US, WASHINGTON (ORDO NEWS) — The Adaptive Capital cryptocurrency hedge fund plans to close after a market collapse on March 12-13, The Block reports.
“Adaptive decided to suspend operations and return the remaining funds to the fund participants. We are convinced that the risks of working in such an unstable environment exceed the potential benefits,” the letter reads to investors.
The company complains about the “inferiority of the infrastructure”, which makes it difficult to properly respond to the movements of the volatile market:
“A number of reputable exchanges, platforms and services that we use daily suspended operations amid a sale, significantly limiting our ability to respond appropriately.”
In particular, during the fall of the price of bitcoin below $ 4000, the BitMEX platform faced serious interruptions for about 45 minutes, during which trading orders of users were not processed. Representatives of the popular crypto derivative exchange explained these problems by distributed denial of service (DDoS) attacks.
Sources familiar with the situation told the publication that Adaptive Capital used BitMEX for operations, and as a result of the recent collapse, the fund’s assets decreased by 50%.
Note that earlier the fund showed good returns. For example, from October 3, 2018 to May 3, 2019, Adaptive Capital’s assets grew by 552.77%. To predict market movements, the company used its own tools based on on-chain analysis of popular cryptocurrencies.
The fund was managed by well-known analysts in the crypto community – Murad Mahmudov, an ex-employee of Glencore and Goldman Sachs, and Willy Wu, creator of a number of on-chain indicators.
Recall that last year, about 70 large cryptocurrency hedge funds closed.
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