Crypto Billion Dollar Fund Records 22% Loss in August, State of Market

According to a letter to its clients from Pantera Capital - the first billion-dollar crypto fund, the holdings of the fund have recorded a loss of 22 percent in August and a 72.7 percent loss year-to-date.

As a billion-dollar investment firm, it is difficult for Pantera to liquidate its holdings in an attempt to catch short-term uptrends and downtrends in the market without heavily affecting the cryptocurrency exchange market.

It is especially challenging for a large hedge fund to initiate in short-term trading of small market cap cryptocurrencies.

Kyber Network, 0x, OmiseGo, and Basic Attention Token are widely recognized Ethereum-based ERC20 tokens with market valuations in the north of $400 to $500 million.

Sylvain Ribes, cryptocurrency trader, and investor revealed in his research that the actual daily trading volume of most cryptocurrencies are lower than their listed volume on market data platforms.

In a paper entitled "Chasing fake volume: a crypto-plague," Ribes investigated the depth of the market by selling $50,000 worth of cryptocurrencies on leading exchanges to measure the "Slippage" of each cryptocurrency.

In 2013, when the price of Bitcoin was $100, Dan Morehead, the CEO of Pantera Capital told investors of the firm's Bitcoin Fund that the price of Bitcoin will inevitably achieve $5,000, recording a 10,136 percent return on investment.

In 2017, investors in Pantera's Bitcoin Fund saw a peak return of 19,900 percent, as the price of Bitcoin surpassed $20,000 in most major markets.

Investors in the fund nor the fund itself are likely not phased by the 70 percent drop in the cryptocurrency market.

In an unpredictable market like crypto, similar to how assets can lose 30 to 50 percent of their value overnight it is possible for the market to jump by a similar margin in a 24-hour period.