Crypto funds are looking to raise fresh capital after making it through a tough March

After enduring a tumultuous March, several cryptocurrency funds are looking to raise fresh capital. 

It's not easy to get a perfect picture of the crypto fund market as a whole, but data and anecdotal evidence can give us an idea of how funds performed.

According to BarclayHedge, which analyzed data from 28 funds, cryptocurrency hedge funds ended March down 8%.  Another index, by Hedge Fund Research, shows crypto hedge funds on average shedding 26.6%. Bitcoin, meanwhile, shed 25.3% last month.

Joe DiPasquale, a crypto fund of funds manager at Bitbull Capital, told The Block that aggregate performance indexes depend heavily on the makeup of the individual funds they reflect, making it difficult to get a full picture.

But DiPasquale said that, based on the crypto funds he tracks, March wasn't such a bad month for those that were actively long and short various cryptos or taking advantage of arbitrage opportunities. "They cut down some of the losses in March," he said. "Generally they were negative in March, but in general better than a passive index or bitcoin."

The picture has changed drastically since the middle of last month, with bitcoin picking up considerably since it cratered (it pushed above $9,000 Wednesday evening, though it has slipped somewhat since then). While it's not clear yet if hedge funds have been able to capture that upside, a few appear to have managed to protect their investors' capital last month on the way down. 

For instance, crypto hedge fund Polychain's crypto trading side-pocket fund was only down 1.57% in March, according to a document reviewed by The Block. At the same time, its master (venture) fund was down more than 37%. 

To be sure, March did see some casualties. Adaptive Capital – which shut down after suffering losses during the March 12-13 sell-off – is one notable example.

Meanwhile, smaller hedge funds like Ikigai posted results above 9% in March, according to an April 2020 performance update sent to prospective investors. 

Ikigai began deploying capital into a new "rules-based" systematic strategy, according to an investor letter. Ikigai is led by former Point72 portfolio manager, Travis Kling.

"This strategy deploys limited but opportunistic discretion," the firm said, adding that it has recently made adjustments to the models underpinning its flagship trading strategy that will " improve their usefulness." 

Orthogonal Trading, another crypto fund, reported greater than 8% returns in March, according to documents reviewed by The Block. The firm is led by Michael Zim, a 25-year veteran from the FX options trading business. Previously, Zim was a senior portfolio manager at Bluecrest Capital Management. His fund's strategies range from statistical funding arbitrage, cash and carry arbitrage, and cross-exchange arbitrage, according to the documents. 

Both Ikigai and Orthogonal Trading are currently accepting funds from new investors – and they are not alone. 

Virgil Capital, a fund that manages a reported $100 million in assets under management, is accepting new investors for its waiting list. A spokeswoman for the fund told The Block it is currently closed. That fund underperformed bitcoin in the first two months of the year, according to documents reviewed by The Block, though it's not clear how it fared in March.

Source: Virgil Capital

Andreessen Horowitz, meanwhile, has raised a $515 million cryptocurrency fund, as reported by Axios' Dan Primack on Thursday morning. The report follows one by the FT that said a16z "could finalize the new fund in about a week but has not yet placed a hard cap on its size," citing an unnamed source. 

As for Polychain, a source said the firm was actively raising as of the last quarter for a reported $200 million venture fund. 

Brian Kelly, a contributor to CNBC and head of crypto fund BKCM, declined to confirm whether his fund was raising fresh capital. But he noted that in general, crypto funds could have an easy time raising in the coming months given the current macro backdrop. Market chaos is forcing investors to explore new opportunities.

"Alpha is hard to find out there," he said in a phone interview. "As investors seek alpha amidst unprecedented Fed actions, they might come to bitcoin."

This piece has been updated to include new information from Virgil Capital.