Blockchain can be defined as the core structure underpinning bitcoin. It is already attracting considerable attention and investment from a wide range of financial organizations, including asset managers. Given technology’s potential to disrupt as well as improve processes and systems, many businesses are devoting the resources required to comprehend blockchain and integrate it into their operations.
What is blockchain hedge fund?
Anyone who is acquainted with the financial markets and how they operate surely has an understanding of hedge funds. Hedge funds are defined as a mutual fund organized in the form of a limited partnership that employs high-risk, speculative methods to generate large profits”. All investments include some level of risk. However, hedge funds and cryptocurrencies are riskier than the average.
How do Blockchain Hedge fund work?
Some just do what they do in other asset classes. For instance, in Forex, they buy and sell cryptocurrencies such as Bitcoin based on their models and attempt to benefit from the trading activity. They may invest solely in cryptocurrencies or add them as a new asset class to their current portfolio.
Others, by investing in Pre-ICOs, behave more like venture capital firms. To refresh your memory, a pre-ICO is a time in which chosen investors may purchase tokens before the main crowd sale, typically at a significant discount. Naturally, access is often difficult to acquire and requires thorough knowledge of an opportunity, not just for locating it, but also for determining if it is worthwhile to invest in it. Investments in businesses conducting an ICO, in which hedge funds take a real equity interest, are also heading in the same way.
Those hedge funds that utilize the ICO model to generate money to invest in cryptocurrencies through one of the methods mentioned above are somewhat different but are technically not a distinct business model.
Top blockchain hedge funds
Blockchain hedge fund aim to assist investors who want to invest in anything other than Bitcoin. These funds use active management, in which fund managers manage the portfolio and allocate money based on a trading strategy. Some funds are more aggressive in their investment strategies, while others are more careful.
Blockchain hedge funds are used by investors who do not have the time or expertise to invest on their own.
Polychain Capital, which was founded in 2016, is a cryptocurrency-based investment management company headquartered in the United States. It is widely regarded as the world’s top digital asset hedge fund. The firm is based in San Francisco. It actively manages and invests in global blockchain assets to provide outstanding returns to its investors. Polychain Capital’s fundamental principles are represented via a long-term vision, ferocious intellect, quantitative thinking, and a team of low-ego, open-minded individuals.
The hedge fund’s main emphasis is on protocols and businesses working in the blockchain sector that contribute to the advancement of global cryptocurrency adoption. Olaf Carlson-Wee, an ex-Head of Risk and Product Manager at Coinbase and a key player in the digital assets sector, established Polychain Capital.
Galaxy Digital Assets is a cryptocurrency-focused multi-strategy investment company headquartered in New York City. Michael Novogratz, an ex-hedge fund manager and well-known personality in the financial sector, established the firm. Galaxy Digital is well-known in the business for being one of the most well-capitalized and trustworthy firms. Galaxy Digital has raised about $700 million in funding throughout the years. Trading, asset management, principal investing, and advisory services are the four business areas of the investment management company. Galaxy Digital is based in New York City. It has offices in San Francisco, Tokyo, Hong Kong, London, Vancouver, the Cayman Islands, and New Jersey.
BlockTower Capital is yet another prominent cryptocurrency and blockchain investing company. Ari Paul established the business in 2017 and it is based in New York. BlockTower Capital only uses professional trading, investing, and portfolio management for bitcoin assets. BlockTower Capital has raised a total of $140 million in the financing, according to third-party information sources. The BlockTower Capital team includes investors, engineers, operators, and risk managers with extensive industry expertise and diverse backgrounds. The digital asset investing company is regarded as one of the industry’s leading players. It conducts the BlockTower Investment Analyst Competition, which aims to find and recruit outstanding talent from throughout the United States.
Cumberland DRW LLC, established in 2014, is a prominent worldwide cryptocurrency investing company. The company’s primary goal is to provide financial institutions and high-net-worth people with the access they need to capitalize on possibilities in the crypto-asset sector.
Cumberland is a subsidiary of DRW, a diversified primary trading company with over 25 years of expertise in a wide range of asset classes, instruments, and strategies in global markets.
The business is committed to providing professional onboarding and relationship management, fast and efficient payments, and 24/7 access to a diverse range of crypto assets.
Cumberland’s primary approach is to adapt the finest investing techniques from traditional asset classes to the realm of digital assets.
Blockforce Capital is a hedge fund based in the United States that specializes in digital assets. The Blockforce Multi-Strategy Fund employs a comprehensive collection of alpha-oriented cryptocurrency trading techniques across a wide range of cryptocurrencies (BTC, ETH, etc.).
The fund’s goal is to maximize risk and return via the use of contemporary portfolio theory, active risk management, and quantitative finance. The Blockforce Multi-Strategy Fund aims to offer 80% of the upside, 40% of the downside, and half the volatility of key digital asset markets. The minimum investment is USD 250,000. The fund carries a management fee of 2% and a performance fee of 20%. There is also a 3% penalty for early withdrawal. Accredited investors are the only ones who may invest in the fund.
Quick Read: Building Games on Blockchain: A Starting Point
Before investing in a hedge fund, you must ensure that you are prepared and financially fit for the endeavor. The apparent method to do this is to guarantee that you satisfy the previously stated “accredited” requirements for hedge fund investors.
However, you must also determine how bold and risky you want to be, what you want to invest in, and what your objectives are.
When studying various funds, keep these objectives in mind when deciding what best suits your interests and the availability of capital.