analysis and macro analysis.

Directional: Long-short: Directional long-short futures strategies buy and sell futures or swaps (with fixed end terms or perpetual futures or swaps), often based on momentum strategies. These strategies are often systematic, but don’t need to be.

Directional: Quantitative: Directional quantitative strategies are systematic strategies that do not fall under the long-short category. The strategies can be expressed as computer code and thus executed without human intervention.

Directional: Early Stage: Directional early-stage strategies are discretionary strategies focused on newer, small tokens. Portfolio managers seek to identify promising tokens early on.

Directional: Multi Strategy: Directional multi-strategy portfolios cannot be classified in just one of the previous buckets.

Non-directional: Arbitrage: Non-directional arbitrage means that the trader only takes positions that counter each other. Movements in the overall market do not affect these strategies. Only the relative prices of the two traded assets may impact the profitability of arbitrage trades. There are different levels of neutrality among arbitrage strategies. Some come with higher market risk and others with lower market risk. Despite their non-directional nature, heavy directional market movements may impact some of these strategies.

Non-directional: Lending, Farming: Non-directional lending and farming utilizes interest-bearing strategies.

Non-directional: Arbitrage: Futures: Non-directional arbitrage futures strategies do arbitrage specifically in futures markets.

Non-directional: Multi Strategy: Non-directional multi-strategy portfolios use multiple of the above-mentioned non-directional strategies at once.

Directional: Fund of Funds, Multi Fund, Multi Manager: Directional fund of funds are funds that invest into other funds. Instead of making direct investments, these fund only indirectly invest by choosing other fund managers.

Non-directional: Fund of Funds, Multi Fund, Multi Manager: Non-directional fund of funds are funds that invest into other funds. Instead of making direct investments, these fund only indirectly invest by choosing other fund managers.

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