Crypto Hedge Fund Pantera Capital Loses 73% Year-to-Date

  • A leaked screenshot hints that Pantera Capital, one of the largest cryptocurrency hedge funds in the world, is down 73% on their investments in 2018.
  • This performance is worse than strictly holding Bitcoin.

Pantera Capital, one of the largest cryptocurrency hedge funds in the space, is rumored to be down 72.7% on their investments this year.

In a widely circulated screenshot found on Twitter, Pantera’s ROI figures can be seen.

pantera loss.png

The original tweet:

The numbers are as follows:

August: -22.3%

YTD (year-to-date): -72.7%

LTD (life-to-date): -40.8% (The Fund’s first full month was December 2017)

CAGR (compound annual growth rate): -50.3%

Considering the screenshot says “August Performance,” this is most likely a report came out on September 1st.

In June, CryptoGlobe reported that Pantera was down 51% YTD. Since then, it seems the funds performance has not improved.

Is It True?

It’s possible that this screenshot is fake news. However, at this moment, there is no confirmation that this is real or fake.

Most likely, these figures came from a memo to investors. Hedge funds routinely publish their numbers internally, so that investors can see how their investments are doing.These are usually not available to the public, which explains why no public source can be found for these numbers.

CryptoGlobe reached out to Pantera for comment, but there was no response.

Performance Versus Bitcoin

Although it seems Pantera has not produced much ROI for their customers, the entire market has been in a downtrend this year.

To see how the hedge fund really performed, here’s how Bitcoin (BTC) performed over a similar time frame.

Price Of Bitcoin

January 1, 2018: $13,445

August 1, 2018: $7,611

September 1, 2018: $7,203

Bitcoin ROI

August: -5.36%

YTD (January 1 to September 1): -46.4%

Pantera ROI

August: -22.3%

YTD (year-to-date): -72.7%

Looking at the numbers above, holding bitcoin would’ve been more profitable than investing in Pantera Capital (if the screenshot is true).

Why did this happen?

Although it’s impossible to see exactly how much Pantera invested in what, there is a list of their investments published on their website.

They’re invested in Bitcoin, but also altcoins: 0x, Augur, Civic, Ethereum, Enigma, Filecoin, Funfair, Gems, Icon, Kin, Ripple, and many more. In addition, they’re invested in exchanges such as Shapeshift, Abra, Circle, and Xapo, and infrastructure projects like Earn and BitPesa.

Over the past year, altcoins have performed worse than Bitcoin, so Pantera’s diversified portfolio might have led to their downfall.

Weekly Newsletter

Trans-Fee Mining Crypto Exchange 'FCoin' Insolvent After Mistakenly Being Too Generous

One of the first cryptocurrency exchanges to adopt the controversial trans-fee mining (TFM) model, which has been called a “disguised ICO” has paused trading and withdrawals over a shortage of crypto worth up to $130 million.

According to a statement published by FCoin’s founder Zhang Jian, a former Huobi CTO, the exchange is now unable to process withdrawals as its reserves are down by between 7,000 to 13,000 bitcoin, worth over $130 million at press time, over an issue that’s “a little too complicated to be explained in a single sentence.”

Zhang’s statement details the cryptocurrency exchange wasn’t hacked, nor is it pulling an exit scam on its users. He detailed that an internal system error gave users more mining rewards than they should have received, noting the error wasn’t detected for a long period of time.

The transaction-fee mining model, which saw FCoin’s trading volume surpass $5 billion per 24 hours numerous times, sees the cryptocurrency exchange incentivize trading via its own token, FT. FCoin reimbursed users for transaction fees paid in BTC or ETH with FTs until 51% of the coin’s supply was distributed, and redistributed 80% of the BTC and ETH it collected to those holding FT tokens.

The controversial model drew criticism and saw Zhang defend it, claiming it was a misunderstood invention. At the time, he said:

If you look back at history, all new things were not recognized at the beginning. Many were believed to be fraud. Jack Ma was recognized as a fraud when he first promoted the internet in China.

Various cryptocurrency exchanges started adopting the TFM model shortly after, with research showing these platforms had unusually thin order books and low traffic taking into account the trading volumes they had.

According to Zhang, the errors in FCoin’s system gave away too many tokens in mining rewards from mid-2018 to mid-2019, when a complete back-end auditing system was implemented. As throughout 2019 the price of FT kept on dropping, Zhang and his team reportedly used their own funds to buy back tokens and drive up demand, a decision he claims was an error.

This, as it gave users a chance to sell their FT tokens and withdraw as much as possible from their accounts, while FCoin bought up tokens that kept on losing value. Zhang’s announcement came shortly after FCoin suspended its platform over a risk-control issue.

Zhang is now reportedly manually processing users’ withdrawal requests sent via email. The founder of the exchange claimed he will “switch tracks” to start again, and noted he hopes he can use the profits made from new ventures to “compensate everyone for their losses.”

Featured image via Unsplash.