Since founding our fund, Alpha Sigma Capital Fund, LP in January 2020, we’ve talked with many family offices about their exposure to cryptocurrency. The world has shifted dramatically since Q1 2020 and attitudes toward crypto investing run the gamut: “resembles a Ponzi scheme” to “money 2.0 is a huge, huge, huge deal.” However, this is for certain: crypto is here to stay.
Family Offices want to gain exposure to blockchain/crypto but are concerned about the volatility and the risk. There’s the regulatory, reputational, governmental, environmental, and financial risk associated with cryptocurrency. Since January 2021, there have been two major corrections in the crypto market: May 2021 due to China miners move out; September 2021 due to regulatory scares, and Evergrande Group’s debt crisis. These two events resulted in massive corrections in Bitcoin and Ethereum that impacted the altcoin market. And, the volatility is likely to continue.
So, what’s a family office to do?
- Educate the family and family office on the risks and opportunities. Participate at blockchain/crypto events, webinars, get access to research. Some of my favorites include Coinagenda and Blockworks.
- Partner with great advisors like Alpha Sigma Capital that can offer insights on a particular blockchain/crypto project, an exchange, or a company.
- Do your due diligence. Like all investments don’t rely on someone else’s endorsement. That may be the first step to getting your attention, but you need to do an assessment.
As you dive into crypto, I encourage you to sign up for Alpha Sigma Capital’s Research and Weekly Wrap-Up, where we share the top headlines for the week. In the meantime, click the link to access What You Need to Know About Blockchain/Cryptocurrency.
Please feel free to DM me with any questions. I would love to hear from you.