Canadian Crypto Hedge Fund Is Focused On Cash

It is a measure of the volatility in cryptocurrency markets that Canada’s only actively-managed crypto fund holds nearly all of its assets in cash. According to a Bloomberg article, as of July 13, Rivemont Crypto Fund had approximately 91% of its $2.3 million holdings in cash. “I would say that the cryptocurrency market right now is not really in a bull market so people are waiting to see if it’s going down further,” Rivemont Investments’ Martin Lalonde, founder of the fund, said. The firm is using the 30-day moving average for bitcoin to make its cryptocurrency investment decisions. 

“After rebounding on this moving average twice on July 2^nd and 3^rd, we finally crossed it on 4^th. We therefore deployed a little more than half of the Fund’s capital in Bitcoin and Ethereum. If last weekend’s action proved encouraging, a sudden correction on Tuesday took us back to the wrong side of the 30-day average. We have therefore taken the path of discipline and resold our positions, waiting for a future profitable entry point for our investors,” the firm elaborated in a Facebook post. The crypto fund, which was launched at the peak of the recent cryptocurrency mania in mid-December, offers a mix of traditional wealth management strategies and investment in innovation-related finance products.

While regulations in the country are mostly focused on preventing anti-money laundering practices, Canada requires businesses dealing in virtual currencies (as cryptocurrencies are categorized there) to register with FINTRAC. While launching the fund, Lalonde had said that his fund was the only one accessible to accredited Canadian investors. Rivemont’s crypto fund is only invested in bitcoin so far and is restricted by Canada’s regulation to investing in Bitcoin, Ethereum, Litecoin, Ethereum Classic, Ripple, and Bitcoin Cash. It has lost 10 percent of its value between March and June, according to the Bloomberg report. That’s not bad performance, when you consider bitcoin’s precipitous drop of more than 70 percent since the beginning of this year. Cryptocurrency markets have mirrored bitcoin’s performance. At the beginning of this year, the total market capitalization for cryptocurrencies reached a peak of $813 billion. As of this writing, it was $283 billion. 

The slide has not, however, arrested investor enthusiasm for bitcoin and cryptocurrencies. The pace of crypto-focused hedge fund launches was expected to slow down this year due to the drawdown in bitcoin prices. But that has not happened. According to Crypto Fund Research (CFR), 61 hedge funds have been launched this year and 140 are expected to be in operation by the end of this year. The latter figure surpasses last year’s total of 130 hedge funds. (See also: Cryptocurrency-Focused Hedge Funds Rebounded 80% In April). 

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