News

Mastering Crypto Volatility: An interview with Digital Asset Funds Management

Published

8 months ago

3 June, 2024

Mastering Crypto Volatility: An interview with Digital Asset Funds Management

Chris Gosselin: Welcome. My name’s Chris Gosselin from Australian Fund Monitors. Today, I’m talking to Dan Nicolaides from Digital Asset Funds Management, a crypto fund. Dan, welcome.

Dan Nicolaides: Thanks, Chris.

Chris Gosselin: Now, looking at the performance of your fund, you would say it’s anything but a typical crypto fund. We normally think of crypto as being highly volatile, digital assets being volatile, Bitcoin. It can go from 60,000 to 15,000 and back up to 70,000. You have a track record of three years. You’ve had one relatively small negative month in that time. What’s the difference?

Dan Nicolaides: As you commented on then, these are volatile assets. It’s a nascent industry, it’s a nascent asset class, and people are still trying to work out what the value is of these assets, if there is any value in these assets. That’s where this volatility is derived from. We don’t care whether it goes up or down. It’s not our problem. What we care is that it’s volatile, that these markets are still somewhat immature and prone to dislocation, and that we have the strategy, the team, the systems, the risk control processes to capture that in a trading sense. That’s really all there is to it. If some other future out there was equally as volatile with the same opportunities, we’d be trading that. We just see an opportunity in this asset class and that’s why we’re there.

Chris Gosselin: When you say you’re trading that, I understand you’re trading 24/7 and across the globe. Just explain these exchanges. There’s multiple exchanges, not like having the ASX or NASDAQ or Dow Jones, whatever it may be. These are multiple exchanges trading the same assets.

Dan Nicolaides: Absolutely, yeah. Like you say, there’s not a single oracle price like you have for an S&P future that comes out of a Chicago data server. The industry basically trades in all these different venues and it’s funds like us that basically are able to arbitrage across those exchanges that keep those prices in check. That’s where the alpha is derived in our strategy. The strategy has two parts. It takes the native embedded yield that we see in these assets, which generally can be reasonably high, from single figures up to as high as 40%. We have that yield embedded in there. And then, we trade across these multiple, like you say, multiple venues, multiple exchanges across… These are exchanges that are in Europe, in Asia, in the US, or North America. Yeah, our system basically captures that and we’re able to arbitrage these exchanges.

Chris Gosselin: It is highly systematic.

Dan Nicolaides: Absolutely.

Chris Gosselin: Is it completely automated?

Dan Nicolaides: Completely automated, yeah. We design the system. The system is we’re trading futures, and that’s trading a Bitcoin future is really no different than trading a foreign exchange future or a commodity future or an equity future. It’s just that they’re more volatile and they trade across many more venues. We basically take some of the systems, the trading practices, the strategies that we have in traditional markets that we trade in other parts of the business, and we just apply those to these digital assets and we take in the nuances of these assets or these markets that they are very volatile and that they do trade 24/7, and yeah, we build our business around that.

Chris Gosselin: You can buy something, say, in Asia today and simultaneously sell it or sell it very shortly afterwards. On another extent, you actually want these exchanges to be out of kill time.

Dan Nicolaides: Absolutely, yeah. Simultaneously, yeah. Matters of milliseconds, yeah. Yeah, you’ve got in the digital, the native crypto exchange place, which is where nearly all of the price discovery happens in digital assets, these exchanges are predominantly based in Asia but also in Ireland, the Seychelles, the UK, various places. Our systems are basically connected to all those venues.

Chris Gosselin: Effectively, this is like a yield fund. I wouldn’t call it a fixed income fund, but you are basically harvesting yield of these things, which gives you some steady return or steady-ish returns without the volatile, without the extreme upside as well, I guess. But most importantly, without the downside.

Dan Nicolaides: Yeah, absolutely. We don’t take directional risk. That’s not what we do. Like I said, we take the yield that is there. Having traded this for a number of years now, this industry or this space goes through periods of being a focus for investors and not, but we know that in normal and even bear market environments, we can capture a good return. But we know that there’s also periods where, generally, when crypto is in kind of a bull market and those yields become quite high and we can generate exceptional returns. Yeah.

