You’ve been at the forefront of creating digital asset products from an early stage. Why do you think investors should consider putting money into digital assets?
First of all, with digital assets, you get a quantitative diversity of return. Per increment of risk to reward, the ratio of the performance of bitcoin to the S&P 500 is more than three to one. So if you're going to invest money, one of the best risk-reward ratios is, without question, in digital assets as a stand-alone asset class.
Secondly, you get something new with digital assets that you didn't have before, and that's transparency. Public blockchains are auditable in real time, so they are trustless. You also get economies of scale and capital efficiencies. That's what this technology does — it makes things easier, cheaper, better and faster.
Thirdly, I believe bitcoin is one of the most important assets in all of human history because it removes the need of central banks. At the core of Decentralized Finance (DeFi), is recreating traditional financial services like lending, borrowing, and trading, but without relying on centralized intermediaries like banks. This cuts out the middleman.
Lastly, as the application layer of Web3 continues to evolve, the ease of use and access becomes better. If you look at the adoption curve now, we're about to hit an acceleration point. Six to eight years ago, the security was just gnarly. Now, you have multi-party computation (MPC) technology and multi-sig wallets, and Chainalysis doing work to ensure illicit funds aren't mixed into the funds you're acquiring. This offers a more robust infrastructure to let the application layer bring product and services to the masses at scale, and easier to use.
What are the biggest obstacles preventing people from investing in digital assets?
The first is recency bias. We saw in 2022 the failure of FTX, Celsius and others, which was a mix of counterparty failure, fraud and crimes. No one would fault anybody for being hesitant to get into digital assets because of that, but I will point out that the second-most fined company ever in the history of mankind is JP Morgan. So while you can forgive people for recency bias, I would argue they're not appraising it properly against TradFi counterparty risk.
Then, whatever people’s recency bias is anchoring them to, the tendency is to follow up with confirmation bias, "I don't want to touch that asset, since memecoins are down 90%.” So I believe these two biases combined do to not motivate people to underwrite the space properly.
Secondly, there’s a lack of understanding and awareness that all TradFi assets are held in “street name,” meaning you don't own it — your brokerage firm does. People also aren't aware that banks’ reserve ratios are in single digit percentages all over the world, meaning if you have money in a bank, it's actually not there. There’s a lack of appreciation of the fractional reserve banking system, which arguably has caused all of the credit crises throughout history.
Overall, it’s important to put headlines of bad actors and failed memecoins aside. Look at the infrastructure and all it offers. With Web3, you have shared security or privacy with zero-knowledge proofs. You can participate in certain networks to make them stronger, which then offers you staking yield. If you provide liquidity, you can get an automated market maker (AMM) yield. The system is efficient and strong.
What are the best ways to get alpha in today’s volatile markets?
First, have an accumulation strategy. This means you pick a portfolio of your best 5, 10, or 20 assets and dollar cost average them. Then, develop a trading plan. For example, if Ethereum drops to $1,200, then what am I doing? Or if Ethereum goes to $4,000, what will I do?
Next, you want to “invest with the trend,” which I see as a three-factored process. First, we're looking at the adoption curve. Then, we're looking at monthly data points for the establishment of the trend. Lastly, appraise the progression of the technology and the value proposition of the products and services of the entire space. Those three things are how you effectively contemplate where we are in a trend, in my opinion.
Tell me more about the HD CoinDesk Acheilus Fund.
We launched the HD Acheilus Fund in mid-May to leverage CoinDesk Indices’ Bitcoin and Ether Trend Indicators and it's diversified because it trades the CoinDesk 20. This actively managed, single-strategy fund targets institutional investors, aiming to profit from crypto market uptrends while avoiding drawdowns. We use a combination of quantitative and macroeconomic signals to shift between crypto tokens and cash, delivering a disciplined, outcome-driven cryptocurrency investment strategy. In my opinion, this is the easiest push button allocation anybody can ever make in crypto.
Our award-winning funds are centered around a dedicated compliance team, ensuring adherence to all CFTC and SEC regulations while anticipating future changes. Also, we have established robust internal policies and procedures that meet or exceed regulatory requirements, covering areas such as anti-money laundering (AML), know-your-customer (KYC), data protection, and risk management. All of this speaks to a forward-thinking culture that governs all our activities.
Where can someone learn more about the fund?
Potential investors can set up a meeting with us by going to the
Hyperion Decimus website
.
The interview was conducted by CoinDesk Indices and is not associated with CoinDesk editorial. Authors' views and opinions are their own and not associated with CoinDesk Indices.
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