Hedge Fund Backed by Industry Leaders Closes Its Doors (#GotBitcoin?)
Backed by Jamie Dinan and Dan Loeb, Cerrano Capital was launched less than a year ago. Hedge Fund Backed by Industry Leaders Closes Its Doors
A hedge fund backed by some of the industry’s biggest names, Cerrano Capital LLC, is closing less than a year after it got off the ground, the latest sign of the difficulties new funds are having raising money.
Michael Weinberger’s $230 million hedge fund was launched last year, hoping to raise as much as $1 billion. The fund’s early investors included York Capital Management founder James Dinan and chief investment officer Daniel Schwartz. Billionaire hedge-fund investor Dan Loeb of Third Point LLC was among the investors in Cerrano, according to people close to the matter.
Mr. Weinberger previously oversaw billions of capital as head of equities at York. Cerrano focuses on making both bullish and bearish bets on stocks.
Cerrano lost 1.4% through June of this year, after being up over 5% last year. In the 11 months the firm existed, the fund was up slightly. Mr. Weinberger became frustrated with the time he needed to devote to market the fund, the people say, and decided to return capital and manage his own money.
The decision underscores the difficulties many hedge funds are having making money and raising capital, as investors rethink the value of such funds.
Hedge funds have generally performed worse than broader stock market indexes for much of the past several years, making it hard for them to justify high fees. More recently, a widely followed hedge-fund index maintained by data research company HFR declined by 0.46% in June, pulling down the industry’s gains for the first half of 2018. The index rose 0.81% in the first two quarters, which is lower than the 2.65% return on the S&P 500, including dividends, over the same period.
ICO Volume in 2018 Already Double that of Previous Year
According to a joint report from consulting firm PwC and the Swiss Crypto Valley Association, Initial Coin Offerings (ICOs) are booming despite the price collapse of cryptocurrencies, Cointelegraph auf Deutsch reports today, June 29. PwC found that ICO volume reached new record highs in the first half of 2018.
Per the report, between January and May 2018 alone, ICO volume is already twice as much as it was during the entire year of 2017. PwC Switzerland writes in an accompanying press release:
“In total, 537 ICOs with a total volume of more than $13.7 billion have been registered since the beginning of the year. In comparison, in 2017 there were a total of 552 ICOs with a volume of just over $7.0 billion. Also, the average size of an ICO has almost doubled from $12.8 million to over $25.5 million since last year. ”
Special mention is made of the ICOs of Telegram and EOS, which reached into the billions. Telegram raised $1.7 billion through its ICO, while EOS raised over twice as much at $4.1 billion.
According to the ICO report, the U.S., Singapore, and Switzerland are now the three most important ICO hubs worldwide, largely due to progress in regulation. Switzerland in particular benefits from the ‘Crypto Valley’ of Zug with its consistent focus on blockchain and fintech startups. Smaller countries and city states such as Hong Kong, Gibraltar, Malta or Liechtenstein have seen some success, having copied the crypto-friendly models of Singapore and Switzerland.
Regarding regulation, the authors identified three different approaches that are currently being implemented worldwide:
“The US uses a centralized system in which all tokens offered by ICO are traded as securities. In Europe, on the other hand, a differentiated regulation prevails. FINMA, for example, classifies tokens into three sub-types: asset, payment and utility tokens, which do not constitute an actual investment but allow the buyer direct access to the product or service of the ICO. Finally, in Asia, regulation is very heterogeneous, ranging from strict prohibition to active promotion of ICO projects. ”
Regulators and traditional financial institutions remain skeptical of ICOs, and have criticized their lack of oversight in certain jurisdictions. Nasdaq CEO Adena Friedman recently claimed that ICOs pose “serious risks” to retail investors due to regulatory shortcomings. Earlier this month, SEC chairman Jay Clayton reiterated the agency’s position that ICOs are securities and should be regulated as such.
Top 10 Cryptocurrency Hedge Funds
Cryptocurrency hedge funds are investment vehicles where money is pooled together to be invested in assets or projects related to cryptocurrencies and blockchain technologies.
For instance, cryptocurrency hedge funds may invest Bitcoin, Ethereum, Ripple, Litecoin and other major cryptos directly or buy altcoins during ICOs and pre-ICO sales. Crypto hedge funds can also invest in emerging blockchain startups or in companies that benefit from crypto boom like manufacturers of graphics cards.
A firm can use use such a fund as part of its total asset portfolio that includes traditional assets, in order to offer those investing in traditional assets exposure to crypto assets and help them to further diversify investments.
