Hedge Funds Investing Billions In Crypto (#GotBitcoin)
Billionaire investor Steven Cohen, once dubbed the “Hedge Fund King,” has reportedly entered the crypto space. Hedge Funds Investing Billions In Crypto (#GotBitcoin)
Autonomous Partners was founded last December by Arianna Simpson, a venture capitalist with a history in the bitcoin space, including a time at bitcoin wallet startup BitGo. Her crypto fund has already secured investments from big names including Coinbase CEO Brian Armstrong, Union Square Ventures and Craft Ventures.
While the size of the new investment was not revealed, it’s not the first time Cohen Private Ventures has invested in Simpson’s projects. In 2015, her venture fund, Crystal Towers Capital, also received an investment from the firm.
Simpson told Fortune that Autonomous Partners is currently concentrated on smaller, “next generation” cryptocurrencies, though it invests to some extent in major cryptos like bitcoin and ether.
Arca’s Flagship Crypto Hedge Fund Is Up 77% in 2020
Arca Capital Management’s flagship hedge fund – the Arca Digital Assets Fund – is up 76.74% in 2020, even as some cryptocurrency-focused hedge funds appear to be floundering and still others are folding due to lackluster demand.
* According to a monthly investor note obtained by CoinDesk, Arca Digital Assets Fund, which invests in crypto companies’ tokens, equities and bonds, has grown 9% or more every month this year except for in February (-3.24%) and March (-4.36%) when it followed global capital markets’s virus-induced plunge.
* The fund’s 76.74% year-to-date gains beat the S&P 500 (+1.12%), Bloomberg’s crypto index BCGI (+38.01%) and bitcoin (+30.39%). January’s 35.37% growth was the fund’s strongest single month of 2020. Last month it gained 9.9%, the investor note shows.
* Arca’s Investment Adviser registration documents reveal that Arca Digital Assets Fund had a gross asset value of $2,976,028 as of March 30. A source familiar with the matter told CoinDesk that Arca has doubled its assets under management every quarter of 2020.
Crypto Hedge Fund Looks For $50M To Buy DeFi Tokens Amid Market Pullback
The cryptocurrency money manager Panxora seeks to raise up to $50 million for a new hedge fund to buy digital tokens associated with the fast-growing decentralized finance (DeFi) sector.
DeFi is a segment of the blockchain industry consisting of automated lending and trading platforms that aim eventually to displace banks and Wall Street firms. But in a sign of just how fast-moving and fickle digital-asset markets can be, the new fundraising effort is getting underway just as prices are tumbling for some of the leading DeFi projects, including Yearn.Finance and Aave.
“This has got the potential to really change the way finance is carried out,” Panxora CEO Gavin Smith said in an interview.
DeFi projects, often referred to as protocols and mostly built atop the Ethereum blockchain, have soared in popularity this year.
It has been fueled by the “yield farming” craze that encourages crypto traders to sock digital assets into the trading and lending systems in pursuit of high interest rates, token rewards and fast gains. Dollar-linked tokens known as stablecoins can fetch annualized rates up to 20% through Yearn.Finance, versus 0.01% for a savings account with JPMorgan Chase, the largest U.S. bank.
Collateral locked into DeFi projects surged to $13 billion earlier this month, according to DeFi Pulse, a 20-fold increase since the start of the year. Big cryptocurrency exchanges like Binance and Coinbase have rushed to cash in on the trend, listing DeFi tokens while acknowledging that a growing share of market volumes might eventually migrate to decentralized trading platforms.
But just in the past week, the trend has reversed; total collateral in the systems has declined to about $9.5 billion. And as prices tumbled for bitcoin (BTC), the largest cryptocurrency, and ether (ETH), the native token of the Ethereum blockchain, DeFi-affiliated tokens fell even harder.
Aave, a decentralized lender, saw its LEND tokens fall by 12% during the seven days through Tuesday, according to Messari, a cryptocurrency data firm. OMG’s OMG tokens have plummeted 54%, while Yearn.Finance’s YFI tokens are down 29%.
