Starting from an 80% loss in the McCann Fund: Why has the performance of the encryption liquidity fund been so poor during the bull run?

Bitcoin has surged over 27% this year; however, most encryption liquidity funds (Liquid Fund) have not only failed to outperform the market but have also experienced significant losses and forced closures. Joe McCann's Asymmetric fund lost ten million dollars in six months, which is the best example, leading outsiders to question: "How can you lose even in a bull run?"

Analysis of the reasons for the 80% loss in Asymmetric over half a year: high leverage and high exposure.

Recently, the liquidity fund closure case that has stirred the cryptocurrency industry is none other than the Liquid Alpha Fund of Joe McCann's hedge fund company Asymmetric. The fund boasts a "high volatility market strategy," yet has suffered a terrible loss of 80% from the beginning of the year until now and has quietly closed.

( Hedge fund lost tens of millions, founder Joe McCann takes the helm of the world's largest SOL reserve company )

Arthur Cheong, the founder of DeFiance Capital, pointed out that Asymmetric is the "worst performing" liquidity fund he knows of. Even though most funds saw a recovery in the second quarter, and some have made up for their first quarter losses, that fund has not shown any improvement.

The asymmetric trading style may be the reason for significant losses, including high-leverage derivative operations in extremely volatile markets, excessive trading of meme coins like BONK and MOTHER, and potentially counterproductive options strategies.

Why can't liquidity funds outperform Bitcoin?

According to the VisionTrack data from Galaxy, the performance of hedge fund indices as of the end of June this year is as follows:

Fundamental Index (: -13.74%

Composite Index ): -6.36%

Market Neutral Strategy (Market Neutral): 5.05%

Quantitative Strategies (: 0.26%

At the same time, Bitcoin's own annual pump has reached 27.1%, forming a stark contrast with the above data.

Why is this happening? The Block pointed out in the latest issue of "The Funding" that many liquidity is restricted by compliance or limited partner )LP( regulations, which cannot directly hold BTC, and can only look for targets in the generally underperforming altcoin market, but their performance is then compared to BTC.

Pantera Capital partner Cosmo Jiang described:

Using Bitcoin as a performance benchmark for a liquidity fund is like using Nvidia to measure the performance of an ordinary stock fund, which is not fair.

The nightmare of fund managers in this cycle: choosing the wrong tokens and missing the rebound.

In addition to operational restrictions, "choosing the wrong targets and missing the timing" has worsened the situation for many funds. Balder Bomans, Chief Investment Officer of Maven 11 Capital, mentioned that the slow collapse of most altcoins before June caused many tokens to plummet by 50% to 80% from their historical highs )ATH(. Many funds were unable to reduce their positions in time and missed the rebound from May to July due to insufficient liquidity in their positions.

The uncertainty of macroeconomic deterioration, the constantly changing narratives, and the lack of experience in liquidity management make it difficult for many fund managers to accurately measure position size and exit smoothly, further worsening their performance.

Ryan Watkins, the founder of Syncracy Capital, pointed out: "In this cycle, very few tokens have performed better than BTC, so the probability and cost of betting on the wrong asset are very high."

) How do market collapses impact VCs? Cryptocurrency venture capital is shifting from private equity to liquidity funds, with strategic flexibility becoming key (.

Return to fundamentals: Fund winners rely on careful selection and risk control capabilities.

The shift from speculative, meme coin-driven capital flows to more fundamentally driven investments may catch some funds off guard.

In this wave of major fund reshuffling, the investment market is returning to a "fundamentals-driven" approach. Patel-O’Connor, a partner at Framework Ventures, stated: "Such a rapid shift might catch some funds off guard, as most are still adapting."

Current agreements need to be truly profitable, possessing concrete business models, actual revenue, user scale, and profit-sharing or incentive mechanisms to gain favor.

Rob Hadick, a partner at Dragonfly, added: "The fund's 'risk control ability' has also become a crucial decisive factor in this cycle. In addition to selection, timely entry and exit, along with flexible allocation, are essential for survival in a highly volatile market."

The next stop for the liquidity fund: more agile, more decisive

This round of bull run can be said to be quite challenging for liquidity funds, as various data reveal the strategic failures and operational challenges faced by active funds.

As the market gradually shifts from speculation to fundamentals, the winning funds in the future will no longer rely solely on risk appetite and high leverage bets, but will return to the true skills of token selection, risk management, and Liquidity allocation.

This article starts from McCann Fund's 80% loss: Why is the performance of cryptocurrency liquidity funds so poor during the bull run? Originally appeared on Chain News ABMedia.