US-Based Crypto FoF to Close After Investors Lose Up to 90%

Protocol Ventures is the latest casualty of the ongoing crypto market decline as the fund of funds notified investors it will shut down and return cash, according to Bloomberg. The US-based fund is expected to complete the closure by the end of 2022 or Q1 2023, the report added.

Protocol’s Investors Facing 90% Losses Amid Crypto Slump

US fund of funds (FoF) Protocol Ventures is set to close down and return funds, Bloomberg reported Thursday. The move marks the latest in a series of funds and crypto projects that closed shop due to the persisting crypto winter.

According to Bloomberg, Protocol notified investors about its intention to shut down at the end of October, with the process expected to be completed by the end of 2022 or Q1 2023. Losses suffered by Protocol’s investors may be as high as 90% over the past year, Bloomberg said, citing sources with knowledge of the matter.

Founded in 2017, Protocol Ventures is a fund of funds in crypto asset classes that invested in firms like BlockTower Capital, Pantera Capital, Multicoin Capital, and Electric Capital, among others. Started by venture capital investor Rick Marini, Protocol was reportedly the first-ever crypto fund of funds. Marini set up the fund with his own $1 million, with hopes to raise $100 million.

Risk Assets Still Under Pressure

Protocol Ventures’ fall comes amid a difficult year for the crypto market, which has lost more than $2 trillion in recent months. Many cryptocurrencies are down at multi-year lows, with Bitcoin (BTC) and Ether (ETH) losing more than half of their value in the past 6 months.

Crypto hedge funds were booming in 2021 boosted by unprecedented liquidity infusions to help ease the adverse effects of the coronavirus pandemic. However, that was followed by a drastic shift in monetary policy by global central banks to fight soaring inflation. Rampant inflationary pressures and high-interest rates shifted the macroeconomic environment, pushing investors away from risk assets.

As a result, several crypto funds and firms have collapsed in recent months, including Three Arrows Capital (3AC), Voyager Digital, and Celsius Network. The implosion of the algorithmic stablecoin TerraUSD (UST) and LUNA also contributed, with the two tokens giving up $60 billion in combined market value.

The Fed delivered a fourth straight interest rate hike of 75 bps Wednesday and reiterated plans to maintain its hawkish approach. The central bank’s comments suggested that risk assets will remain under pressure for the time being.

This article originally appeared on The Tokenist

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