It’s been “an absolute bloodbath,” Messari analysts wrote Tuesday in their daily newsletter. “DeFi’s casino summer could be coming to an end.”
Cryptocurrency analysts say DeFi systems are likely to grow over the long term, though short-term risks are high in the nascent market, and many of the digital tokens are so new that they can be difficult or even impossible to value using anything resembling traditional financial analysis.
Chainlink, a so-called blockchain “oracle” that supplies price feeds to decentralized protocols, is the top-performing digital asset this year among those with a market value of at least $1 billion, climbing more than fourfold in 2020. And that’s after a 45% decline just this month.
“We expect the market to be volatile in the early years,” Smith said. “While there is great potential there will inevitably be setbacks along the way.”
Panxora’s new hedge fund, based in the Cayman Islands and scheduled to start trading on Nov. 2, will primarily buy tokens listed on big centralized cryptocurrency exchanges rather than from the roster of decentralized, automated exchanges like assembled by DeFi developers.
Smith, a former metals-pricing analyst for the Singaporean commodities-trading firm Trafigura, says that’s primarily because few if any decentralized exchanges can guarantee sufficient compliance with anti-money-laundering rules, and also because a token listing from an exchange theoretically implies some level of vetting.
“We have to offer it as a conventional hedge fund that invests in these protocols,” Smith said.
Hedge Fund Predicts $115K Bitcoin Price And The Fall Of ‘Speculative’ Altcoins
Analysts say Bitcoin and Ether’s growing dominance of the crypto market are signals that the current bull market is drastically different than the last one.
New data from Pantera Capital, an investment firm and hedge fund, suggests that Bitcoin’s (BTC) current price action is closely following the stock-to-follow model’s trajectory and the firm’s analysts believe BTC will reach $115,212 by Aug. 1.
Bitcoin’s parabolic rally may have placed the price a bit ahead of the model’s projection and this week’s 28% correction sent temporary shivers across the market but sharp corrections and short consolidation periods are characteristic of bull markets.
The model focuses on the price impact of Bitcoin halving events that cut the amount of Bitcoin minted every block in half every 4 years.
According to the model, the impact of decreasing Bitcoin’s supply becomes present roughly 6 months after each halving. When Bitcoin price halved on May 11, 2020 the price was around $8,000 and 6 months later BTC was trading above $15,000 and on the verge of entering a parabolic rally to a new all-time high.
The chart above shows the progress of Bitcoin’s price in the days after each halving. A similar pattern developed over the past two halvings, just with a differing time span. The current BTC performance appears to be in between the 2012 market 2016 cycles, which has the potential to lead to a price of Bitcoin between $300,000 and $400,000 around 450 days after the last halving, or roughly Aug. 4.
Signs Of A Maturing Market
Another significant difference between this rally and 2017 has to do with the overall market composition and where value is located. A majority of the value of the current market is consolidated in Bitcoin and Ether (ETH) as institutional investors have thus far chosen the most established chains to gain exposure to the cryptocurrency sector.
Andy Yee, a Public Policy Director for Visa in Greater China, pointed to this development in a Tweet response to Pantera’s report:
“This rally is different. Massive shift from high-speculative, non-functioning tokens in 2017 to #Bitcoin and #Ethereum today, according to PanteraCapital.”
As shown in the chart above, Bitcoin and Ether have 86% of the value. The other 5,000 chains have 14%. While BTC was peaking late in 2017, the two top coins had a total of 52% of the value, indicating that BTC and ETH have consolidated their market share over the past three years.
Possible reasons for this shift in funds include institutional money focusing on Bitcoin as an entry point into the cryptocurrency market due to its network security and vast mining infrastructure, and the burgeoning decentralized finance ecosystem which is predominantly built on the Ethereum network.
