Sygnum Launches BTC Alpha Fund
Sygnum, a prominent digital asset bank based in Switzerland, has introduced a new fund aimed at assisting investors in enhancing their Bitcoin returns while keeping their exposure to the cryptocurrency intact. On October 1, the bank unveiled the BTC Alpha Fund, created in partnership with Starboard Digital, a trading firm located in Athens, as highlighted in a recent announcement from crypto.news.
Investment Strategy and Goals
Markus Hämmerli, who oversees the BTC Alpha Fund initiative at Sygnum, emphasized the growing importance of Bitcoin in investment portfolios. He stated,
“Bitcoin has become a key exposure in modern portfolios, and many of our clients want to stay invested while building their positions further.”
He described the BTC Alpha Fund as a way for investors to engage with Bitcoin’s price movements while also aiming to generate additional Bitcoin returns through trading activities, all structured within a framework suitable for institutional investors.
Fund Details and Management
This newly established fund, which is registered in the Cayman Islands, aims to achieve annual returns between 8% and 10%, calculated in Bitcoin and after fees, with distributions made in BTC. Starboard Digital will focus on yield production through various arbitrage trading strategies, with Sygnum providing custody services. However, specific arbitrage methods have yet to be disclosed by the two collaborating firms.
Challenges for Institutional Investors
Nikolas Skarlatos from Starboard Digital pointed out that maintaining Bitcoin exposure while trying to produce yield has been a significant hurdle for institutional investors. He claims their alliance with Sygnum creates a robust institutional-grade environment to expand Bitcoin holdings.
Yield Opportunities in the Market
For several years, Bitcoin yields have been obtainable through decentralized finance (DeFi) sectors, primarily through lending and arbitrage opportunities. Traders often capitalize on price differences between exchanges or inconsistencies in the futures market to yield low-risk returns. Nevertheless, engaging in lending or entrusting Bitcoin to third parties can introduce counterparty risks, as evidenced by issues with firms like Celsius and BlockFi.
