Litecoin Creator Charlie Lee Effortlessly Outperforms Crypto Hedge Funds
The 2018 bear market has been tough on retail traders and equally hard on cryptocurrency funds. With Bitcoin down a little over -80% at this point in December, the cryptocurrency market has been experiencing a drawdown for almost 11 months or a full year. While there have been some isolated price jumps on some cryptocurrencies spontaneously over the past couple of months, the drawdown across the entire market has been significant.
2017 was a much different year for the cryptocurrency markets, with many altcoins taking off early in the year to also rally at the end of the year where Bitcoin saw an all-time high of roughly $20,000. Taking a look at the “Eurekahedge Cryptocurrency Hedge Fund Index” in 2017 cryptocurrency funds had an average return of roughly 1700%.
The Eurekahedge Cryptocurrency Hedge Fund Index is an index of 16 different cryptocurrency funds, equally weighted between all of them. The index is designed to look at a couple different types of funds to provide a broad measure of performance for cryptocurrency funds “in general.” Details to this index are linked in the sources at the end of the article.
Charlie Lee tweeted on December 11th, 2017 where he warns investors of potentially buying near the top and beginning of a “multi-year bear market.” December 11th of 2017 was where Litecoin was having a parabolic run up from roughly $40 to just over $300. In this tweet, Lee also notes that there is possibility LTC could drop to around $20. On December 11, 2018, exactly a year to date from Lee’s original tweet, the price of Litecoin reached just under $24 USD. While Lee was spot on with his price drop prediction, he also locked in some pretty gnarly gains for himself as well along the way up.
According to the performance of cryptocurrency funds according to the Eurekahedge Cryptocurrency Hedge Fund Index was a quality gain of +1700%. Charlie Lee, the creator of Litecoin, had a roughly 7400%+ performance for himself, assuming he held Litecoin from $4 and sold with an average of $300. There are also a lot of other assumptions here in Lee’s case… assuming this was the only cryptocurrency he held, that he truly sold it all, etc, but there is a news story linked in sources that discusses Litecoin creator Charlie Lee selling all of his Litecoin at $300.
Moving to 2018, Lee has no gain or loss as he does not hold any cryptocurrency or litecoin, and sold last year in December. Cryptocurrency funds according to Eurekahedge throughout 2018 have reported a roughly -60% loss. A visual is included below about the Eurekahedge crypto funds, showing the gradual decline over the 2018 year with the bear market. Lee had the foresight to understand that the price increases that happened last December appeared to be topped out, sold his holdings, and has not announced he has re-purchased any litecoin at this time.
To summarize, throughout 2017 Charlie Lee outperformed an index of 16 cryptocurrency funds, 7400% compared to 1700%. In 2018 Lee took the “no position is a position” approach which provided a 0% gain/loss, which is substantially better than the Eurekahedge cryptocurrency fund index 2018 performance of -60%.
While there are a lot of assumptions to Lee’s trading performance… the point is that he alone did better than most of the cryptocurrency funds that attempted to trade throughout 2018. Lee’s tweet from December 11th, 2017 (screenshot above) was better trading advice than any “guru” could have provided going into the 2018 year. The greater message here is that you would have been better off sitting out the bear market of 2018 as even the trading “experts” at the cryptocurrency hedge funds attempted to trade through it to still manage to end up at a more than -50% loss on the year. Overall, no matter your opinion on Lee or Litecoin you have to recognize the insight that Lee was able to provide about what was to come for the cryptocurrency market. Lee sold close to the all-time high of litecoin and warned investors of a potential price drop throughout a bear market.
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