Lewis also discussed crypto hedge fund returns, saying that 2018 was quite tricky for the crypto fund market. Quant funds finished the year slightly higher, according to PwC data. But most funds took significant losses that year before rallying back hard in 2019. He compared crypto funds to fireflies, saying their lifespans can be “pretty short sometimes.” He explained how he’s seen super smart groups come and go over the years with a lifespan as short as two to three years. He’s also seeing now groups with bigger AUM that stay the course through various market cycles.

As for which markets crypto hedge funds are flocking to, bitcoin is unsurprisingly the biggest market. The funds are generally looking for institutional appeal, Lewis said, so they are often trying to allocate heavily toward the major traded cryptocurrencies, the ones with the most liquidity. He added that if they are pursuing more exotic cryptocurrencies, they must be really clear and have a small basket. To go far and wide, it is with the larger cryptocurrencies like BTC, ETH and the variants on BTC. They are dipping in and out of assets that are most likely to have liquidity.