Protocol Ventures LP is a US-based crypto hedge fund. announced Following the collapse in the value of digital assets, the company plans to shut down and return cash to its investors. According to sources who requested anonymity, this is what the company plans to do.
Protocol Ventures sent notices to investors about the decision at the end October, sources said. Sources revealed that one of the people claimed that Protocol Ventures expects to complete the closing by year-end, or the first quarter in 2023.
According to sources, investors in Protocol’s hedge fund fund may have lost up to 90% in the past year.
Protocol Ventures was a crypto hedge fund fund that invested in companies like BlockTower Capital and Multicoin Capital. Protocol’s decision is made amid widespread turmoil in the digital asset industry, which has seen a loss of $2 trillion over six months.
As the financial market was severely affected by the pandemic in 2021, cryptocurrency hedge funds gained popularity. Investors began to embrace crypto as a safe-haven asset after the financial crisis.
After central banks around the world raised interest rates to combat inflation, this year’s outperformance quickly waned. This drastic shift in financial conditions dramatically tightened the market and decreased investor appetite for riskier investments.
Three Arrows Capital (3AC), a major cryptocurrency hedge-fund based in Singapore, went bankrupt in June due to the ongoing crypto snowstorm that began in May. 3AC was severely affected by the plunge in cryptocurrency prices that saw billions of dollars disappear from the market. This led to a liquidity crisis at 3AC.
3AC’s last public statement revealed that it had a net assets value of $18 million. It was well-known for its large and highly leveraged stakes within crypto businesses and cryptocurrencies. These holdings were destroyed by the turmoil in the crypto market.
Mike Novogratz was the founder and CEO at Galaxy Digital in June. anticipated The market turmoil would cause two-thirds to fail for crypto hedge funds.
Novogratz stated that the reason for the collapse of cryptocurrency prices was due to the reaction of the wider market to the US central bank’s removal of stimulus. Galaxy and he were both investors in TerraUSD stablecoin. The executive stated that the crash of cryptocurrency prices was caused by macroeconomic factors, rather than flaws in this project.