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Split Capital is a cryptocurrency hedge fund founded in January.
As the cryptocurrency market picks up steam again, graduates from major trading companies have launched their own cryptocurrency hedge fund, “Split Capital.”
According to co-founder Zaheer Ebtikar, Split Capital will focus on liquid tokens and adopt a “long-term bias” strategy, which will see long-term price appreciation alongside an active management approach. means that is expected.
Investors include venture fund Novi Loren, digital asset fund UTXO Management, and Dan Matuszewski, co-founder of digital asset fund CMS Holdings. Ebtikar declined to reveal the size of the fund, citing regulatory constraints.
Ebtikar argued that the middle 80% of the token market is often overlooked due to short-term incentives. luck Split Capital aims to support crypto projects over a longer period of time and help build an ecosystem.
“When assets become liquid, they are no longer loved, and VCs move on to the next thing,” Ebtikar says. “We want to be more aligned with the founders.”
Provided by Split Capital
“Shiny new stuff”
Prior to starting Split Capital, Mr. Ebtikar worked as a portfolio manager at LedgerPrime, a trading company that was acquired by FTX in 2021 and restructured to operate under the umbrella of Alameda and FTX’s U.S. subsidiary. Ledger Prime refunded outside investors and began transitioning into a family fund in 2022, but FTX’s subsequent bankruptcy after the crypto empire run by Sam Bankman Fried collapsed in November 2022 caught up in.
“We did everything right to the best of our ability. We just got the place and time wrong,” Ebtikar said. “So we had a little bit of a hard time on our shoulders to get things right.”
Michael Churchouse, a LedgerPrime alumnus, and Nai Boonkonkird, a Ph.D. He received his PhD in astrophysics from Sorbonne University and participated in the founding of Split Capital with Ebtikar. Shiliang Tang, former chief investment officer of LedgerPrime, is serving as an advisor.
From a split perspective, the unique incentive structure of crypto venture capital has a negative impact on the overall market. Unlike traditional VC, crypto VC firms often have shorter time horizons due to the liquid nature of token investments. Through investment vehicles like SAFTs, VCs can receive a promise of future tokens in lieu of traditional equity, and instead of waiting several years or more for a company to be acquired or go public, VCs can earn 1-2 from their initial investment. The tokens may be unlocked after a year.
“The vast majority of crypto capital is venture money,” Ebtikar said. “Their mission is to buy shiny new products quickly, promote them, and then sell them to retailers at a high price.”
While major venture firms such as a16z Crypto and Haun Ventures have pushed back against the criticism by insisting they support projects long-term, the space is still full of venture firms that operate like hedge funds. .according to bloombergCryptocurrency hedge funds lost an average of 52% in 2022, but returned more than 40% in 2023.
Ebtikar said that by investing in less popular tokens, Split can find undervalued investments and foster ecosystem growth. Currently, the market value of the project’s tokens is too high because it is tied to speculation rather than the fundamental value of the project.
U.S.-based Split, which launched earlier this month, is registered with the Commodity Futures Trading Commission, a requirement for trading derivatives for hedging investments.
“The argument is that in the long run, you can’t keep creating and releasing new tokens and keep the cryptocurrency in existence without collapsing itself,” Ebtikar said. “Gambling is not about trillions of dollars.” [total addressable market]”
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