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Introducing Haru X

‘Simple for anyone’ — Cryptocurrency Fund Haru X is Lowering the Investment Barrier

‘Haru’ recently announced its leap from a cryptocurrency deposit interest to a cryptocurrency asset management platform. This switch leverages the company’s asset management expertise to achieve stable returns that exceed those from the previous loan-deposit margin model. Launched alongside Haru’s rebranding, its cryptocurrency fund Haru X lowers the fee, investor credential, and minimum investment amount requirements of existing cryptocurrency funds and was designed to make investing accessible for anyone. With a rapidly increasing demand for cryptocurrency funds, Haru’s plan is to extend the customer base to regular investors.

Asset management — the evolution of the cryptocurrency loan-deposit margin model

Together with its recent rebranding, Haru has diversified into three services according to deposit lock-up period, Haru Earn, Haru Earn Plus, and cryptocurrency fund Haru X. When users deposit Bitcoin (BTC), Ethereum (ETH), Tether (USDT), or Terra (KRT) cryptocurrencies with Haru, they receive deposit interest paid out of management profit.

Haru decided on a model where the interest on cryptocurrency deposit products is reached through asset management. Generally, companies providing cryptocurrency deposit interest services adopt a loan-deposit margin model where deposit interest is paid from loan interest. However, the average loan interest is currently on a downward trend in the industry, which is leading to a slowdown in deposit interest growth. To provide higher deposit interest payouts than from loan interest, Haru focuses on a model where interest is paid from asset management profits.

The product most reflective of these efforts is Haru X. Haru X is a type of cryptocurrency fund that utilizes the volatility of cryptocurrency markets through various trading strategies to maximize returns and distribute profits among investors. Returns on the funds entrusted by users will be maximized by Haru’s specialist traders pursuing a market-neutral strategy based on futures exchange price stability mechanisms and spread trading focused on Bitcoin (BTC) and Ethereum (ETH) future contract volatility. Haru X’s target annual return rate is 25%.

The cryptocurrency price has dropped, but cryptocurrency fund deposits have grown

Haru’s burgeoning cryptocurrency asset management and fund business is seeing continued growth. What stands out is that the cryptocurrency fund is growing regardless of the fluctuations in cryptocurrency prices.

According to a report jointly released by global consultancy PricewaterhouseCoopers (PwC) and UK-based asset management company Elwood, the total amount under management (AUM) of all cryptocurrency fund operators doubled from $1bn in 2018 to over $2bn in 2019, whereas the share of cryptocurrency hedge funds with an AuM of over $20M increased from 19% in 2018 to 35% in 2019. The number of cryptocurrency hedge funds stood at 150 as of Q1 2020, with 63% of these established between 2018 and 2019.

The growth trend in the cryptocurrency fund market is also clear from a report released in Q2 2020 by the professional cryptocurrency fund research institute Crypto Fund Research. The report finds that the growth of AUM has been sustained from 2018, reaching the $20bn cumulative AUM milestone as of 2020. It goes on to analyze that this expansion in the scale of AUM is accounted for to a significant extent by the attraction of new investors.

While the number of cryptocurrency funds and AUM has grown, deposit funds are concentrated in a few dozen funds. Whereas some 50% of all operators are managing less than $10M in funds, only about 5% of crypto funds manage over $100M in assets. Haru’s predecessor HaruBank reached $46M in cumulative trading volume on September 4 — just one year after the beta test launch.

Haru X vs. other cryptocurrency funds

A new joiner to the cryptocurrency fund market, Haru’s strength lies in its low barrier to entry. By easing requirements such as fees, investor credentials, or minimum investment amount, Haru aims to make cryptocurrency fund products accessible to regular investors.

△ Cryptocurrency Fund Products Compared by Operating Company [Editing: Haru]

Haru’s actual fees are lower than with other companies. Grayscale Bitcoin Trust (GBTC), by cryptocurrency fund pioneer Grayscale, requires payment of a premium (a price gap between the real assets and fund) in addition to the 2% annual management fee. According to data by cryptocurrency finance company Amber Group, as of July GBTC was traded at a 30% premium over its net asset value (NAV), while a premium of 850% had to be paid on the Ethereum Trust (ETHE) product.

Another company, Pantera Capital, charges 2% in management fees and a performance fee of 20%. A report by Crypto Fund Research revealed that 2% operating fees and 20% performance fees are the most common fee structure for cryptocurrency funds. The PwC report also found an average 2.3% operating fee and a 21.1% performance fee in 2019. By contrast, Haru has no operating fee and charges 1.8% on principal and profit only if the annual interest rate exceeds 10%. This figure is remarkably low even when compared to other operators.

Together with the low fees, the lack of a minimum investment amount opens the door for regular investors to easily invest. This further sets Haru apart from other companies that only accept investments from accredited investors exceeding a certain minimum amount. Grayscale, Pantera Capital and most other companies only sell cryptocurrency funds to accredited investors with a minimum investment amount of $25,000–100,000. In the United States, to obtain accredited investor status an individual must have over $1M in net assets, an annual income of over $200,000, hold an entry-level stockbroker’s license, among other requirements.

Because of these requirements, currently the vast majority of cryptocurrency fund investors are high value or institutional investors. According to the PwC report, over 90% of cryptocurrency fund investors own family offices or are high net worth individuals. In eliminating the accredited investor and minimum investment amount requirements, Haru is creating an environment in which small value or individual investors can also invest in cryptocurrency funds.

Haru X, creating a cryptocurrency fund for everyone

Besides lowering the entry barrier for regular investors, Haru X offers the further advantage of lowering volatility with its medium risk/high return strategy.

With cryptocurrency funds, investors can, in fact, expect more stable returns than through high volatility trading, and funds are considered especially advantageous in a bear market. According to a report by Crypto Research, the CFR crypto fund index, which measures the average profit rate and fee income of over 70 active funds, recorded a 6% increase in Q1 2020, leading to a 24.88% gain in Q2. The report finds that while the profit rate of cryptocurrency funds in Q2 might seem low compared to the nearly 42% gain of Bitcoin, their Q1 performance puts them 6.5% ahead of Bitcoin and offsets the Q2 results. It further notes that historically, the bulk of crypto funds’ performance was realized in bear markets, particularly during the 2018 ‘crypto winter’.

The PwC report analyzes that while no crypto fund strategy succeeded in replicating the upward trend of Bitcoin, funds were able to mitigate the effects of the 2018 bear market. It goes on to conclude that rather than maximizing the profit rate, they acted as volatility-reducing tools.

In this way, with its eased requirements in terms of fees, investor credentials and minimum investment amount, Haru X will revolutionize the medium risk/high-profit cryptocurrency fund market. Haru Co-CEO Hugo Lee said, “Haru X will satisfy the demand of regular investors who want to hold cryptocurrency but find it difficult to realize profits through direct trading due to high volatility”.

Haru is a trusted digital asset management platform. We provide up to 16% earn rates for monthly deposits of BTC, ETH, USDT, and Terra KRT. What we offer aims to shift a paradigm of investment — investing in crypto can be stable and comfortable, too. Crypto in, more crypto out. It’s that simple.

Official Website: www.haruinvest.com

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