The first secondary crypto market fund launched by Hashkey Capital will invest a significant part of its assets in second-tier cryptocurrencies, with a goal of outperforming market leader Bitcoin, its portfolio manager said.
The fund, run by the investment arm of Hong Kong crypto giant Hashkey Group, launches on Friday. It has already secured potential clients, mainly high-net-worth individuals and investment firms serving rich Asian families, Jupiter Zheng told Reuters.
Less than 50% of its investments will be in Bitcoin and Ethereum, the two biggest crypto currencies. The asset manager will leverage its crypto venture investment experience to diversify allocations to smaller rivals collectively known as "altcoins", Zheng said. Part of the fund's holding will also be in cash.
Hashkey Capital, which manages over $1 billion in assets, earlier said it aimed to raise $100 million for the fund over 12 months.
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The Hong Kong government has made a push to embrace crypto and fill market demand for alternative assets, with the Asian financial hub promoting the development of web3, a version of the internet that operates the blockchain technology used by crypto assets.
The city has held some 100 crypto-related conferences this year.
Zheng said Hashkey Capital is also developing distribution channels with some offshore Chinese financial institutions, adding that weakness in the Hong Kong stock market has also pushed investors to look for diversified strategies.
"We see untapped demand from professional investors who wish to chase (above-market) alpha (returns) in crypto," he said.
Zheng believes the price of cryptocurrencies is bottoming out as the industry liquidity will be improved along with the peaking U.S. rate and big U.S. asset managers' filing for spot bitcoin ETFs, including Grayscale’s victory in a spot bitcoin ETF case.