Bitcoin (BTC), the main cryptocurrency by market worth, surged 121% final 12 months to cross the six-figure mark, outshining conventional property. Nonetheless, this efficiency falls brief compared to Pythagoras Funding Administration’s Alpha Lengthy Biased Technique, which pushed the envelope even additional.
The fund, which mixes a BTC base place with two uncorrelated methods, achieved a formidable return of 204% in 2024, Pythagoras mentioned in an electronic mail to CoinDesk. That equates to a 3x acquire, considerably outpacing the 2x return a typical buy-and-hold bitcoin investor would have realized. The fund expenses incentive price solely when it beats bitcoin’s efficiency.
The fund’s base place in bitcoin gives direct publicity to long-term appreciation, and the 2 uncorrelated methods – a momentum market timing technique and a long-short market choice technique – generate alpha.
The momentum technique employs machine studying and sample recognition to regulate and optimize publicity dynamically, permitting it to seize short-term market fluctuations. In the meantime, the long-short technique makes use of a proprietary AI-based forecasting mannequin to create a dollar-neutral portfolio, making lengthy investments in tokens anticipated to yield superior returns whereas shorting these anticipated to underperform.
The allocation to the three elements is calibrated to maximise returns relative to bitcoin.
Regardless of its efficiency, the Alpha Lengthy Biased Technique was Pythagoras’ smallest fund, boasting property below administration (AUM) of $7 million. It suffered a 2% drawdown in December because the year-end noticed BTC climb down from file highs above $108,000 to $93,000.
In the meantime, Pythagoras’ Arbitrage technique delivered a 3% return in December, ending the 12 months with an 18% acquire and $45 million in AUM. The Quant Lengthy Brief Fund generated a return of 30% in 2024, with $23 million in AUM and the Absolute Return Technique generated a 41.7% return, gathering $158 million in shopper funds. Pythagoras mentioned that the highest asset gatherer of 2024 can be closed for brand spanking new traders from Feb. 1.
The mixed AUM of the 4 funds grew to over $230 million from $80 million in 2023 because the bull market revved up investor confidence.
Bullish outlook
Pythagoras expects the bull market to proceed this 12 months, pushed by optimistic regulatory developments within the U.S. and company sovereign demand for bitcoin.
“The incoming Trump administration, with its proposal on making a nationwide strategic Bitcoin reserve and appointing people favorable to our business in key Government Department positions, is predicted to be a significant catalyst. With over 290 members of Congress who’re pro-crypto, we anticipate that supportive laws for the cryptocurrency business will acquire momentum,” Mitchell Dong, CEO of Pythagoras, mentioned in a observe to CoinDesk.
“Because the U.S. Congress explores the thought of a nationwide strategic Bitcoin reserve, we count on some international locations to aim to front-run the U.S. in accumulating Bitcoin, ought to this initiative come to fruition,” Dong added, mentioning the potential for listed firms following MicroStrategy’s lead in adopting BTC.
