In this episode of Hidden Forces, host Demetri Kofinas speaks with crypto fund manager Ari Paul. Ari is co-founder and CIO of BlockTower Capital, a hedge fund focused exclusively on the cryptocurrency space. Before his move into cryptocurrencies, Ari was a portfolio manager for the University of Chicago’s $8 billion endowment, as well as a derivatives market maker and proprietary trader for Susquehanna International Group (SIG). Ari earned a BA in political science from the University of Pennsylvania, and an MBA from the University of Chicago with concentrations in economics, entrepreneurship, strategic management, and econometrics & statistics.
In our last conversation with crypto fund manager Chris Burniske, we learned about the models that some of the most forward-looking investors are using to value cryptocurrencies. In this episode, we learn how some of the most advanced and sophisticated crypto fund managers are trading them, beginning with Ari Paul.
How are crypto fund managers managing risk? What are the existential risk factors to such a new and fledgling market? What benchmarks are used for measuring the performance of a crypto fund? Is the benchmark bitcoin, cryptocurrencies, or the broader equity markets? How does a cryptocurrency investor seek alpha in an already uncorrelated asset class? How might the flood of institutional capital alter these correlations? What does a consolidation in cryptocurrencies look like? Are we verging near a collapse in valuations, and if so, what sorts of tools are available for shorting an overheating market?
We also take a look at cash-settled futures markets, consider the use of put and call options, and explore ways of protecting ourselves from counterparty and exchange risk. Finally, we examine some of the most interesting and creative investment opportunities for making money in cryptocurrencies and what you can do in order to take advantage of them.
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Producer & Host: Demetri Kofinas
Editor & Engineer: Stylianos Nicolaou