CRYPTONAUT Winning Ways: A Crypto-Investment Fund Led by Champions
by MAXIMILIAN VON WALLENBERG
Everybody wishes they had bought a bunch of Bitcoin a year or so ago. Don’t you? The cryptocurrency’s meteoric rise in 2017 has prompted some central bankers to start pointing at the tulips, warning of Dutch-style speculative mania. Many other central bankers, however, have embraced cryptocurrencies as part of a cashless, financial revolution. At the very least, Bitcoin (BTC) is now being accepted at the very highest level, after the Switzerland-based Bank for International Settlements (BIS) stated in September 2017 that central banks could no longer afford to ignore the growth of cryptocurrencies. In fact, suggests the BIS, central banks should even consider issuing their own digital currencies. Bitcoin may have its critics, often amongst those who have most to lose in a revolution, but most analysts would agree on just how difficult it is to value Bitcoin and other blockchain-based cryptocurrencies like Ethereum (ETH). It is simply not possible to say at present whether prices represent a bubble or not, and what is
the true, fundamental value of Bitcoin, Ethereum and the likes. The task is made all the more difficult by knowing how investors tend to move in herds. Stampedes, typically triggered by a few individuals and driven by base instincts of greed and fear, might destroy value as quickly as it was ever built: a phenomenon known otherwise as volatility.
and falling angels, but one thing is for sure: these markets are here to stay, and growing fast.
So where exactly do you invest? And what trading strategies should you deploy? In the more mature equity markets, there are any number of portfolio investment strategies. Institutional investors might choose to place some monTHE CHALLENGE ey with an ‘active’ fund Everybody If it is difficult to value high manager - one who offers profile cryptocurrencies like wishes they had a particular style of investBitcoin and Ethereum, how bought a bunch ment and is tasked to outdifficult must it be to value a certain benchof Bitcoin a year perform assets in the broader crypmark. Or they might play or so ago. to-markets? These marit safe, save costs and put Don’t you? kets embrace highly innomoney into a ‘passive’ fund vative start-ups that deploy - one that tracks the perforblockchain-based, corporate crypto-to- mance of a stock index like the S&P kens or crypto-coins to facilitate their 500. Or they might even invest in an business models. Located further away exchange-traded fund, which effecfrom the main street, the crypto-martively commoditises index-tracking kets already number over 1,000 listed funds into tradeable hedging instrucoins across 100 global crypto-exchang- ments. Retail investors have similar es, valued at over US$500 billion. There opportunities, through the range of will be winners and losers, rising stars mutual and retail investment funds.
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