Chris Gosselin: Where does the risk lie? Because many people of, dare I say, my generation and close to my generation, whether it be on the upside or the downside, would consider the thought of investing in a crypto fund to be far too risky for them. They might as well go for the race track. That’s not the case given your trading strategy, but there must be risk. Is it counterparty risk?

Dan Nicolaides: Yeah, counterparty risk is the predominant risk that we face. That was evidenced during FTX. You alluded to the one down month we had. That was in November ’22 when FTX went bankrupt. I think that was a seminal moment in the industry in that participants had maybe not given it the thought that it deserved in terms of where their assets were sitting and how they were custodied and who was in charge of or control of those assets. Since then, the industry’s done a bit of navel-gazing and realized that this isn’t an optimal solution. One, there’s, there’s more transparency around the existing exchanges that are there, proof of assets, proof of reserves, things like that. And obviously, with crypto, all you need is the wallet address of the exchange and you have 100% visibility of the assets that are there.

But also, the industry is moving to standardize a third-party custody of assets that you would have on the exchange. We have to have collateral to trade on the exchanges. That’s why our capital is at risk because it’s sitting on the exchange. These solutions that are basically working through now, those assets will be held by a third-party custodian, and it will take both the exchange and us and the third-party to release those funds in either direction. So, it ameliorates a lot of that counterparty credit risk that was there. Digital asset funds is actually working through setting up these kind of arrangements as we speak.

Chris Gosselin: You also mitigate that risk by not trading just through one exchange or one counterparty. Your counterparty risk is there. You spread your –

Dan Nicolaides: Yeah, absolutely. We try and limit it to 20 to 25% on a given exchange. We’re rarely even at 20% on any given one exchange. Yeah. FTX taught us a lot of lessons about. We weren’t overly concentrated in FTX, but we had, I think it was maybe 17% of our assets there, which was… We were far from alone in that respect. But yeah, everyone’s learned lessons from that and I think a lot of that risk is now getting mitigated.

Chris Gosselin: Is it fair to say that the industry is maturing? I mean, are the big institutions getting involved or are they still sitting on the sidelines and waiting for the, I hate to use the term cowboy, but the cowboy element to disappear? We take FTX as the cowboy.

Dan Nicolaides: Yeah, absolutely. You’ve seen, just in recent months in the US, the spot ETFs getting approved. Names like BlackRock and Fidelity now with tens of billions of dollars of Bitcoin effectively under management. Yeah, it’s clearly maturing. We’ve been through enough, we’ve seen enough cycles now in this industry that it’s not going away. People believe these to have value. Whether we believe it or not is kind of irrelevant, but we think that we agree with that sentiment that this isn’t going away. The volatility will remain. But yeah, the overall kind of… Yeah, the maturity of the industry, the regulatory oversight, the willingness of governments and regulators to look at the industry in a new light and come up with best practices, that’s all front of mind at the moment.

Chris Gosselin: Sure. Can I just turn for a moment to the firm? We’ve seen quite a few sort of two men and a pot plant in a garage type concept in some emerging strategies and even in some crypto areas, or particularly in some crypto areas. I think that’s probably washed through the system a bit, and we are now left with mature, pretty serious organizations. You’ve got 25 or 30 hardheaded, experienced either finance or tech staff on board?

Dan Nicolaides: Yeah, absolutely. Well, we still are heavily involved in traditional markets with the experience that comes with running algorithmic strategies in those markets for a long period of time. The system that we use for trading these digital assets is basically transplanted from traditional markets, from a future trading system. Yeah, we have that background. We have the experience. Yeah, we’re not a bunch of 22-year-old programmers that thought they could make some money by betting on the direction of Bitcoin or any other digital asset. We take a very agnostic view about what the space is like. We try and identify where the risks are, we try and mitigate those as much as we can, and we try and embrace volatility and the opportunities that are there.

Chris Gosselin: It’s always dangerous both for us to ask and for you to answer as to what your target return is, especially in something like this. But if you are looking at a yield fund to be competitive, you’ve got to be yielding somewhere between seven and 10, maybe a little bit more, percent. Are you achieving that, and do you expect to be able to achieve or overachieve that going forward?

