Metalpha launches Bitcoin tracker fund with NextGen Digital Venture

Photo credit: bloodua / 123RF

Metalpha, a Hong Kong-based crypto derivatives firm, is launching a new fund called Next Generation Fund I in partnership with NextGen Digital Venture, which provides cryptocurrency exposure to traditional investors, ranging from accredited investment firms and family offices.

The fund provides a financially compliant channel to purchase shares of Nasdaq-listed Grayscale Bitcoin Trust (GBTC), which tracks the price of bitcoin and is the largest holder of the cryptocurrency in the world. This will also allow investors to gain exposure to bitcoin without actually owning the digital asset.

Founded in 2021, Metalpha built its business by helping crypto miners hedge their risks through the booms and busts of the market. It is a subsidiary of Metalpha Technology Holding, a Nasdaq-listed crypto wealth management company. In Hong Kong, Metalpha holds a Type 9 license, which allows it to conduct asset management activities.

“If you are an oil or gas company in the traditional finance world, you will have to hedge your risks to ensure that you have cash flow for future productions. But in the crypto world, there’s no such solution,” says Adrian Wang, founder and CEO of Metalpha, said in an interview with Tech in Asia.

(first from right) Adrian Wang, CEO of Metalpha / Photo credit: Metalpha

Prior to launching Metalpha, Wang founded hydropower-based crypto mining company Lotoie in 2016, which was shuttered after mainland China banned cryptocurrencies.

See also: Is crypto-friendly Cross River Bank the next to fall?

Optimism abounds

Metalpha focuses only on derivatives based on large-cap coins, namely bitcoin and ether. Some of its bets have worked out.

The company began trading in January last year during the bear market and entered its clients into a bitcoin accumulator when the coin was trading at US$20,000. The structure allowed them to purchase bitcoins at a discount compared to the spot price, effectively at US$17,000 on average per coin. With bitcoin breaking past US$30,000 this week, Metalpha’s clients are satisfied.

Wang now aims to raise US$100 million for the fund, which has already hit US$20 million – Metalpha’s management contributed US$6 million of that. Investors must put in a minimum of US$1 million to participate in the fund. There is also a one-and-half-year lock-in period before investors can redeem their money.

GBTC has long been a proxy for trading in bitcoin, says Wang. It allows investors to invest in the coin within the existing financial regulatory framework and does away with wallet management challenges, which can be tricky for less crypto-savvy retail investors.

Grayscale – the company behind GBTC – became the subject of controversy last year when its parent company, Digital Currency Group (DCG), was hit by the collapse of its lending subsidiary, Genesis. DCG reported a US$1.1 billion loss for 2022.