This Hong Kong Fund Could Allocate Over $50 Million to Altcoins
HashKey Capital, a subsidiary of the renowned cryptocurrency giant HashKey Group based in Hong Kong, is set to launch a fund that concentrates on second-tier cryptocurrencies, commonly referred to as “altcoins,” on Friday. This unique approach deviates from the typical investment strategy centered around Bitcoin and Ethereum, instead aiming to capitalize on the potentially high rewards and risks associated with lesser-known digital assets.
HashKey Capital Targets Untapped Alpha
Jupiter Zheng, the portfolio manager and strategist behind HashKey Capital’s new fund, is targeting high-net-worth individuals and firms that cater to wealthy Asian families. Zheng believes that there is unmet demand in the crypto market for above-average returns, also known as “alpha,” and intends to cater to this demand. In a market dominated by Bitcoin and Ethereum, HashKey Capital is taking a less-traveled path in the pursuit of alpha.
In an effort to diversify and tap into the potential of altcoins, HashKey Capital’s new fund will consist of less than half investments in Bitcoin and Ethereum. This strategy represents a significant departure from the conservative and Bitcoin-centric investment paradigms commonly seen in the crypto industry.
By leveraging HashKey’s extensive experience in crypto venture investments, the fund aims to explore altcoins that offer greater volatility and potential returns. While this approach may raise some eyebrows, it comes at a time when Hong Kong is emerging as a prominent hub for crypto innovation, with the government actively fostering a crypto-friendly environment and encouraging the development of Web3 technology.
Hong Kong has played host to over 100 crypto-related conferences this year alone, and its Securities and Futures Commission (SFC) has recently updated regulations to allow centralized crypto exchanges to serve retail customers, provided they hold an SFC license.
The High Risks of Investing in Altcoins
With assets under management exceeding $1 billion, HashKey Capital aims to raise an additional $100 million for its new fund. However, the fund plans to maintain some holdings in cash to mitigate the inherent risks associated with altcoins.
Altcoins are known for their price volatility, often experiencing significant surges during bull markets, only to crash dramatically when market sentiment turns negative. This erratic behavior has contributed to the closure of approximately 13% of crypto hedge funds this year, as reported by Swiss investment consultancy 21e6 Capital AG. However, the average return for crypto funds in the first half of 2023 was 15.2%, while Bitcoin recorded gains of 65.2% during the same period.
Ultimately, the success of HashKey Capital’s venture into altcoins remains uncertain. While the potential for high returns exists, it is crucial to acknowledge the inherent risks involved in chasing such returns.
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Investing in altcoins can be an exciting and potentially lucrative endeavor. However, it’s important to approach it with caution and always conduct thorough research. The crypto market is known for its volatility, and altcoins can experience significant price swings. It’s crucial to assess your risk tolerance and only invest what you can afford to lose.
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