What to know:
- Pythagoras’ Alpha Long Biased Strategy generated a return of 204% last year, outperforming BTC‘s 121% rise.
- The fund manager expects the bull market to continue in 2025.
As a crypto investor, I’ve witnessed Bitcoin (BTC), the dominant digital currency by market value, skyrocket an impressive 121% last year and break through the six-figure barrier. Despite this stellar performance, it pales in comparison to the exceptional growth experienced by Pythagoras Investment Management’s Alpha Long Biased Strategy, which has pushed beyond expectations.
In 2024, the investment fund, built on a foundation of Bitcoin (BTC) and incorporating two unrelated tactics, reported an outstanding gain of 204%. This translates to a triple return, far surpassing the 2x increase a standard Bitcoin investor holding onto their coins would have achieved. Notably, this fund only levies an incentive fee when it outperforms Bitcoin. (This message was sent by Pythagoras in an email to CoinDesk.)
The core investment in Bitcoin within the fund offers immediate access to potential long-term growth, while its two independent tactics – a strategy that tracks market momentum for timing purposes and another that selects long and short positions based on market evaluation – help create additional returns (alpha).
The momentum approach makes use of machine learning and pattern recognition to continuously adapt and maximize exposure, thereby seizing short-term market swings. Simultaneously, the long-short strategy leverages an exclusive AI-powered prediction model to construct a portfolio that is neutral in terms of dollars. This strategy invests in tokens predicted to generate higher returns while simultaneously selling tokens forecasted to perform poorly.
The allocation to the three components is calibrated to maximize returns relative to bitcoin.
Although it was the smallest with an asset value of $7 million, the Alpha Long Biased Strategy, managed by Pythoras, showed notable performance. However, in December, it experienced a 2% setback due to Bitcoin’s decrease from its record high of over $108,000 to around $93,000 at year-end.
In December, Pythagoras’ Arbitrage strategy yielded a 3% return, bringing its yearly total to an impressive 18%, amassing $45 million in assets under management (AUM). The Quant Long Short Fund provided a remarkable 30% return in 2024, managing $23 million in AUM. Additionally, the Absolute Return Strategy achieved a staggering 41.7% return and attracted $158 million in client funds. Notably, Pythagoras has announced that starting from February 1st, the top asset gatherer of 2024 will no longer accept new investors.
The total value of the four investment funds increased significantly, rising from approximately $80 million in 2023 to more than $230 million, as the robust bull market boosted investor trust.
Bullish outlook
This year, according to Pythagoras, the bull market is anticipated to persist, fueled primarily by favorable regulatory changes within the United States and a heightened interest among corporations and sovereign entities for Bitcoin.
In simpler terms, Mitchell Dong, the CEO of Pythagoras, stated in a message to CoinDesk, that the new Trump administration’s plan for establishing a national Bitcoin reserve and placing cryptocurrency-friendly individuals in crucial government positions could potentially spark significant change. Moreover, with approximately 290 members of Congress who are supportive of cryptocurrencies, it is expected that favorable legislation for the crypto industry will pick up steam.
With the U.S. Congress considering a national strategic Bitcoin reserve, it’s likely that certain countries might try to get ahead by amassing Bitcoin if this plan becomes reality. According to Dong, this could potentially prompt listed companies to mimic MicroStrategy’s approach and embrace Bitcoin.
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2025-01-07 09:01