Why Invest in Crypto


By: Eric Ervin

For the past five years, cryptoassets have outperformed all other asset classes and that is after a 70+% market correction from the peak earlier this year.  

They did this with little to no correlation to the traditional investment categories of stocks and bonds.

Some are saying this category of assets could be one of the largest wealth creation events in history.  Unlike the Internet, wealth will be created at the protocol level as well as in the equity of businesses built on or around the blockchain ecosystem.

The market is highly fragmented, driven primarily by the lack of solid trading infrastructure, information assymetry, and a plethora of “alpha donors” trying to get rich quick.

Volatility is extremely high creating a rich trading environment for sophisticated trading systems and asset managers who understand how to provide liquidity and hedge unwanted risks using a variety of exchanges, techniques and instruments.

Regulatory uncertainty around trading and custody creates risks for those managers who lack expertise in these areas.  Firms with expertise as regulated asset managers have little to no expertise in crypto/blockchain investments, firms with expertise in crypto/blockchain, have little to no expertise in traditional asset and risk management.  Blockforce Capital has both.

Don’t get left behind, the average investor- both institutional and individual has little to no exposure to crypto assets in their portfolio.  Furthermore, the average investment advisor is either not allowed to recommend, or is unwilling to recommend crypto assets to their clientele.

This is important for two reasons, “average” is not going to cut it for most investors.  Most are underinvested based on their spending needs, and are unlikely to meet their objectives if they remain invested in lower return asset classes.  According to a number of recent surveys, many of the most sophisticated asset managers expect markets, both equity and debt, to produce lower returns over the next decade than the historical average.

Even a 1% allocation over the past five years would have increased returns and decreased the risk of the average allocated portfolio of, 60% Stocks and 40% Bonds.

Dollar cost averaging into volatile asset classes can provide meaningfully improved returns even in a flat or negative market.  

Bottom Line

Whether you believe that cryptoassets and blockchain technology investing is going to be a homerun, a strong outperformer or a long term “maybe”, it would be difficult for anyone to argue that the market is efficient.

We feel that we are well positioned to capture and deliver alpha to our clients based on those inefficiencies in a prudent, risk managed multi strategy approach.  For investors looking to gain exposure to this emerging asset class but aren’t willing to stomach the extreme uncertainty and volatility of a long only strategy, our Blockforce Multi Strategy fund offers a semi liquid structure managed by a team of industry veterans, with expertise in key areas.

Kasey Price