Cryptocurrency hedge funds are still a fairly new investment vehicle, but we’re already getting a pretty good idea of how they stack up against simple passive investments in two common underlying currencies. The bitcoin price and ethereum price have both plunged this year, leaving cryptocurrency hedge funds scrambling for cover.

However, performance data shows that in a down year, investing in those two cryptocurrencies via hedge funds seems to offer slightly better performance than a passive investment in a portfolio consisting of 80% bitcoin and 20% ethereum. Interestingly, cryptocurrency hedge funds were able to generate alpha against all the benchmarks they were compared to.

The year of the cryptocurrencies

The September Eurekahedge report included detailed data on cryptocurrency hedge funds and how they stack up against key benchmarks. Needless to say, when the bitcoin price skyrocketed in 2017, cryptocurrency hedge funds killed it, raking in massive gains for investors. Now that the bitcoin price has plunged, this hedge fund strategy has struggled as well, but the hedge fund investors did better than investors holding a passive stake in bitcoin and ethereum.

Last year the bitcoin price surpassed $1,000 and then kept right on going. By May, the bitcoin price had reached $2,500, and then it doubled from there in October. The bitcoin price peaked in December at more than $19,000 after CBOE and CME launched their bitcoin futures. Since then, the bitcoin price has come crashing down.

Last year was also the year other cryptocurrencies started to take hold. According to Eurekahedge, the ethereum price gained more than 10,000% in 2017. Last year also brought about a number of new cryptocurrencies, including bitcoin cash, which split off from bitcoin.

Eurekahedge noted that 2017 also brought stable coins, a new type of cryptocurrency which became popular due to their price stability. Stable coins offered less price volatility because they were pegged to gold, fiat currencies, or other stable assets.