Since the first Bitcoin was mined by its eponymous investor Satoshi Nakamoto in January 2009, the market capitalization of all cryptocurrencies has grown to more than $530 billion. Before the recent downslide that caused a huge drop in most cryptocurrencies including leaders of the pack Bitcoin and Ethereum, the market cap peaked at just over $740 billion. With more than 1,300 cryptocurrencies, and more being created all the time, initial coin offerings (ICOs) have raised a total of $2.3 billion, and most of that was raised in 2017. Very clearly, there is a growing market for cryptocurrency investing.
And there are now hundreds of new cryptofunds springing up–again, most of them in 2017–to fill the need. One of the early pioneers in the market is Blockweather.
Blockweather: The Hedge Fund For Crypto Assets
When David Henry and Shane Shields started Blockweather, they wanted to create a reputable hedge fund for cryptocurrencies similar to Morgan Stanley and Goldman Sachs in the traditional finance sector. Shields had been a financial engineer in traditional hedge funds, designing and building the security infrastructure needed to manage them effectively, but he’d also been an early Bitcoin, Ethereum, and blockchain enthusiast. Henry is a double-board-certified surgeon and experienced equities investor who parlayed that experience into a successful run at amassing great returns in the Bitcoin and blockchain markets. They put their heads together to create one of the first five hedge funds specializing in digital currencies.
“Our investors want great returns,” Henry, a Blockweather managing partner, said. “They want a certain percentage gains each month, and with Blockweather, they see returns greater than 20 percent per month on average.”
Henry said investors are turning to cryptocurrency investing for two reasons. First, it’s getting a lot of press. The rally that Bitcoin experienced last year, rising from under $1,000 to almost $20,000 by the end of the year, has put the entire ecosystem in the spotlight. Secondly, cryptocurrency investing is in the early stage of mass adoption. More than 100,000 people enter the market every day, and big institutional investors are putting their money into the pot. To add icing to the cake, these investors see huge returns.
“They’re getting much higher returns than with stocks, bonds, or the mutual funds they’re already invested in,” Henry said. “Those are good reasons to add digital currencies to your portfolio.”
Cutting Edge With a Dose of Traditional Technical Analysis
For a number of reasons, DigitalCurrencyHedgeFunds.com ranks Blockweather No. 1 among crypto hedge funds. One of the reasons is reputation. They simply are regarded highly by their customers, and by other industry players.
The experience of their management team sets them apart from most cryptocurrency funds. Both managing partners had experience in traditional investments and crypto investments prior to opening Blockweather’s doors in December 2016. Plus, they tend to hire experienced analysts and fund managers, poaching them from traditional wirehouses and investment firms like Ameritrade and Merrill Lynch. In the last year, they’ve tripled in size and make all of their employees sign a strict code of ethics.
Blockweather is registered by FINCEN and all their employees take FINRA trading courses so they can learn the rules regarding money laundering. Blockweather also prides itself on excellent customer service, and they boast the lowest fees in the industry.
“We use a lot of charts,” Henry said, talking how about they evaluate the cryptocurrencies they list in their funds. “Our analysts use technical analysis, and we perform heavy due diligence on every cryptocurrency.”
Blockweather offers customers three funds—a conservative fund, a moderate fund, and an aggressive fund—as well as individual accounts. Their aggressive fund is made up of small cap and new currencies as well as ICOs while their moderate and aggressive funds include a wide mixture of small- and mid-cap currencies. The conservative fund only invests in older currencies that are doing well, like Bitcoin and Ethereum. They tend to invest in short- to mid-term time periods to maximize profit margins.
“When we evaluate a currency, we look for a strong team, novel technology, and a good pricing structure,” Henry said. “If everything checks out, we invest in the early stage, or pre-IPO, to get the best pricing.”
They also make sure to read white papers published by the currencies they buy and take a hard look at price history.
Blockweather’s Outstanding Growth
From December 2016 to December 2017, Blockweather grew to $8 million assets under management (AUM). They expect their AUM to grow to at least $30 million by the middle of 2018, and it’s likely to hit $50 million, Henry said. They took their first investor in the final month of 2016 and had 180 investors at the end of last year. Their client portal allows investors to keep tabs on investments and includes charts, account balance, gains, and all the information investors traditionally expect to see.
Their net asset value has tripled since the middle of 2017, and Blockweather has seen a profit every month since their first customer signed on. Since June 2017, they’ve made over $700,000.
Revenues come from their fee structure, which consists of a biannual fee, which begins after the first 30 days after the first investment, 20 percent commission on profitable trades, and a 24 percent transaction fee on executed trades. Blockweather claims these are the smallest in the industry.
Most of their customers earn moderate to high income, are middle-aged, and they have a significant amount of money invested in traditional assets. They typically have not invested in digital currencies, but they are aware of them. The platform is open to both accredited and non-accredited investors.
Henry said he’d like to attract more family offices and high net worth individuals to the platform.
Is the Future of Crypto as Bright As It Appears?
Henry said he believes the blockchain will integrate more fully with artificial intelligence technology and will branch out to a variety of different types of services. He sees it expanding to include most functions of banking, auto lending, and real estate, and he also believes its development will grow for many years to come. He sees it growing to mass adoption within the next decade.
As for Blockweather, he hopes the company will expand to associate with or acquire a larger firm, and he said an IPO may be an option at some point in the future.
On his wish list is better automated software designed specifically for crypto hedge fund investing.
“I’ve spoken to a lot of clients who say they talk to 20 or 30 crypto hedge funds, and they say ours is the most professional and have the best ethics,” Henry said.
Disclosure: Allen Taylor writes for Blockweather. As editor of Blockchain Times and Lending Times, however, he is dedicated to non-biased reporting.