Watch the interview with Joe DiPasquale, founder & CEO of BitBull Capital, a crypto hedge fund focused on multi-strategy active management:
You can read DiPasquale’s recent guest post on the FI blog here: Top 9 Questions about Investing in Bitcoin, Blockchain, and Cryptocurrencies.
Bitbull fund is an open-ended liquid crypto hedge fund that invests not only in liquid crypto assets but also in equity such as Coinbase. Under the leadership of founder and CEO, Joe DiPasquale Bitbull has flourished in many ways.
Here’s our interview with Joe DiPasquale.
Tell us about your background and experiences, (professional and personal), and how you became active with crypto.
I’ve been investing in crypto since 2013. By 2016, I started following full-time on my crypto investments. I started as an entity in 2017.
What is Bitbull capital?
In crypto, there are different ways to invest, for example, buy and hold an asset like Bitcoin, or do some active strategies like initial coin offerings, equity deals, etc. Bitbull is a diverse portfolio of active strategies. Essentially, we attempt to offer profit out of volatility (crypto is known for its unique volatility) or to do strategies that you wouldn’t be able to if you’re just buying and holding coins.
Where should crypto fit into an overall healthy investment portfolio for an individual?
Research shows that crypto is uncorrelated with many other asset classes such as equities and gold. Crypto is on the low side 1% and the high side 10% of someone’s total investments. That’s because tech and specifically crypto is a good investment.
What do you see as the macroeconomic purpose of the whole asset class?
A hedge fund thesis is different from a crypto thesis. Hedge funds attempt to cut down downside risks. Cryptos are two different things; cryptocurrencies (Bitcoin), and crypto-assets (Ethereum). People invest in crypto for different reasons:
- It’s a hedge against global inflation.
- It’s a hedge against global uncertainty.
How can you take advantage of volatility?
This comes up all the time. Volatility will remain. If you believe that in the coming years that crypto will appreciate, you won’t bother about it.
What are the ways investors can take advantage of blockchain, and other things like smart contracts and ledgers?
At its core, blockchain is simply a database of information based on consensus. IBM for example is pioneering several blockchain management. Also, Ethereum has a smart contract ability. Finance is the first large application for it but people are trying to do other applications like the blockchain or any other secure database.
Is there a place for ICO in the future? Are there other types of safe tokens or securities, fundraising mechanisms for companies whose core competency is not primarily crypto or fund raise-based?
In terms of ICO, there was so much news about them years ago. ICO’s are something companies can do. It’s very simple, similar to venture capital investing. Look at your team to find experience in this area, apply the same matrix that any traditional venture capitalist would invest in ICO.
To the other question, there are a couple of blockchain adjacent industries in the crypto space. For example, we did an equity investment with Coinbase. They trade crypto too. There’s a lot about crypto you can do even in other assets like carbon credits, gaming, anything to do with virtual.
Is there a common place for blockchain technology?
At Dres and Howards recently, we’re launching an equity fund for blockchain ventures. When I listened to Ben Howards, he talked about how it’s a new platform where you can improve the common ways in which we live. We’re really at the very beginning stages, so it’s just being used in finance as an alternative currency. Bitcoin itself is not that advanced as crypto assets where people are trying to do a lot more things, but we are at the beginning stages of even adoption at the moment.
Can you tell us about some of the biggest challenges that you’ve faced and overcome as a new fund manager?
Part of what we try to do as a whole is a lot of education of our investors. The challenge there is to inform them of the outlook of their decisions when they barely know about it. The first challenge is usually convincing someone that it makes sense to give any kind of allocation to crypto.
Number two is helping people understand the volatility and the way to profit off the volatility.
Do you have any other kind of advice that you would offer to would-be new fund managers or someone just starting?
We’ve been doing this for about 7 years, so I can say something about that:
- Decide how liquid your fund is.
- Know your investor audience.
- Structure your fund.
Where is digital capital heading next? Any other updates you want to share?
We’re always looking for compelling deals. We focus on large liquid crypto investments (crypto assets). We call it value-based investing. The next step for Bitbull is to continue to out-perform and then look for additional deals and look into the market to get funds at a discounted rate.