MH Carnegie Launches Second Fund to Seize Inefficiencies in Cryptocurrency Markets

MH CARNEGIE LAUNCHES SECOND FUND TO SEIZE INEFFICIENCIES IN CRYPTOCURRENCY MARKETS

  • Follows the launch of the MHC Digital Asset Fund in April, which upheld its goal of downside protection during recent volatility
  • New market-neutral strategy aims to produce outsized returns while mitigating volatility risk

SYDNEY, 5 July 2021 – Following the recent launch of its first cryptocurrency fund, alternative asset manager MH Carnegie & Co. today announced the launch of its second fund, in a bid to offer Australian investors unique opportunities within the digital assets space, irrespective of market conditions.

The MHC Digital Market Neutral Fund (the Fund) is aimed at Australian wholesale investors looking to take advantage of inefficiencies within the cryptocurrency, blockchain and DeFi markets, but concerned about the high risks associated with direct investment in volatile cryptocurrencies.

In a market neutral strategy, the Fund seeks to generate outsized alpha returns independent of cryptocurrency market conditions through yield farming*, arbitrage strategies, options strategies and basis trading, targeting a 30% annual return while minimising volatility.

Commenting on the launch, Mark Carnegie, Principal of MH Carnegie & Co. and Founder of MHC Digital Finance said: “Having taken our first steps in the cryptocurrency space, we learnt one key point which formed the basis for our second fund: these are young and developing markets offering exceptional risk-return opportunities without the need to take a directional view on the market as a whole.

“In the past year, we’ve seen the crypto market dominated by retail investors who want to buy Bitcoin and HODLin the hope of enormous returns. With so many new investors buying into these incredibly volatile assets, huge price anomalies have developed.

“It’s worth noting that these early-stage opportunities won’t be around forever. Eventually, once the large cap traditional players overcome their hesitations on crypto, they will come around in droves and take the same positions we have (but in much greater size) to close these price gaps.

“Until then, a combination of derivative strategies and liquidity provision affords us the opportunity to take advantage of pricing anomalies not seen in traditional markets for many years,” he added.

Crypto passed the stress-test

Mr Carnegie acknowledged that May and June have been extremely volatile months across the cryptocurrency market. After the significant appreciation seen over the past few months, prices fell dramatically back to pre-2021 levels with over AUD$1.6T in value wiped out from cryptocurrency’s overall market capitalisation.

“These significant selloffs are not unusual in this market, rather they are to be expected,” he said.

“The fundamentals remain unchanged, and the long-term trend is still intact. Investors should note that the market cap of the crypto ecosystem is still five times the level that it was 12 months ago.

“What’s important is that the initial sell-off lead to leveraged players being liquidated out of their positions, which despite exacerbating the size of the decline, has dramatically reduced the leverage within the system. We think this is positive for the long-term stability of the market as a whole,” he added.

Despite nearly 50% drops in the price of Bitcoin and Ethereum, the recently launched MHC Digital Asset Fund delivered on its goal of downside protection by falling 17% in the month of May due to its active asset allocation and the fact that a subset of the Fund’s asset allocation is allocated to the strategies which dominate the Fund.

“While this is a considerable change when compared to other asset classes, it is the outcome we had strived for when constructing the portfolio as we did,” noted Mr Carnegie.

He believes the recent correction is a significant stress test for the functionality of the market and is confident that the infrastructure has held strong.

“Imagine the behaviour of the Government and financial intermediaries if this had happened in the global debt or equity markets. They would have stepped in to protect the integrity of the market like we saw in the Global Financial Crisis or more recently the COVID-19 pandemic.

“Due to its decentralised nature, this intervention cannot happen in the crypto land, proving once again that in times of extreme stress, the crypto market doesn’t need market interference from a central party to preserve its sanctity,” he concluded.

* liquidity provision and lending

** Hold On for Dear Life

ENDS

About MHC Digital Finance

MHC Digital Finance Pty Limited (ACN 646 614 397) is a focused Australian digital currency and emerging technology asset manager with a unique mix of active digital asset and traditional financial funds management expertise.

Both MHC Digital Asset Fund and MHC Digital Market Neutral Fund are unlisted Australian unit trusts, co-owned by Mark Carnegie of MH Carnegie & Co., and Australian entrepreneur and leading blockchain expert Sergei Sergienko. More information can be found at https://mhcdigitalfinance.com/

About MH Carnegie & Co.

MH Carnegie & Co is an alternative asset manager, managing committed funds in excess of $1 billion across eight platforms, with a successful track record in delivering risk adjusted returns to investors since its establishment in 2011. MH Carnegie & Co has invested across a broad range of asset classes including venture capital, private equity, real estate and debt. More information can be found at https://www.mhcarnegie.com/

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