Crypto hedge funds, which are different from crypto index funds, have grown from only 37 in the beginning of 2017 to over 226 as of February 2018 and together, they have over $3.5 billion in assets under management (AUM).
Many people, particularly the risk-averse investors, may choose to invest in crypto hedge funds because this way, they can get profits without the need to buy and hold tokens and coins and do trading themselves. So crypto hedge funds are yours for consideration if you love crypto or looking for profits but do not have the time to engage in trading yourself, or are busy with other things.
These hedge funds are managed by a team of expert investors who research markets and carry out in-depth analyses with the aim of determining where to direct their investments — obviously where there is more potential for earning more profits. At the end of the day, the investors will receive profits from the market strategies employed and implemented by the fund managers.
Below are the top crypto hedge funds that you can consider if in the process of deciding which you could invest in. They basically come in two types: those than manage portfolios containing exclusively cryptocurrency and those that add cryptocurrency to a mix of other asset types. The third recent type is the fund of hedge funds type that exposes investors to a multiple of other hedge funds from a single investment vehicle.
1. Pantera Capital
Panthera capital is a crypto hedge fund that also acts as a venture capital backer to Bitcoin or crypto startups. It has attracted investment from institutional investors such as Fortress Investment Group and venture capital firms Benchmark Capital and Ribbit Capital among others.
From its list of portfolio, the firm invests in a mixture of assets including cryptocurrencies such as Bitcoin, Ox, FunFair, Omise and Civic; startups such as BitPesa, BitOasis, Center.io, and BTCjam; and exchanges such as Bitstamp, Kraken and Poloniex.
The crypto hedge funds attracted much attention by returning 25,000 percent over its lifetime through the end of last year, but saw a 45.7 percent reduction in its fund for the month of March alone this year.
Currently, they are managing over $700mm across two venture funds and five cryptocurrency funds (Venture Fund III, Digital Asset Fund, ICO Fund, Bitcoin Fund and Long-Term ICO Fund). It is open to accredited investors seeking to invest $100,000 or more in digital assets or blockchain-enabled companies and hence most suitable for institutional investors.
The firm was founded in 2013 by Dan Morehead, the then chief financial officer and head of Macro Trading at Tiger Management, and focused on global macro hedge fund investments until 2014.
2. PolyChain Capital
Polychain Capital lets investors earn returns by actively managing portfolios of blockchain assets. It invests digital assets at the Protocol Layer, not at the App layer.
The hedge fund, which is also suitable for institutional investors, targets investments in Ethereum innovations, IPFS ecosystem, Tezos, Rchain, Polka, DotDifinity and Cosmos among many other prptocol-layer tech.
New York-based-CoinCapital crypto hedge fund which helps investors to diversify across strategies, investment styles, and managers in addition to cryptocurrencies. This is by investing in variety of blockchain start-ups, ICOs and cryptocurrencies for the benefit of its investors.
The company is open for investment from individual investors, blockchain startups and institutions as well. Currently, the fund manages over 40 cryptocurrencies including popular coins such as Bitcoin, Ethereum, Litecoin, Dash, Bitcoin Cash and Ripple.
The fund is managed by a team that has finance, marketing and sales background. Samuel Cahn, who heads the team, is also former manager at Arbitrage Fund.
4. Bitcoins Reserve
Bitcoins Reserve, in addition to providing other services, runs the Arbitrage fund, which performs automated crypto trading across different cryptocurrency exchanges with price differentials to correct market inefficiencies and bring more liquidity. The firm also works with a number of retail exchanges and OTC traders to provide procurement services, providing emergency liquidity when a larger than expected buy or sell orders are beyond the target firm’s capacity to service.
The Arbitrage Fund falls under the firm’s Cryptocurrency Arbitrage service, which targets arbitraging opportunities in crypto investments. It allows investors to take advantage of market inefficiencies through arbitrage activities. Their automated cryptocurrency trading engine performs high frequency statistical arbitrage. It will analyze the historical price/volume/order depth relationships between major Bitcoin exchanges. It then performs simultaneous trades when the value deviates from historic mean in certain ways until the values return to historical mean.
The arbitrage exchanges include Bitstamp, BTCChina, OKCoin and Huobi.
The company also runs Bitcoins 101, which is an educational initiative.
Bitcoins Reserve is headed by Sam He, who has Strategy Director background in the Financial Services industry; and Kai Shi, a data analyst who is also a financial analysts with a postgraduate degree in Master of Applied Finance and a Bachelor degree in Accounting and Finance from Monash University. The board of directors includes Pierre Boutros, managing director at Millennius; Gordon Lee, a Managing Partner at Caricom Oil; and Dallas Brooks, a director at National Wealth.