Dan Nicolaides: Yeah, it’s a tricky one. Unfortunately, we are very much captive to the market at any point in time. We don’t drive the market. We are participants in it. We saw in 2021 that crypto was in a bull market, and we had fantastic returns from when we started to the end of that calendar year. ’22 and ’23 were more difficult. That was precipitated, I think, by the rising interest rates globally, which dampened the risk-taking and crypto probably still is very much driven by global liquidity factors. So, the way I think of it is, on an average year, we should be making that high single digit after fees, maybe even low single teen kind of returns. But we have the opportunity when the market does go into a bullish phase that we can derive some much more exceptional returns than that. That’s kind of been born out the start of this year where we’re up 14% already in the first four months.

Chris Gosselin: This is not for the crypto punter?

Dan Nicolaides: No, absolutely.

Chris Gosselin: This is for someone who wants to get a regular yield, a regular return, limited downside, but a good steady return with the occasional kicker.

Dan Nicolaides: Yeah, exactly.

Chris Gosselin: If the market’s right.

Dan Nicolaides: No, absolutely. You’re not going to make 100% return in a year. We could have a 2021 environment where these things go into a real bull run that a lot of leverage comes into the market, and that’s very conducive for our strategy. It’s possible, but far from probable, but we will derive a very steady return. If the market conditions are favorable, then we can drive exceptional returns.

Chris Gosselin: Dan, finally, you’re Australian based and you’ve got an office in France as well.

Dan Nicolaides: We’ve got an office in France. Yeah, this strategy runs 24/7, which is a challenge, but that’s the big thing with this type of strategy is you are always involved in these exchanges. When those opportunities present themselves, as they do periodically, we’re there. We’re ready to take advantage of that. Sometimes that happens on a Saturday and sometimes it happens on a Sunday morning, and we deal with that.

Chris Gosselin: And you hope the computers are working.

Dan Nicolaides: Well, there’s always someone monitoring those systems. Yeah, there’s always traders there looking after it. One of the big challenges of this strategy is that because we do trade on so many different venues, and to be as efficient as possible, we try and maintain sufficient capital so that we’re never exposed to big volatile swings, but we want to be involved in a lot of places. Our capital has to be widely distributed, and we regularly have to move that capital from one venue to another, so there’s always someone monitoring that and ready to do that.

Chris Gosselin: Dan, fascinating. Thank you very much.

Dan Nicolaides: No problem.

Chris Gosselin: Best of luck for it. We look forward to following the fund going forward.

Dan Nicolaides: Excellent. Thanks, Chris.

Chris Gosselin: Thank you. That’s the Digital Asset Fund, Digital Yield Fund, I think it’s now called. Thank you for your time.

Ends

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News

Block Investors Need More to Assess Crypto Unit’s Earnings Potential, Analysts Say — TradingView News

Published

7 months ago

11 July, 2024

FinCrypt Staff

DeFi Lending Protocol Nexo Allocates $12 Million for Ecosystem Incentives — TradingView News

Block, a payments technology company led by Jack Dorsey square could become a formidable player in the cryptocurrency mining industry, but Wall Street will need details on profit margins to gauge the positive impact of the business on earnings, analysts said.

Block signed its first large-scale cryptocurrency mining hardware pact on Wednesday, agreeing to supply its chips to bitcoin miner Core Scientific CORZbut no financial details were disclosed.

JP Morgan estimates the deal could net Block between $225 million and $300 million, but said more information will be needed to assess the hardware business’s long-term earnings potential.

“We still have a lot to learn in terms of the margins of this business, so we are hesitant to underwrite this transaction until we know more about the cadence and economics,” J.P. Morgan said.

The deal marks a major step for the payments company, which started out as “Square” in 2009 before rebranding in 2021 in a nod to its focus on crypto and blockchain technologies.

Dorsey, who co-founded and ran Twitter (now known as “X”), has long been bullish on Bitcoin. Block began investing 10% of its monthly gross profit from Bitcoin products into Bitcoin in April.

In the first quarter, nearly 9% of the company’s cash, cash equivalents, and marketable securities consisted of bitcoin.

