2024's Watershed Moment for Digital Asset Funds

Last Summer's Ethereum ETF launch drew over $1 billion in trading volume. Last week, Blackrock’s co-founder and CEO, Larry Fink, went on CNBC to say about Bitcoin:

I studied it, I learned about it, and I came away saying okay [...] I believe Bitcoin is a legitimate financial instrument that allows you to have uncorrelated type of returns.

With Blackrock’s spot Bitcoin ETF, IBIT, surpassing $22 billion in assets under management (AUM) in July, the world’s largest asset manager is no longer a skeptic.

From our perspective as a technology provider to digital asset funds, this year’s momentum in the asset class has catalyzed three notable trends. These trends are worth noting because changes in innovative areas of financial technology – such as digital assets – often foreshadow broader shifts in the industry. Here’s what we’ve observed:

#1: A New Generation of Hedge Fund Managers Is Born

A fresh wave of hedge fund managers has emerged. Many new fund founders honed their skills at larger institutional digital asset managers during the 2021-2023 cycle and have since ventured out on their own as digital assets resurged in 2023. These new managers often receive backing from their previous employers, a strong vote of confidence in an otherwise challenging first-fund fundraise.

Additionally, trading teams or individuals who excelled in 2023 are now raising funds based on their strong track records. While these managers typically oversee less than $50 million, we believe they are poised to become a more significant segment in the asset management industry. They bring innovative approaches to asset and strategy selection and a more nimble operating model compared to their larger peers.

#2: Fund Managers Are Diversifying Their Strategy Offerings

Existing digital asset funds, managing anywhere from a few tens of millions to a few billions in assets, are diversifying their strategies and portfolios to stand out in an increasingly competitive market. A primary challenge has been delivering superior returns compared to Bitcoin (BTC). With BTC and ETH exposure now more accessible than ever through spot ETFs, limited partners (LPs) and financial advisors must justify higher management and performance fees for allocations that historically have not always outperformed BTC. In response, fund managers are launching new strategies. Fundamental managers are extending allocations to smaller-cap tokens, adding a venture-like flavor to their portfolios. Systematic managers are incorporating market and delta-neutral strategies aimed at achieving higher Sharpe ratios. Others focus on large-cap strategies centered on Bitcoin and Ethereum while adding derivative overlays to capitalize on market volatility. The shared goal is for funds to demonstrate the value of their investment and risk management frameworks in a competitive market environment.

#3: Funds Are Looking for Better Ways to Systematize Their Investment Frameworks

A significant trend stemming from the above is the development of new investment frameworks and related technology needs. Fund managers are increasingly systematizing investment decision-making processes, risk management controls, investment monitoring, performance and risk analyses, and reporting. This trend is crucial because these elements are essential for professionally managing a fund and substantiating claims of performance and differentiation. However, the lack of standardization and decentralized nature of digital assets present significant challenges. These challenges have led to teams spending countless hours and dollars building in-house tools or piecing together third-party solutions, often with unsatisfactory results. In-house tooling can be prohibitively expensive, costing hundreds of thousands or even millions of dollars. Piecing together third-party solutions can be an expensive and unsatisfactory experience, as these tools are often covering just a limited set of use cases instead of serving multiple types of users within the fund.

How Genie is Shaping the Future of Digital Asset Management

Within this evolving landscape, we at GenieAI are excited to help shape the institutionalization of the digital asset class with our comprehensive platform for digital asset funds. We believe that the lines across asset classes will become increasingly blurred, with tokenization and investment diversification as key drivers. Our institutional-grade investment management platform leverages the latest software technologies, artificial intelligence, and machine learning advancements. The result? A modern platform that equips asset managers with the tools they need to work more efficiently and effectively. We are thrilled to partner with a growing number of leading digital asset funds globally and look forward to connecting with you soon. For more info reach out at https://www.genieai.tech/.

About GenieAI:

GenieAI is the premier AI-powered Portfolio and Risk Management System for digital assets, leading the industry towards smarter, data-driven decisions and automated workflows. The technology enables investors to anticipate market trends and navigate risks in ways that were once unimaginable—all while managing portfolios with unprecedented precision.

GenieAI helps leading fund managers to:

1. Enhance portfolio metrics

2. Predict market trends

3. Improve data-driven decisions

4. Automate analysis and reporting

5. Boost model performance

GenieAI's expert team of industry leaders brings unmatched AI and ML experience to investment management. GenieAI’s clients include some of the world’s most successful and well-respected digital asset funds.

GenieAI is backed by leading investors, including Coinbase Ventures, Bain Capital Ventures, Goodwater Capital, Sierra Ventures, Fasanara Digital, Arca, and other prominent firms.