A cryptocurrency hedge fund helmed by three Brazilian bankers has lost half of its money even though it returned positively over the past 16 months.

The value of São Paulo-based BLP Asset Management’s crypto-asset hedge fund, Genesis Block Fund, is down 56.3% from its inception to date. That is because despite gains of 34.9% in 2019 and 46.6% from January to May 2020, it suffered a 77.9% plunge in 2018, its first year.

BLP Asset Management’s returns are a reminder cryptocurrency funds that took a hit in 2018 — when prices of digital currencies crashed — have a harder time getting back to sea level than those buoyed by 2017’s cresting market gains.

“We launched the fund on Jan. 1, 2018, right as [the] market went into crypto winter,” said BLP Asset Management partner Axel Blikstad, who used to head Banco Santander Brazil’s fixed-income sales desk for institutional clients. Blikstad launched the fund with Glauco Bronz Cavalcanti, a chief investment officer for the firm and formerly with Credit Suisse Asset Management Brazil, and Alexandre Vasarhelyi, a BLP partner who was Banco Pine’s treasury manager and a former trader at Credit Suisse, Boston Deutsche Bank, ING Bank and Indosuez Bank.

Even though 2018 was a losing year, the BLP Genesis Block Fund’s 2018 and 2019 returns exceeded those of the Bloomberg Galaxy Crypto Index, the investing benchmark the fund tries to beat. The Bloomberg Galaxy Crypto Index is a Galaxy Digital index fund tracking top cryptocurrencies weighted by market capitalization. “Our clients are used to various Bloomberg indexes and this was the best index we found on the crypto space with monthly rebalancing,” said Blikstad.

To get into BLP, investors need to put in a minimum of $100,000 but can pull some or all of their money out during a window of time that opens once per month. The Genesis Block Fund’s value decreased the most in April 2018 by 37.4% and increased the most in May 2019 by 58.6%, and saw 17 months on the downswing and 12 months on the upswing, according to BLP Asset Management reports.

For high-net-worth individuals and institutional clients, the BLP Genesis Block Fund now manages approximately $5 million and an additional $2 million from “local feeder funds for Brazilian domestic clients,” Blikstad said.

It is possible complicated hedging instruments could have staved off the tricky market conditions back in 2018, but BLP Asset Management is a “long-only” crypto fund, said Blikstad, and that has been the case since it launched. “We may go overweight or underweight any asset we want, but never outright short,” he said. “We do not use any derivative nor do we lend our assets out for extra yield. In one specific case we do stake a token but never lend them out.”

According to monthly BLP investment letters, the fund shied from trading ethereum classic, bitcoin gold and bitcoin SV. Rather, the fund varied its holdings between dozens of coins: bitcoin, bitcoin cash, litecoin, zcash, monero, tezos, zcoin, eos, Stellar lumens, XRP, ADA, IOTA, NEO and numerous crypto-linked platforms. Those platforms include the Funfair online casino, Worldwide Asset eXchange, Polymath security token network, Brave web browser, Chainlink SmartContract processor, Decred network, MakerDAO stablecoin basket and Ethereum blockchain privacy layer Keep. BLP Asset Management invested in Keep through a coin offering with Polychain Capital and Andreessen Horowitz’s cryptocurrency fund.

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