“This development (the deal with Core Scientific) is further evidence of Block’s role as an emerging leader in the crypto hardware ecosystem,” Macquarie analysts Paul Golding and Emma Liang wrote in a note.

Analysts say similar deals to follow could further validate Block’s reputation in the industry.

But J.P. Morgan said the stock’s performance will be determined by Block’s other segments, such as Square and Cash App.

Block shares have lost nearly 17% this year.

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News

This Thursday’s US Consumer Price Index could be a game-changer for cryptocurrencies!

Published

7 months ago

11 July, 2024

FinCrypt Staff

This Thursday's US Consumer Price Index could be a game-changer for cryptocurrencies!

3:30 PM ▪ 4 minute read ▪ by Luc Jose A.

This Thursday, attention will be focused on the United States with the anticipated release of the Consumer Price Index (CPI). This economic indicator could trigger significant movements in the markets, especially for the U.S. dollar and cryptocurrencies. While investors remain vigilant, speculation is rife about the potential impact of these key figures.

The Consumer Price Index: The Cornerstone of the American Economy

The Consumer Price Index (CPI) is a key measure of inflation which reflects changes in the price of goods and services purchased by American households. This index is calculated monthly by the Bureau of Labor Statistics (BLS) and serves as a barometer for the cost of living. The consumer price index covers a wide range of products, including food, clothing, housing, health care, and entertainment. Economists and policy makers closely monitor this data to anticipate economic trends and adjust monetary policies accordingly.

The June CPI data is due to be released this Thursday at 2:30 p.m., and is highly anticipated by investors. The current consensus is for headline annual inflation to decline to 3.1%, from 3.3% the previous month, while core inflation is expected to remain stable at 3.4%.

THE BIGGEST EVENT THIS WEEK 🚨

The U.S. Consumer Price Index is expected to
PUBLICATION TODAY AT 8:30 AM ET.

EXPECTATIONS ARE 3.1% WHILE
LAST MONTH THE CONSUMER PRICE INDEX (CPI) WAS 3.3%

HERE ARE SOME SCENARIOS 👇

1) CPI above 3.1%

THIS WILL BE A DAMAGE TO THE MARKET
GIVEN THAT THE LAST TIME THE CPI DATA… photo.twitter.com/yudjPLPl8g

— Ash Crypto (@Ashcryptoreal) July 11, 2024

Consumer Price Index Release: What Does It Mean for the Dollar and Bitcoin?

Inflation as measured by the consumer price index is a key determinant of the value of the US dollar. If the consumer price index declines more than expected, it could reinforce expectations of a rate cut by the Federal Reserve in September, thus weakening the dollar. A weaker dollar could benefit GBP/USD, which recently broke a major resistance level, and Bitcoin, which could see its price rise due to increased demand from institutional investors.

Current forecasts suggest that headline inflation will decline to 3.1%, with core inflation holding steady at 3.4%. However, a surprise increase in the consumer price index could upset these expectations. Fed Governor Lisa Cook has mentioned the possibility of a soft landing for the economy, with inflation falling without a significant increase in unemployment, which could lead the Fed to consider rate cuts. This outlook is particularly favorable for stock markets and cryptocurrencies, including Bitcoin, which could benefit from a more accommodative monetary policy.

According to experts at 10x Research, especially their CEO Markus Thielen, Bitcoin could see a significant increase if the CPI data confirms a decline in inflation. Thielen indicated that Bitcoin could reach almost $60,000, a prediction that has already been reflected with a rise to $59,350 before the data was released.

Therefore, Thursday’s CPI data could determine the future direction of financial and cryptocurrency markets. High inflation could strengthen the US Dollarwhile a drop in inflation could pave the way for rate cuts by the Fed, thus giving a boost to Bitcoin and other digital assets.

Enhance your Cointribune experience with our Read to Earn program! Earn points for every article you read and access exclusive rewards. Sign up now and start earning rewards.

Click here to join “Read to Earn” and turn your passion for cryptocurrencies into rewards!

Avatar of Luc Jose A.

Luke Jose A.

A graduate of Sciences Po Toulouse and holder of a blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I am committed to raising awareness and informing the general public about this ever-evolving ecosystem. My goal is to enable everyone to better understand blockchain and seize the opportunities it offers. Every day, I strive to provide an objective analysis of the news, decipher market trends, convey the latest technological innovations and put into perspective the economic and social issues of this ongoing revolution.

