Quantitative fund Kbit believes that greater returns lie within the digital asset space itself as hedge funds turn to traditional strategies like the basis trade to capitalize on the recent surge of crypto ETFs.
“The larger opportunities, higher return opportunities are in the crypto native markets,” said Ed Tolson, founder and CEO of Kbit, during a recent interview.
Tolson emphasized the importance of engaging with centralized crypto exchanges and trading various crypto instruments, including tokens, perpetual swaps, and derivatives.
Kbit Manages Over $100M in Assets
Kbit manages assets exceeding $100 million and employs a market-neutral trading strategy.
This approach aims to profit from both rising and falling prices while minimizing overall market risk.
The firm, based in the British Virgin Islands, also functions as a market maker.
Tolson declined to disclose the fund’s performance, citing client confidentiality.
In traditional markets, hedge funds utilize the basis trade to exploit price discrepancies between an asset and its corresponding futures.
With the launch of Bitcoin and Ether ETFs, these funds have begun applying the same strategy, buying ETFs and shorting Bitcoin futures on the CME.
However, Tolson pointed out that this approach is more profitable when executed with native crypto instruments, such as buying spot crypto and shorting perpetual swaps.
Unlike standard futures contracts, perpetual swaps have no expiration date and are available exclusively to non-US customers.
“We’re a quant shop trading anything that has volume and creates opportunities for us,” Tolson explained, noting that Kbit trades around 500 different tokens. “We will trade tokens even if we don’t like the fundamentals.”
This year, Kbit has expanded its team significantly, hiring seven new members.
Notable additions include Thomas Johnson, a former senior quant developer at Citadel, who joined as principal research engineer, and Sean Slotterback, previously at Highbridge Capital Management, now leading Kbit’s efforts in forecasting and portfolio risk management.
Eddie Markman, with eight years of experience as CFO and chief compliance officer at Sun Mountain Capital, has also joined Kbit as chief financial officer.
Over the past year, the team has grown to 14 members, doubling in size to bolster its capabilities and drive further growth.
Jersey City’s Pension Fund to Invest in Bitcoin ETFs
The municipal pension plan of Jersey City, New Jersey, is set to allocate part of the city’s pension fund to crypto ETFs.
The municipal pension fund, known as the Employees Retirement System of Jersey City, is currently navigating regulatory requirements with the U.S. Securities and Exchange Commission (SEC) to integrate a portion of its assets into Bitcoin ETFs.
While specific details regarding the allocated percentage of pension funds to Bitcoin ETFs remain undisclosed, Mayor Fulop hinted that Jersey City’s approach would mirror Wisconsin’s state pension fund, which committed a 2% allocation to Bitcoin ETFs earlier this year.
As reported, digital asset investment products saw a substantial inflow of $1.35 billion last week, bringing the total inflows over the past three weeks to an impressive $3.2 billion.
Bitcoin remained a popular choice among investors, attracting $1.27 billion in inflows last week.
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