As Cryptocurrencies Grow, Mutual Coin Hedge Fund Guides Investors
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transactions for investors in November. “Now, we get offers on a weekly basis. Our portfolio is close to $1 million from over 20 investors.”
Most of the fund’s investment capital has come from West Coast and Michigan investors, and Majeed says cryptocurrencies have been a tougher sell for Midwesterners, who he views as being more fiscally conservative than their coastal counterparts. He tries to entice them into the fold by comparing a crypto investment to backing Amazon (NASDAQ: AMZN) or Apple (NASDAQ: AAPL) during their early days.
“The number one advantage [of cryptocurrencies] is the return on investment,” Majeed says. “Crypto pays more than a 1,500 percent return in some cases. The average return with mutual funds is less than 5 percent. Beyond the money, the entire ecosystem is great. The cryptocurrencies are like startups themselves.”
Majeed says his three-person firm based in Detroit and Los Angeles invests in ICOs (initial coin offerings) only after they’ve been “heavily vetted. If we don’t receive a warm introduction, or if there’s no product or customers, they don’t need millions of dollars.”
He also says Mutual Coin Fund takes security “very seriously,” storing the private keys needed to access accounts and protecting them with features like two-factor authentication instead of just giving the keys to individual investors.
“Cryptocurrencies are decentralized, so our fund is not just a hedge fund, but also kind of like a bank,” he says.
There are roughly 100 cryptocurrency hedge funds in the United States, Majeed says, but “only a handful are taking investments and trading with a track record.” (Xconomy covered a similar Boston-based venture called Flipside Crypto in September.) This month, the Chicago Mercantile Exchange began trading bitcoin futures, and Majeed expects the market to continue its growth in 2018 as traditional investors get more curious and confident about the potential return of cryptocurrencies.
In the meantime, Majeed says his advice to crypto investors is the same as what he gives to any investor: buy low, sell high, and don’t invest more than you can afford to lose. A lot of investing is emotional, he emphasizes, but on the cryptocurrency rollercoaster, where it’s especially volatile, one must keep cool even as values skyrocket or plummet.
“What comes up must come down,” he adds. “There’s not a lot of historical data to use for technical analysis. Buy it and hold onto it if you don’t understand the cryptocurrency space. There’s no time like the present, because a bitcoin could be worth $30,000 or $50,000 by the summer. Go on Coindesk and read more about the underlying technologies, then you can understand that it’s not just made up. Cryptocurrencies have a function that can help change the world.”