DISCLAIMER

The views, thoughts and opinions expressed in this article are solely those of the author and should not be construed as investment advice. Do your own research before making any investment decisions.

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Crowd Expects Bitcoin Bounce Suggests Further Losses, As RCO Finance Resists Crash

Published

7 months ago

11 July, 2024

FinCrypt Staff

Crowd Expects Bitcoin Bounce Suggests Further Losses, As RCO Finance Resists Crash

Bitcoin is seeing a rebound after its recent price crash to $53,000. Other altcoins are subsequently recovering, with many cryptocurrency investors increasingly making new entries. However, Santiment warned against this hopium, suggesting that Bitcoin could extend its price losses.

As the broader market anticipates Bitcoin’s next price action, RCO Finance (RCOF) demonstrates resilience, attracting thousands of people in influxes. Read on for more details!

RCO Finance challenges the market crisis

RCO Finance (RCOF) is approaching $1 million in funding raised, amid growing interest from institutional traders seeking stability from Bitcoin’s wild price swings. While much of the broader market has seen significant price losses, RCO Finance has remained resilient, experiencing a surge in its pre-sale orders.

As a result, the project seems oblivious to the current market conditions, leading top market experts to take a deep dive into its ecosystem. They identified why RCO Finance was able to withstand the bearish pressure and its potential to hold up even stronger during the impending broader market crash.

The main reason was related to the innovative use of RCO Finance AI Trading Tools as a Robo Advisor. This tool has been integrated into RCO Finance’s cryptocurrency trading platform, offering full automation and highly accurate market forecasts to help investors make informed decisions.

Read on to learn more about this tool and other exciting features of RCO Finance!

Bitcoin Bounces Amid Impending Crash

Bitcoin is bouncing back, rallying 8% after plunging to its lowest point since February on July 5. While this rebound has triggered a bullish wave in the broader market, many cryptocurrency analysts predict it could be short-lived as Bitcoin is poised for an imminent crash toward the $50,000 zone.

On a Post X (formerly Twitter)Santiment revealed that while the crowd is anticipating a Bitcoin rally, this potential crash could trigger FUD and panic, causing average traders to wither and give up on Bitcoin. The platform noted that Bitcoin rally has historically occurred after these weak hands sold their holdings.

In particular, these cryptocurrency analysts speculate that the previous and upcoming Bitcoin crash is largely the result of bearish market psychology, as opposed to large BTC sell-offs by the German government and Mt. Gox. In particular, Ki Young Ju, founder and CEO of CryptoQuant, noticed that “the sales were rather negligible, given the overall liquidity of Bitcoin.”

Enjoy seamless investing on RCO Finance

RCO Finance is making investing easier and easier, democratizing access to high-level tools and cryptocurrency earnings that were once reserved for professional and institutional investors. It has also prioritized accessibility, allowing investors of all levels to easily navigate its features through its intuitive interface.

Additionally, they can also maintain anonymity and privacy as the platform has no KYC requirements. To build trust, the platform has instead emphasized regular smart contract audits by respected security firm SolidProof.

Performance data shows massive adoption, indicating that it is doing its job effectively. Investors can also capitalize on RCO Finance’s fast transaction speeds and incredibly low transaction fees, with leverage options up to 1000x to further optimize their portfolios and maximize returns.

Leverage RCO Finance’s pre-sale earnings

An in-depth analysis of the RCO Finance ecosystem revealed that it has strong potential to rival and surpass major cryptocurrencies in the cryptocurrency industry. With a very limited total token supply and excellent tokenomics, RCO Finance is poised to reach its target of $1 billion in market cap upon its official launch.

RCO Finance has adopted a deflationary model, strategic burn mechanisms, and a vesting schedule. However, the project encourages long-term holding by focusing on sustained growth through incredibly high staking rewards.

RCOF tokens are currently available at an altcoin price of $0.01275 in progress Pre-sale Phase 1. This is likely the lowest price these coins will ever trade at, as they are expected to increase exponentially with each new presale phase.

