Welcome — about Mizu Capital
Mizu Capital was founded in mid 2017 with a singular interest in mind: to take advantage of the rising secular trend in digital assets.
This launched an amazing adventure through the crypto landscape as we researched different projects, refined our thesis, and rode the rollercoaster of the 2017–2018 bubble. Eventually an expansion of our thesis lead into other areas of investing such as precious metals, emerging markets, and event-driven strategies.
Despite the expansion, Mizu Capital remains at its core a digital asset focused fund. We believe digital assets can and will change the world. At their heart these instruments liberate people from the inefficiencies of the financial markets. Who needs banks when everyone is their own bank? Why should an international wire transfer cost $50 and take 7 days? Why should loans be available only to those in developed nations? The answers to these questions are the keys to our future.
The Strategy & History
Initially the fund started with holdings in Bitcoin and Ethereum — as market leaders we decided these assets would give us an index-like exposure to the entire market. With high correlation coefficients between these two holdings and the market we weren’t wrong and did quite well, however, it felt like something was missing. We quickly started deep dives on several promising projects and using VC-style thinking we soon held smaller positions in over 10 additional digital assets.
The 2017/2018 bubble was brutal and the following bleed out was equally as bad. During this time we doubled down on research, backed up our bets where it made sense, and sold positions that were clearly never coming back.
In 2019 ChainLink exploded and gave us our first major win. The position was quickly liquidated and we began searching for a new target.
Around this time our thesis about digital assets, specifically Bitcoin, began to change. Given the market conditions it became increasingly important to our team to invest in deflationary assets as a hedge against future market turmoil, and a possible currency crisis.
In late 2019 we began buying gold in addition to increasing our Bitcoin position.
Around this time we also made our first mistake — we launched an emerging markets segment. Fundamentally this wasn’t a terrible idea, EMs had lagged developed equities and there was sufficient evidence a catch-up was possible. What we didn’t see coming was COVID-19. With Asia hit hard, the segment was liquidated in January 2020 at a slight loss.
In early February, against a bleak macro outlook, we redeployed the EM segment capital into short positions against US equities. The evidence pointed to a global economic slowdown due to the virus and the US was already poised for a dip, it just needed an excuse to make the turn.
All of the positions discussed are still active and we’re adjusting allocations as conditions change. As you probably can see in your own lives things change quite fast these days.
Performance to Date
In the interest of transparency with our readers we will post fund performance metrics with every new post (typically at the bottom) along with an allocation chart.
The Fund Today
We are still laser focused on digital assets, however to better respond to a changing macro environment we have expanded into metals and event-driven strategies.
Like the water our name represents we are ever changing and always flowing. This blog will follow that flow. It will be a regular publication of the inner workings of our fund. From research to market positioning to thoughts it will all be posted here. We appreciate you reading and hope you stay along for the ride.
– Mac
