Bitwise Asset Management’s Hold 10, a cryptocurrency index fund that invests in the top 10 cryptocurrencies in the global market, has raised $4 million from former PayPal executives.
Risk Minimization
Investors including prominent venture capitalist Naval Ravikant, Keith Rabois, and former PayPal chief operating officer and product leader David Sacks have contributed to the $4 million investment round of Hold 10.
According to Bitwise CEO Hunter Horsley, Hold 10 is only open to accredited investors and allows its investors to allocate funds into the 10 largest cryptocurrencies in the market weighted by the value of circulating coins or market valuation.
“We and our investors believe that a vehicle like this, or passive index investing as an approach, is a great way for many people to participate in cryptocurrency,” said Horsley.
Although more than 60 percent of the funds stored in Hold 10 are invested in bitcoin, the primary purpose of the Hold 10 cryptocurrency index fund is to minimize risk and maximize profit margins for investors, rather than allocating large sums of capital into one cryptocurrency, which can be highly risky.
“Cryptocurrency is such a new and volatile asset class, it’s hard to guess how the market will play out in the future. If you use subjective judgment, you could misjudge or overlook something,” said Horsley.
Realistically, unless investors devote themselves full-time in cryptocurrency investment and researching emerging technologies in the market, it is challenging to develop a depth of knowledge in many cryptocurrencies. For instance, despite the $20 billion market valuation of Cardano, many investors are still unaware of the cryptocurrency and new to its technology.
Hence, focusing on the 10 largest cryptocurrencies in the market would encourage and motivate investors to invest in cryptocurrencies with a depth of knowledge sufficient to justify their investments and be confident in the technologies they support.