Key Takeaways
- • Matthew Dibb, CEO of crypto hedge fund Astronaut Capital and COO of Stack Funds, says his Liquid Trading hedge fund has returned 1,240% since its June 2019 launch through September 10, 2021, versus 456% for bitcoin over the same period, according to Dibb.
- • Dibb's risk framework caps leverage at 50% and no more than 1.5 times, and hedges drawdowns through paired trades and short exposure to assets he expects to fall in a downturn.
- • Dibb runs three strategies: systematic sector rotation across emerging crypto themes, pairs trading (currently long FTX token FTT versus short BNB), and a covered call fund on bitcoin that he says yields 1.5% to 4.5% per month.
- • Dibb expects bitcoin and ethereum to reach all-time highs within a year, and suggests $75,000 for bitcoin and $10,000 for ethereum within six to eight months.
Summary
Matthew Dibb, who is based in Singapore and previously worked as a derivatives and commodities trader, outlined his crypto trading approach in an interview with Business Insider. He is chief executive of crypto hedge fund Astronaut Capital and chief operating officer of asset manager Stack Funds. He said he was awake for much of the night during the sell-off that coincided with El Salvador's official recognition of bitcoin as legal tender, which Business Insider reported took place on a Tuesday.
According to Dibb, his Liquid Trading hedge fund has returned 1,240% since its launch in June 2019 as of September 10, compared with a 456% return for bitcoin over the same period. Dibb said his risk management centers on limiting leverage to no more than 50% and never above 1.5 times, and on hedging drawdowns by pairing trades or holding short exposure in assets he expects to decline in a downturn. He argued that making money in crypto is relatively easy, while preserving capital through volatility is the harder task.
Dibb described three strategies. The first, which he calls systematic sector rotation, seeks to identify capital flows early as they move from bitcoin and ethereum into decentralized finance, non-fungible tokens, and now layer-one protocols such as Solana, Avalanche and Cardano. He tracks social sentiment, technical analysis and on-chain data, including volume spikes and whale accumulation, and compared the pattern to thematic cycles in equities such as cannabis, biotech and SPACs, except that crypto themes recur roughly every six to eight weeks. The second is pairs trading. Dibb said he is currently bullish on the FTX exchange and would go long FTX token (FTT) while shorting BNB, arguing that crypto assets are less correlated on the way up than on the way down. The third is a covered call fund that holds bitcoin and sells call options roughly 20% out-of-the-money every two weeks, which he said generates a monthly yield of 1.5% to 4.5%.
Dibb said he sees substantial enthusiasm around layer-one protocols but expects capital to rotate back into bitcoin and ethereum, which could revive decentralized finance. He flagged regulatory scrutiny of decentralized exchanges such as Uniswap as a potential obstacle. He expects bitcoin and ethereum to reach all-time highs within the next year and said he would not be surprised to see bitcoin at $75,000 and ethereum at $10,000 within six to eight months. He called ethereum the strongest candidate for a two-to-three-year hold given its established position and utility.
According to Dibb, his Liquid Trading hedge fund has returned 1,240% since its launch in June 2019 as of September 10, compared with a 456% return for bitcoin over the same period. Dibb said his risk management centers on limiting leverage to no more than 50% and never above 1.5 times, and on hedging drawdowns by pairing trades or holding short exposure in assets he expects to decline in a downturn. He argued that making money in crypto is relatively easy, while preserving capital through volatility is the harder task.
Dibb described three strategies. The first, which he calls systematic sector rotation, seeks to identify capital flows early as they move from bitcoin and ethereum into decentralized finance, non-fungible tokens, and now layer-one protocols such as Solana, Avalanche and Cardano. He tracks social sentiment, technical analysis and on-chain data, including volume spikes and whale accumulation, and compared the pattern to thematic cycles in equities such as cannabis, biotech and SPACs, except that crypto themes recur roughly every six to eight weeks. The second is pairs trading. Dibb said he is currently bullish on the FTX exchange and would go long FTX token (FTT) while shorting BNB, arguing that crypto assets are less correlated on the way up than on the way down. The third is a covered call fund that holds bitcoin and sells call options roughly 20% out-of-the-money every two weeks, which he said generates a monthly yield of 1.5% to 4.5%.
Dibb said he sees substantial enthusiasm around layer-one protocols but expects capital to rotate back into bitcoin and ethereum, which could revive decentralized finance. He flagged regulatory scrutiny of decentralized exchanges such as Uniswap as a potential obstacle. He expects bitcoin and ethereum to reach all-time highs within the next year and said he would not be surprised to see bitcoin at $75,000 and ethereum at $10,000 within six to eight months. He called ethereum the strongest candidate for a two-to-three-year hold given its established position and utility.
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