Other services include merchant services, creation of cryptocurrency, insured cold storage, and analytics for cryptocurrencies.
5. Binary Financial
Binary Financial is a U.S.-based hedge fund that invests in Bitcoin transactions and other investment activities such as proprietary trading of crypto currency and industrial mining.
It specializes in large block trades for high net worth clients and institutions, and offers over the counter trading services to qualified clients in buying and selling of BTC. It also acts as an electronic market making through the BitGo platform.
Through the BTC-OQ concierge Bitcoin liquidity service, institutional clients and high net worth individuals are able to gain exposure to the Bitcoin asset class for profits.
Bitspread uses quantitative trading software that connects blockchain asset exchanges to let Investment Managers to trade and risk-manage blockchain assets. It uses a number of trading strategies to generate alpha and beta returns on blockchain assets.
For instance, the Market Neutral Liquidity Alpha Volatility is a strategy that generates impressive returns while helping with exposure on blockchain assets — it uses market arbitrage to shield from the market price depreciation and appreciation.
The Blockchain Wealth Active growth Alpha Picking strategy aims at exposing clients on a basket of selected blockchain assets in order to get profits linked with the price of the assets in the basket in question.
Blockchain Market Capitalization Tracker Alpha Picking strategy exposes fund managers to a basket of selected blockchain assets on a long term, and therefore to appreciation in prices of this basket.
Blockchain Market Capitalization Tracker Beta Exposure strategy also provides investors with a basket of the 5 biggest blockchain assets according to market capitalization. This basket will be re-balanced on a monthly basis.
The Blockchain Airdrop Event Driven Alpha Event Driven strategy aims at helping to managing and monetizing digital currencies received for free as a result of blockchain forks.
The Blockchain Big Data Prediction Alpha Big Data strategy relies on a military special force market intelligence team, who are also expert in big data, to get analyses that assist to anticipate and capitalize on market movements.
The Blockchain Private Equity Alpha Private Equity strategy capitalizes and centralizes and decentralized emerging exchanges offering blockchain assets.
Bitbull is a crypto fund of funds based in “San Francisco-based cryptocurrency fund” started in the year 2016. The crypto project is part of the Stanford’s StartX startup incubator headed by Joe DiPasquale, who is well known in the crypto world and associated with a wide variety of blockchain ventures such as ReGroup.
Bitbull allows investors to avoid the tedious job of having to search for profitable and appropriate crypto hedge funds that they can invest in. That itself can be a challenge because there are more than 200 different funds out there each with different features.
Secondly, you are able to invest in multiple funds on a single platform and spread the risks. You do not have to limit yourself to index funds because the options offered vary from early-stage and venture capital style investment, to pure quantitative and arbitrage.
The fund has zero percent management fee but it accepts investments from qualified clients and their minimum investment stands at $100,000 USD. Elite funds often charge $1 million or more. IRAs are also accepted.
CoinFund was launched on July 2015 and therefore one of the earliest cryptofunds, and it focuses on investments in cryptocurrencies, cryptoassets, and decentralized technologies. The fund comprises of variety of vehicles (over 20) of different elements, including Ether Holdings, Steem Power, Augur REP, Bitcoin Capital,
Its team members are of multidisciplinary background across the fields of technology, computer science, finance, economics, quantitative research, psychology, and law. The team members also have experience from Goldman Sachs, Amazon.com, American Capital, Kirkland & Ellis, and the MIT Digital Currency Initiative, among others.
Blackmoon acts as a framework for tokenized funds to provide investment opportunities in both the real world and crypto economies. Therefore, with it, investors are able to diversify their income sources while retaining the good of crypto universe including transparency, decentralization, trade-ability, and cost efficiency.
The platform facilitates the creation of tokens where the token issuer will create and distribute asset tokens in exchange for contributions in cryptocurrencies.
The contributions are then accumulated by the token issuer who will then convert the contributions to the Fund’s base currency and the base currency is transferred to the fund for purchase of the Fund’s shares.
10. Atronaut Capital
Astronaut Capital is a fund that provides investors exposure to invest in ICOs that have highest potential to grow. Their investment strategy is based on research of ICOs through its own independent research team Picolo Research. Token holders also benefit from this research and different portfolio tools.
The project has recently launched an ICO that lets investors to earn quarterly income bonuses and achieve capital gains.
The token will provide investors a gateway to a managed portfolio targeting high volume and high demand crypto startups.Go back