The infrastructure for institutional investors in the crypto market continues to gain steam despite this year’s relentless bear market. Most recently, Israel-based crypto investment fund Silver Castle, which targets institutional and accredited investors, unveiled two crypto funds in November with another fund waiting in the wings and is targeting $50 million in assets under management (AUM) by year-end, according to Bloomberg.
Meanwhile, the combined value of the crypto market, which is currently hovering at $170 billion, continues to reel. Bitcoin has lost nearly three-quarters of its value since last year’s peak, as crypto funds, of which there are hundreds, oversee a combined $10 billion in AUM, based on data from Autonomous Research.
“We spent close to a year building robust infrastructure for managing other people’s money at the level of institutional grade with very, very high security,” Silver Castle CEO Eli Mizroch told Bloomberg.
Silver Castle’s maiden fund uses a momentum strategy for long and short investing, an approach whose in-house version has generated “high double-digit returns,” this year’s market downdraft notwithstanding. It’s a market-cap-weighted fund that uses proprietary algorithms to select the five biggest cryptocurrencies.
There’s also a CRB-style fund that’s comprised of the leading 10 coins and whose weightings are determined by an algorithm. The investment firm plans to unveil a third fund by year-end with a focus on, dare we say, ICOs. Israel has been a first mover for crypto regulation, and according to a recent report by One Alpha and Digital Assets Group, more than $1.3 billion has been poured into Israeli blockchain companies, the lion’s share of which are “ICO related.”
Silver Castle is in good company with firms like Fidelity readying its debut in the space, which is a bullish sign for Mizroch, who characterized Fidelity’s crypto push as “awesome for everybody.” Silver Castle similarly boasts talent from the traditional financial system, with alumni from Israel’s biggest bank and investment fund, Bank Hapoalim Ltd and Psagot Ofek Investment House, respectively. Zvi Ziv, who was previously at the helm of Bank Hapoalim, stated:
“There is a lot of potential in using blockchain and everything is going to try and move there. I believe herein lies the biggest potential in the financial world.”
Silver Castle’s ability to launch three new funds in the current market environment is a reflection of the blockchain innovation that has emerged from the country. Israel is home to more than 100 blockchain startups, up approximately threefold from 2015 levels.
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Last modified: March 4, 2021 3:10 PM