When people talk about crypto, you probably assume that they mean bitcoin. After all, bitcoin is the most popular cryptocurrency.
Before Satoshi Nakamoto described how blockchains could maintain public ledgers to track ownership of a digital currency called “bitcoin,” no one had done much to create digital money. Of course, Satoshi Nakamoto isn’t a real person. It’s a fake name used by the person, or group of people, who invented the technology that makes bitcoin possible.
If you’ve been paying close attention to crypto markets over the last few years, you have probably noticed that bitcoin tends to perform better than other currencies. A lot of fly-by-night digital coins attract interest for short periods, only to fall back to earth soon afterwards. But bitcoin has sustained a multi-year bullish trend in spite of the naysayers.
Yet while bitcoin is the most successful cryptocurrency by market capitalization, one crypto fund has outperformed it. Off the Chain Capital claims that it runs the most successful crypto fund. Here’s the story of the how the fund does it.
Off the Chain Capital Fund vs. Bitcoin
According to Off the Chain Capital’s CEO, Brian Estes, the fund has outperformed bitcoin every year for five consecutive years.
Off the Chain Capital Fund was founded in 2016. The fund has returned an average of 133% per year. Bitcoin has returned an average of 108% during the same period.
This is a spectacular achievement, especially when you consider how well bitcoin performed during several of those years. Between September 2020 and March 2021, bitcoin’s value jumped from $10,764 to $58,734. That’s a 445.652% increase over just six months. Off the Chain produced an even stronger return.
Additionally, Off the Chain has been 80% less volatile than bitcoin. Volatility is one of the most concerning aspects of investing in cryptocurrencies.
Off the Chain’s Approach to Investing
How has Off the Chain’s fund managed to outperform bitcoin so reliably while also minimizing volatility? The fund managers do several things to make it more successful.
To start, Off the Chain includes a variety of blockchain and cryptocurrency assets. It can carefully adjust the percentage of these assets to reach higher yields. The fund doesn’t make its portfolio public, so it’s impossible to know precisely the mix of holdings.
The founders and investment managers at Off the Chain say that they follow investment strategies championed by people you don’t often hear about in crypto circles. These names include long-term investors and activist investors like Charlie Munger, Warren Buffett, and Benjamin Graham.
All of these investors are known for studying opportunities through a valuation lens. Once they decide to buy into a company, they typically hold on to the assets for years or decades. They also get directly involved in the management of companies.
Given the nature of blockchain and crypto, we have to assume that Off the Chain takes a slightly different approach. The fund managers likely own stocks in companies that work with various cryptocurrencies, such as Coinbase, and Kraken. These and other companies facilitate crypto buying and selling. Some also develop new blockchain technologies and uses.
It seems reasonable that Off the Chain has these companies in their fund, in addition to a broad swath of other cryptos, because doing so could help mitigate volatility.
Off the Chain may be mitigating risk and volatility by investing in the companies that work with crypto. It’s a smart move that fits the founder’s Buffett-driven approach to getting excellent results even when individuals coins move erratically.
Can You Invest in Off the Chain’s Crypto Fund?
At the moment, Off the Chain’s crypto fund has a small number of investors, including:
- Bob Dwight, former CFO of Fidelity Investments Mutual Funds
- David Bailey, CEO of BTC Inc.
- Thomas Hillman, Managing Partner at Lewis & Clark Partners
- Perianne Boring, Founder and President of Chamber of Digital Commerce
- Olaf Carson-Wee, Founder and CIO of Polychain Capital
You could potentially invest in the Off the Chain Crypto Fund, but you would need to prove that you’re an accredited investor. These investors must show that they have investment savvy. In other words, they know how to identify any potential risks of dedicating their money to the fund.
Additionally, you would need to prove that you have enough money to absorb any losses by investing in the fund. This often means that your household needs a value of at least a million dollars in assets and enough income to recover from any losses.
Bitcoin and other cryptocurrencies could provide excellent opportunities for making money. The volatility, however, is a difficult hurdle to clear. Off the Chain says that it has a fund that overcomes that challenge. If true, it seems reasonable to expect other companies to develop similar funds in the near future. That’s great news for anyone interested in the crypto market.
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