CRYPTO CURRENCY MARKET WATCH
Why Cross Hedge can be considered as the first credible AM powered by blockchain and AI.
Last week, we presented how Cross Hedge aims to leverage on blockchain to create an asset manager truly dedicated to its clients. Other emerging financial services currently developed using blockchain are often built for speculative investors, and are not relevant for the average middle class family. Furthermore, those financial service projects are, most of the time targeting familiar with crypto currencies clients, while we want to offer our services to the whole population. Let’s precise what is our philosophy and introduce concrete elements that differentiates us from the rest of this emerging finance sector powered by blockchain and AI.
1) We are professionals from the finance industry, and this is our world that we’re revolutionizing.
Therefore, we are aware of the market expectations, and the ongoing transformation of this sector, as we were in first line to observe those regulatory, competitive and technological changes. The importance of the user experience in the digital sector and the boom of tailor made solutions in the banking industry are two sides of the same coin: The customer is THE top priority. That’s why it is so important for us to provide instant access to our services with a high level of transparency while other actors are not communicating about those matters.
2) Be able to think out of the box : doing asset management for our retail clients using the Blockchain and AI.
So far, more than 65 million USD have been invested in ICOs exploiting blockchain & AI potentialities for financial activities. Nevertheless, Cross Hedge is radically different from those projects:
We will focus on people that are not familiar with crypto currencies and mutual funds:
We want to democratize financial products such as stocks bonds forex commodities ans crypto currencies, making them more accessible. As social inequalities are surging worldwide (due to globalization), we consider that we also have to think about the social impact of our project.
This approach is coherent with the surge of Environmental, Social, Governance (ESG) mutual fund inflows that highlights the need for a better ethical approach when we provide financial services. Furthermore, the proportion of the population invested in mutual funds is very low (less than 1.5% in India for example vs 50% in the US), which means there is a significant potential market. Finally, we noticed that the 2017 bull market has been driven by retailers, while institutional actors remained cautious. Therefore, crypto assets might be a good way to reach a new public eager to discover new ways of investing.
We will produce responsible strategies and aim to protect the capital of our clients:
The products and strategies that we are developing are intended to provide a low level of risk by exploiting crypto currencies potential and decorrelation to regular assets. Therefore, our target performances (10% yearly for our first strategy) can’t be compared to the high returns promised by our emerging competitors but can be higher than regular funds on a risk adjusted basis. Our goal is to produce strategies that can be considered as potential investments by families, parents and millennials. We will therefore provide conservative strategies to access responsible clients and build a durable relationship based on confidence.
We will give the opportunity to take advantage of our success to our community
We will implement 2 tokens: the first one will represent a share of the fund and is called SmartPiece, while the second one will be called “Cross” Token. We will allow our investors and clients to claim a share of our profits by purchasing “Cross” Tokens. Therefore, this token has a true intrinsic value, which might increase as the fund gets bigger. This mechanism is expected to create a virtuous circle and incentivize our clients to participate to the growth of the company. It also differentiates us from our competitors and other ICOs in a more general way.
Quick Market overview of the past week
The bearish market is still ongoing, as expected (see our last Weekly market comment). We think the key market mover was the announcement that the U.S. launched criminal probe into Bitcoin price manipulation. Those allegations could be linked to:
· The situation of Tether that we pointed in earlier papers.
· Allegations from market participants who suspect smart/institutional money to take advantage of their purchasing power to manipulate the illiquid crypto currency market since late 2017 and the apparition of CME futures. How could they do that?
The scenario is the following: Institutional bought decent amounts of BTC at the announcement of the CME future contracts (which produced the sharp rise of the BTC at the end of 2017). A few weeks later, when those futures are available, the institutional/smart money bought a short contract. The institutional has now thousands of bitcoins in his portfolio and a protection against a drop of the bitcoin price (as the short contract’s value increases if the bitcoin price goes down).
He can now sell his bitcoin massively and fuel the selling flow for an extended period of time without being impacted by this sell off.
To get deeper into the current market conditions, read our next weekly comment!