Bitcoin has been seen as the best performing asset for some individuals in the last decade. However, Chain Capital says that the fund has been consecutively outperforming Bitcoin for the last five years. The fund uses traditional value investing techniques and uses vital analysis to determine undervalued assets.
Since its inception in 2016, the fund has averaged 133% per year. According to Off-Chain, Bitcoin’s average per year is 108%. Off the Chain used a compound annual growth rate starting from December 31st 2016, to February 28th 2022. For both the fund and Bitcoin. Crypto fund CEO Brian Estes said the fund had outperformed bitcoin in the past five consecutive years. He added that they had done that with 80% less volatility than Bitcoin. Brian added that he had built the fund to protect and give exposure to foundations and other conservative investors.
In addition, the fund claims it also outperformed the S&P 500 by about 3,653% in the last five years. The fund claims that the two don’t move similarly (up and down) in the market.
Crypto funds say their main target is to identify mispriced assets in the blockchain. The target is to purchase one dollar’s worth of blockchain assets for 50 cent coins and make profits from purchasing the asset other than purchasing them at a market value and waiting for them to rise. In this manner, the fund can still capture the growth of the young industry and, at the same time, apply a value approach.
Brian gave an example of Mike Novogratz’s Galaxy Digital from two years ago. Off the Chain was its largest buyer at the time. A share cost about 70 cents two years ago. Estes says that when the stocks were closed on Tuesday, a share cost $15.79. According to Estes, Silvergate Bank was also mispriced. Estes claims that the crypto-friendly bank was valued as a bank, yet it operated as a crypto company. Because of this mispricing, the company was growing at a rate of more than 100% in a year.
Today, Off the Chain is one of the largest purchasers of Mt. Gox bankruptcy claims. Before getting robbed by a Russian hacker, Mt. Gox was the largest bitcoin custodian. Estes said that the fund purchases claims from people at an average discount of around 80%.
Crypto fund also sees Binance and BNB as undervalued assets. According to Purcell, Binance is valued the same as Coinbase despite selling 4.2 times the value of Coinbase. Purcell also thinks the development of the Binance Smart Chain, which has been moving developers away from other smart chain communities such as Ethereum, is a value play.
Currently, the crypto fund has around 200 partners and approximately $399 million under supervision. The fund’s main targets are family offices, institutions and any other high net worth persons for a minimum of around $1 million. Estes said the fund has room for an extra $200 million influx; he added that it is very likely that the fund would open an AI algorithm for trading in the next six months.
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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
