Profile of Multicoin Capital, a $100M crypto hedge fund which, between Oct. 2017 and Nov. 2019, had returns of 143%, compared to bitcoin's rise of 109%
I cover fintech, cryptocurrencies, blockchain and investing. — Sitting side-by-side in a trendy Manhattan cafe where a glass … Tweets: @thebearablebull , @forbes , and @forbescrypto . Thanks: @johnrobertreed Tweets: @thebearablebull : Recently I've seen the quantity & magnitude of FUD increasing exponentially... this to me signals that the bullrun is at our doorstep 1st they ignore us.. Then they laugh at us.. Next they fight us.. Then. We. Win. 😤🚀🌒 ✊🏼#XRP https://twitter.com/... @forbes : By shorting some digital currencies and embracing active management, Multicoin has outperformed the market over the past 2 years https://www.forbes.com/... https://twitter.com/... Forbes Crypto / @forbescrypto : Two crypto investing stars explain why they think XRP is worthless, plus other trading tips: https://www.forbes.com/... by @JeffKauflin https://twitter.com/... Thanks: @johnrobertreed
Context & Ripple Effects
This profile lands mid-arc for Multicoin: the firm had already raised from Marc Andreessen and David Sacks in early 2018 en route to its $250M fund target, and the piece argues its edge is active management — shorting some digital currencies rather than holding beta. Its 143% return over Oct 2017–Nov 2019 tops bitcoin's 109%, but only modestly, and sits far below the 2,303% Polychain posted in the same era of crypto asset management.
Read against the later record, the profile captures the peak of the alpha narrative: the same firm that beat bitcoin through stock-picking-style trades would go on to report a 91.4% loss in 2022, with 10% of assets stuck on FTX and exposure to FTT, SOL, and SRM. The gap between those two data points is the story of whether crypto hedge-fund skill survives a full cycle.
First-order effects
- Limited partners reading the profile get a differentiated pitch — Multicoin's shorting and active trading justify fees that pure bitcoin-holding vehicles cannot, at least over this window.
- The 34-point spread over bitcoin over two years sets a thin margin: one bad cycle of concentrated bets can erase the entire claimed alpha, which is exactly what the 2022 investor letter later showed.
Second-order effects
- Rival crypto funds face pressure to demonstrate either comparable active-management returns or to concede the fee argument and compete as low-cost passive exposure, splitting the asset-management market along an active/passive line.
- Multicoin's later concentration in FTT, SOL, and SRM illustrates the knock-on risk for allocators: funds that outperform by concentrating in fewer tokens carry tail risk that standard track-record diligence misses.
Third-order effects
- If the pattern holds across cycles, crypto fund selection becomes dominated by survivorship questions — allocator due diligence shifts from headline returns toward custody arrangements and position concentration, the failure points the FTX episode exposed.
- The industry structure trends toward a barbell: a few scaled passive/index products capturing most flows, with boutique active managers like Multicoin competing on conviction bets whose losses, when they come, are structural rather than cyclical.
The trend: Crypto hedge funds are cycling through an alpha-claims phase into a concentration-risk reckoning, where active-management premiums prove fragile across a full market cycle.