Multicoin Capital's Crypto Hedge Fund Surges Over 9,000% Since 2017, Investor Letter Reveals

Multicoin Capital's cryptocurrency-focused hedge fund has delivered extraordinary returns of over 9,000% to its initial investors since 2017, as disclosed in the investment firm's annual investor letter, reviewed by The Block. This remarkable surge in returns represents a significant turnaround for the fund, which endured substantial losses and nearly complete depreciation in value during the challenging bear market of 2022.

According to the investor letter dated February 16, the Multicoin Capital Master Fund has recorded an impressive growth of 9,281% in value since its inception on October 1, 2017. These exceptional gains are primarily attributed to the resurgence of the cryptocurrency market, culminating in a remarkable 537% return in 2023 alone. The firm is set to file a Form ADV, a requirement for advisers registering with the Securities and Exchange Commission and exempt reporting advisors. As per their previous Form ADV, the firm reported assets exceeding $1.36 billion under regulatory management.

"In 2023, crypto did what it does best and defied death, again," remarked Multicoin executives Tushar Jain, Kyle Samani, and Matt Shapiro in the letter. "Markets rebounded in spectacular form, and our hedge fund was able to capture the market’s overreaction to meaningfully outperform."

These robust returns have more than compensated for Multicoin Capital's substantial loss of 91.4% in 2022. The fund clarified in its letter that its performance since inception figures include various investments made through side pockets.

The bear market cycle proved to be a particularly challenging period for the investment firm. However, Multicoin executives emphasized that despite facing adversities such as macro tightening, political vendettas, and exposure to the collapse of embattled crypto exchange FTX, the events were ultimately not detrimental to the company's longevity.

"2022 was a particularly painful cycle due to the triple threat of macro tightening, a directed political vendetta, and a once-in-a-lifetime financial fraud," noted Multicoin's executives. "The combination of these events created a wave of panic selling that, in all likelihood, was worse than the actual events themselves."

Amidst a financial turnaround, driven by a surge in the digital assets market, Multicoin Capital underscores the potential of cryptocurrency public markets to yield substantial returns. The fund managers highlighted the significance of having exposure to liquid tokens in addition to venture funds, citing their fund's exceptional performance since inception, which has outpaced many venture funds.

At the time of writing, Bitcoin is trading at approximately $69,602, reflecting a significant increase of over 70% since its price at the peak of the bear market. Meanwhile, several altcoins, including Solana and Dogwifhat, have witnessed remarkable price surges of over 20,000% and 2,000%, respectively, since their inception, according to data from The Block.