As the DeFi ecosystem continues to grow it will also attract institutional attention, further boosting the price of Ether as it is required to interact with all smart contracts and DeFi platforms on the Ethereum network.
Data from defipulse shows that the total value locked in DeFi now stands at $29.98 billion, near its all-time high of $23.116 billion.
As the TVL increases, so does the value of the top ecosystem coins including AAVE and Synthetix (SNX). Trading volume on the top decentralized exchanges, such as Uniswap and SushiSwap, continues to grow with data from Dune Analytics showing that the combined weekly DEX volume recently surpassed $13 billion.
Institutional Inflow To Bitcoin May Trigger A New Altcoin Season
While Bitcoin and Ether currently hold 86% of the cryptocurrency market value, past market cycles would indicate the possible flow of funds out of the top cryptocurrencies and into promising new projects. This dynamic has led analysts like Raoul Pal to suggest that after Bitcoin and Ether’s stellar rally, the “next stop will be higher risk alts.”
Media have also reported that Goldman Sachs is rumored to be preparing to offer custody services for cryptocurrencies could set the stage for the next hype cycle for Bitcoin. A sustained inflow of money from the institutional class could be the catalyst that lifts the price of Bitcoin and keeps it in line with the projections of the stock-to-flow model.
Bitcoin Breakout ‘Imminent’ Says Hedge Fund As Analyst Targets $48K Monthly Close
Both Bitcoin’s technicals and analysis of on-chain indicators are “wildly bullish,” says Vailshire Capital Management, with BTC/USD reaching three-day highs.
A fresh Bitcoin (BTC) breakout is “imminent” and most likely to the upside, hedge fund Vailshire Capital Management says.
In a tweet on Jan. 19, Jeff Ross, the firm’s founder and CEO, described the outlook for BTC performance as “wildly bullish.”
Vailshire Capital ‘steadfastly long’ BTC
Using a combination of on-chain metrics and macro insight, Ross highlighted an upcoming end to the ranging and conolidation seen in the Bitcoin price this week.
“Update on #Bitcoin technicals… Breakout imminent. Direction still undecided. Macroview: Wildly bullish. On-chain analysis: Wildly bullish,” he wrote.
“Upside move most likely. Short-term dips will be bought with strength. Vailshire Partners LP remains steadfastly long.”
His comments come as Bitcoin sentiment appears to return to “business as usual” after the holiday break, with asset management giant Grayscale making its biggest one-day BTC buy ever — around $700 million as of Tuesday.
As Cointelegraph reported, both network difficulty and hash rate have hit new all-time highs, and expectations are mounting that price will rise to follow suit. Ether (ETH), the largest cryptocurrency other than Bitcoin, beat its record highs from 2018 on the day.
PlanB: All Eyes On Monthly Close
Vailshire meanwhile is not alone in its optimism over Bitcoin’s prospects this week. In the latest update to his stock-to-flow Bitcoin price model, quant analyst PlanB eyed the possibility of BTC/USD soon passing the “point of no return.”
This, he explains, would occur should January’s monthly close be substantially higher than the current spot rate — around $48,000, for example.
In so doing, Bitcoin would cement its status within stock-to-flow’s theories, including its transition to an asset with a market cap of up to $29 trillion, as dictated by PlanB’s stock-to-flow cross-asset model (S2FX).
“A larger monthly jump to #bitcoin $48K would create a nice gap between monthly dots. These gaps usually mark the point of no return (red arrows), i.c. the phase transition to #phase5,” he commented while uploading the chart to Twitter.
Not everyone was convinced. In an update on Tuesday, Cointelegraph Markets analyst filbfilb warned that the next few days would be critical if Bitcoin is to avoid bearish pressure.
The reason, he said, came from repeated warning signals delivered by his Predator trading tool.
“Predator printed its second yellow candle in the Bitcoin run-up,” he explained.
“Last one it could be ignored as the following candle was green. Three days to resolve it or it may mean a more lengthy chopsolidation/retrace IMO.”
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