- The exit from active crypto trading appears to have had no impact on Tiger’s sizeable venture capital investments in blockchain startups
- The company invested in DeFi protocols to gain access to Web3, in addition to buying Bitcoin and Ethereum
Finally a silver lining for Tiger Global.
The blue-chip hedge-fund firm has been ravaged by punishment from stock markets this year, hit by a precipitous plunge in tech stocks that contributed to a staggering 44% loss for founder Chase Coleman’s flagship company in the first four months of 2022.
Tiger, whose fortune is split roughly 50:50 between stocks and venture capital shares, has started active cryptocurrency trading in recent months, Blockworks first reported.
The push, including building positions in decentralized finance (DeFi) protocol Filecoin as well as Bitcoin and Ethereum, ended almost as quickly as it began, according to three sources with knowledge of the matter.
These digital asset plays were designed to complement the New York-based company’s longstanding and generally successful bets on private blockchain startups. It appears that the company quickly took profits on liquid trades and then cashed out — coincidentally not long before markets hit multi-year lows.
“Tiger probably acted like any other TradFi shop,” a source said. “So if they had any profit, they took it and [went] Risk aversion as markets faced increasing uncertainty.”
The sources were granted anonymity to discuss sensitive business dealings. A spokesman for the company declined to comment.
Tiger hasn’t sold all of its digital asset holdings — and will likely stick with vanilla cryptocurrencies like Bitcoin and Ethereum to bet on their upside once markets recover — but the company is mostly out of the market, sources said.
Although digital assets made up an unspecified but relatively small part of the company’s book, risk aversion most likely saved Tiger from the precipitous performance hits that dozens of crypto-native and TradFi (traditional finance) digital asset traders have suffered in recent years weeks. A large number of such institutional players were arguably over-leveraged and often wiped out by margin calls from exchange counterparties.
However, the withdrawal does not prevent the shop from starting liquid token trading again later. In fact, Tiger has leaned on its blockchain venture analysts to research promising liquid investments and tested the waters on potential hires that would focus on pure digital asset investments.
Attracting these specialists would be no small feat in a red-hot job market.
But the company could be under pressure from other hedge fund giants it competes with for institutional limited partners — including the massive operation Brevan Howard is building with dozens of new hires, BH Digital — to try to extract alpha from crypto economies , which are still relatively inefficient.
Tiger, which brought in about $90 billion in February, has since lost a whopping $17 billion, according to Edmond de Rothschild Group fund-of-funds calculations. The Tiger spokesman declined to comment on the company’s current assets.
The exit from crypto trading hasn’t impacted the company’s venture business. Case in point: Tiger just led a $40 million Series A round for blockchain banking startup BVNK, with a post-money valuation of $340 million. TechCrunch reports.
The Tiger Global Sidestepped Crypto Rout By Cashing Out When Going Was Good post is not financial advice.
Source: Crypto News Austria