Alphabit to raise US$300mil to invest in digital currencies

New global fund says sector in great position to strengthen further

NEW YORK: Alphabit, a global fund that invests in digital currencies, has been launched with a target of US$300mil, co-founder Liam Robertson said in an interview, as managers seek to tap growing demand for virtual assets that allow for instant, borderless transactions.

Digital currencies such as bitcoin are issued and usually controlled by its developers, and are used by members of virtual communities.

The sector’s market capitalisation has surged more than 60% so far this year, and nearly 260% over the past 12 months, to nearly US$30bil, according to Coinmarket.com.

A handful of digital currency funds have emerged over the past year, including Polychain Capital, which has raised about US$15mil from venture capitalists and investors the last few months.

“As you see the digital currency market progress and grow, we have seen professionals come to the market, allowing the sector to become a more streamlined and professional space,” Robertson told Reuters.

“The sector is now in a great position to further strengthen and grow.” Alphabit, a hybrid between an open-ended mutual fund and a hedge fund, started with an initial seed capital of US$1mil raised among the founders and company executives, said Robertson, who is also chief executive and head of investments.

A formal launch will take place at a conference in China in September, when the fund has a six-month track record, he said.

Alphabit is registered in Dubai and the Cayman Islands.

Fees include 2.5% for management and 45% for performance. The latter will only apply if the fund outperforms the price of bitcoin, said Robertson, a former currency trader at hedge fund Light Peak Capital in London.

“We would be very surprised if we don’t return at least 100% for the year,” he said.

Alphabit will use a blend of active strategies including leveraged trading, algorithmic schemes, and investing in the sale of tokens by blockchain start-ups, Robertson said.

These strategies would help the fund outperform bitcoin at lower volatility, he added.

Blockchain is a public online ledger of transactions that first became well known as the software underpinning bitcoin.

It is sought after by government and private corporations as a way to permanently record and keep track of assets or transactions across all industries. – Reuters