top of page
  • Writer's pictureMichael Schwartz

In the Arena | March 1, 2024



Arena Digital Capital Management was founded in January 2022 by three experienced traditional finance hedge fund professionals who have been deploying personal capital in the digital asset ecosystem since 2018. The team has managed billions of dollars of capital for high net worth individuals, family offices, and institutions ranging from pension plans and endowments to sovereign wealth funds. We have worked closely with institutional consultants, RIAs, and other advisors in serving their clients.


In May 2022 we launched Arena Digital Capital Partners, with the goal of providing a multi-strategy investment vehicle to access the digital asset ecosystem. Our mandate is to offer broad exposure across the growing digital asset and blockchain sector with an appropriate level of diversification, professional oversight, and manager selection. Our collection of skill sets and our history in the business allows us to understand, assess, and engage with the practitioners of this nascent asset class with a level of diligence required to be responsible stewards of capital. We are happy to periodically share our observations with you.

 

Fidelity adds Bitcoin to standard asset allocation – inclusion of digital assets in portfolio construction becoming normalized

Fidelity Investments Canada incorporated a 1-3% Bitcoin allocation to its “All-in-One” asset allocation funds. Fidelity has written that BTC is “exponential gold” given its “increased scarcity and potentially high octane demand curve.” They suggest that portfolio allocations of 2%–5% could have an outsized positive

impact in an optimistic adoption scenario, allowing annual retirement spending to increase 1%–4%, while limiting the loss to annual retirement income to less than 1% if bitcoin were to lose all its value. We believe that the inclusion of Bitcoin and other digital assets in standard asset allocation models is part of a broader trend and will include US-based advisors in short order.


ETH trades over $3000 – time to have altcoin exposure

Altcoins typically follow BTC out of bear markets and then proceed to massively outperform BTC as the cycle develops. Ether (ETH), the second largest digital asset by market value, traded over $3000 in late February, a level not seen since April 2022. Investors appear excited about the potential for SEC approval of a spot ETH ETF as early as May of this year (BlackRock, Franklin Templeton, VanEck, Ark Invest and Invesco all have pending applications). They are also enthusiastic about the upcoming “Dencun” Ethereum upgrade that will continue to enhance the scalability and attractiveness of building applications on the Ethereum network. We think that investors ought to have altcoin exposure as the cycle develops and the market rewards a diverse range of blockchain use cases beyond the BTC store of value story.


AI-based crypto project tokens surge on Nvidia earnings – important role for blockchain expected in AI deployment

We are all aware that Artificial Intelligence (AI) is expected to be incredibly transformative; destined to automate tasks, boost productivity and enhance business offerings across wide segments of the economy. Blockchain is expected to play a significant role in the deployment, scalability and efficacy of a number of AI-related business applications. Blockchains enable transparent and decentralized coordination, value transfer and trust minimization at scale, all factors relevant to the commercial viability of AI. The market has taken notice and a number of AI-related digital assets surged the day after Nvidia’s blowout fourth quarter earnings in late February. These include one day gains in SingularityNet

(AGIX) (+37%), FetchAI (FET) (+15%), Render (RNDR) (+20%) and Worldcoin (WLD) (+33%). The overall market cap of AI tokens has surpassed $17 billion. We think that blockchain will play an integral role in the commercial deployment of AI and relevant projects offer a way to gain exposure to that promise.


Chart of the Month


Altcoin Performance and Crypto Market Liquidity





Altcoins Have Room to Run


Source:


Arena Digital Capital Partners is a liquid evergreen fund open to monthly subscriptions. We are always happy to discuss further with you or investors you think may have an interest in the sector. Please reach out to Bill Cline at williamc@arenadigital.capital.


Sincerely,


The Arena Digital Capital Management Team

Michael Schwartz, Michael Prober & William Cline

17 views0 comments

Recent Posts

See All

In the Arena | April 1, 2024

In this edition of “In the Arena”, we highlight BlackRock’s new tokenized fund on the Ethereum blockchain, the growing global adoption ...

In the Arena | February 1, 2024

In this edition of “In the Arena” we highlight the launch of BTC ETFs in the United States and enthusiasm around the impact of digital ...

In the Arena | January 1, 2024

In this edition of “In the Arena” we highlight improvements in wallet technology, tokenization of real world assets and expectations . . .

Comments


bottom of page