With RCOF expected to be $0.4 at launch, investors jumping in now can expect a Return 30x on their investment!

For more information on RCO Finance (RCOF) presale:

Visit RCO Finance Pre-sale

Join the RCO Financial Community

Disclaimer: The statements, views and opinions expressed in this article are solely those of the content provider and do not necessarily represent those of Crypto Reporter. Crypto Reporter is not responsible for the reliability, quality and accuracy of any material in this article. This article is provided for educational purposes only. Crypto Reporter is not responsible or liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Do your own research and invest at your own risk.

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Bitget Ranks Third Among Cryptocurrency Exchanges by Capital Inflows in Q2

Published

7 months ago

11 July, 2024

FinCrypt Staff

Although Bitget is not the largest cryptocurrency exchange in terms of total volumes, it closed a favorable quarter. From April to June, the platform ranked third in net capital inflows and showed the strongest growth in market share compared to its competitors.

In the second quarter, investors moved $700 million into Bitget, and activity on the platform increased by nearly 50%.

The exchange has seen a surge in user funds, with Bitcoin (BTC), Tether (USDT), and Ethereum (ETH) rising 73%, 80%, and 153%, respectively, in the first six months of the year. This growth coincided with adding 2.9 million new users to the platform.

This has positioned Bitget among the top exchanges with the highest positive net inflows in the last quarter. Only Binance, which remains the market leader, and Bitfinex have performed better in this category.

According to CCData’s latest H2 Outlook Report, the exchange also recorded the highest market share growth among centralized exchanges, increasing 38.4% from H2 2023 to H1 2024.

Bitget’s spot trading volume has also seen a visible increase, going from $28 billion in Q1 to $32 billion in Q2, marking an increase of over 10%. The platform’s monthly visitors have reached 10 million. Although its volumes are increasing, Bitget still does not rank among the top 10 cryptocurrency exchanges in terms of spot trading.

The changes taking place in the centralized cryptocurrency exchange market show that competition is becoming more and more intenseAn example of this is the recent surge in popularity of Bybit, which has become the second largest exchange in terms of spot trading volumes.

Sports Sponsorships and New Products

Gracy Chen, Source: LinkedIn

Gracy Chen, CEO of Bitget, commented on the quarterly performance, saying, “Q2 2024 was a pivotal period for Bitget. Our collaboration with Turkish athletes, along with significant growth in users and website traffic, is part of our global expansion.”

In an effort to expand its global presence, Bitget has partnered with three Turkish national athletes as part of its #MakeItCount campaign, starring Lionel Messi. The deal with the famous footballer It was signed in Februaryto build brand presence in Latin America.

The exchange also launched a $20 million TON Ecosystem Fund in partnership with Foresight Ventures to support early-stage projects on The Open Network.

The exchange introduced two new initial token listing products, PoolX and Pre-market, which collectively launched over 100 projects. Additionally, Bitget’s native token, BGB, was recognized as the best-performing centralized exchange token in June and was ranked among the top 10 cryptocurrencies by Forbes.

In its latest move, the cryptocurrency exchange aimed to become a regulated player in IndiaThe announcement comes as the world’s most populous democracy grapples with the complexities of integrating cryptocurrencies into its financial ecosystem.

Even recently,
Bitget Wallet Announced a joint investment with cryptocurrency investment firm Foresight X in Tomarket, a decentralized trading platform. This initiative targets emerging asset classes and aims to expand the portfolio’s services beyond traditional decentralized exchanges (DEXs).

In the second quarter, investors moved $700 million into Bitget, and activity on the platform increased by nearly 50%.

According to CCData’s latest H2 Outlook Report, the exchange also recorded the highest market share growth among centralized exchanges, increasing 38.4% from H2 2023 to H1 2024.

The changes taking place in the centralized cryptocurrency exchange market show that competition is becoming increasingly intenseAn example of this is the recent surge in popularity of Bybit, which has become the second largest exchange in terms of spot trading volumes.

Sports Sponsorships and New Products

Gracy Chen, Source: LinkedIn

The exchange also launched a $20 million TON Ecosystem Fund in partnership with Foresight Ventures to support early-stage projects on The Open Network.

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