Why crypto investors should use traditional market strategies

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February 18 2020
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Despite being an alternative asset, many of the traditional equities strategies such as arbitrage and fundamental analysis still apply in crypto, an industry expert has explained.

In a conversation with nestegg, Apollo Capital’s co-founder and CIO Henrik Andersson discussed some of the strategies his fund uses when investing crypto.

“It’s still early days in the crypto markets, so having a multi strategy fund means we can pick the best opportunities in different strategies such as fundamental, arbitrage, strategies,” Mr Andersson said.

The winner of the top-performing crypto fund in the world for the category, Apollo Capital believes the normal rules for investing in shares can be applied to crypto markets.

“Absolutely the difference here is the market is still young and it's hard to see where the best opportunities are, in 12 months from now. That is why we want to have a flexible strategy where we can capture the best opportunity across several strategies,” Mr Andersson said.

Looking forward, Mr Andersson said a multitude of factors are driving the crypto market forward following a two-year bear market, “dubbed crypto winter”, which is now passing.

“During this quiet time in crypto there's been a number of institute players getting involved in the crypto space. CME group, Fidelity, the companies behind the New York Stock Exchange Ice,” Mr Andersson explained.

“Then there’s more specific factors, bitcoin is having a halvening event in May, meaning the supply in bitcoin will be cut in half. This means the inflation will be 1.8 per cent, lower than any central bank's target.”

The crypto expert stipulated that geo-political issues will help drive the price of bitcoin, which could hit a new high by the end of the year.

“I think in this environment there is demand for scarce assets like bitcoin and gold. It’s true bitcoin has been labelled digital gold,” Mr Andersson said.

“I think that narrative has been building last year and this year, with the Iran-US tensions seeing bitcoin react positively. Again with the coronavirus, bitcoin reacted positively. So, that narrative is building and it's not just theory anymore, it’s actually happening in the market.”

The fund manager explained that crypto markets are very tricky for those who do not follow it closely, highlighting the importance of an active management strategy over a passive one.

“There’s a lot of misinformation out there and it's hard to know who to trust. This is why we actively managed funds is so important,” Mr Andersson concluded.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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