Front-Running the Institutions: Generating Bitcoin Alpha at Bitcoin 2024

With Bitcoin 2024 fast approaching – July 25-27 in Nashville, TN – three enterprising fund managers are competing to win $1 million in seed capital in the Bitcoin Alpha Competition powered by Samara Alpha Management in partnership with Bitcoin Magazine Pro.

In a recent podcast, Bitcoin Magazine sat down with the Bitcoin Alpha Competition judges to discuss the state of the Bitcoin market and how individual investors are leveraging their agility to front-run larger capital allocators as Bitcoin moves into the age of institutional adoption.

Patrick Lowry, judge of the Bitcoin Alpha Competition and CEO of Samara Asset Group, believes that while Spot ETFs have been a resounding success, trillions of dollars of institutional capital have yet to seize the opportunity in “the best form of money humanity has ever conceived” largely due to both regulatory and organizational burden. This has left smaller organizations – family offices and individual investors – to seize the opportunity.

Remarking upon his experience at Deutsche Digital, one of Europe’s first Bitcoin ETP issuers, Lowry noted, “I can attest how difficult it is to become an asset manager. It is unbelievably difficult to start and found your own asset management firm. I can’t even tell you how many times I’ve had my nose bloodied by an ungodly amount of regulators and compliance officers”.

“So, one of the things I’ve always wanted to do is empower new-age managers, emerging asset managers, in this asset class that I have strong belief in. [Helping] them in a way that they’re not going to have to go through the same hurdles that I went through six, seven years ago.”

Joining Lowry as judges on the judges panel are Adil Abdulali, CIO of Samara Alpha Management, and Jack Elliot, CTO of Animus Technologies and winner of the inaugural Bitcoin Alpha Competition.

Abdulali, bringing his decades of experience in the hedge fund space, noted that Bitcoin – in comparison to traditional assets – offers a unique risk profile with its heightened volatility. This volatility, especially to the upside, reduces the need for leverage to generate returns. Abdulali believes obviating the need for leverage gives capital allocators a unique option in comparison to fixed-income arbitrage, saying:

“Any time you have an unleveraged strategy that also generates high returns, and there is a drawdown… you don’t have to liquidate. You can stay in the trade for as long as it takes… any kind of leverage strategy, no matter how safe you think it is, eventually will be susceptible to [margin being called].” This ostensibly offers a new way of managing investment risk and another tool in the toolkit when searching for a return.

While Bitcoin has certainly benefited from improved sentiment around Donald Trump’s positive comments on the asset of late, even these types of moves can present risks for fund managers. Jack Elliot, a CTO focused on optimizing his firm Animus’ artificial intelligence-based strategies, noted the importance of being flexible and resilient to tail risks when it comes to modeling and trading the Bitcoin market.

“It’s just acknowledging reality… this is a space that is extremely young and is developing extremely quickly and there are going to be a number of different factors that change the way the market behaves. And some of those are going to be step-function changes… and I think there are going to be a number of those in the future… For us, it’s about staying on the horse… it’s a fun problem because [modeling the market] is intractable.”

On July 25th, Lowry, Abdulali and Elliot will select the winner of $1 million in seed capital to enable an enterprising fund manager to scale their fund strategy, selecting from the following three finalists:

• Boreal.xyz
• L1 Yield
• Hill Valley Capital

The Bitcoin Alpha Competition is one of four total tracks in the larger Pitch Day at Bitcoin 2024, where top founders and projects across Open Source, Mining + Energy and Layer 2 + Scaling will present their vision to leading venture capitalists and audience members.

Bitcoin Magazine is owned by BTC Inc, which also owns and operates the world’s largest Bitcoin conference, The Bitcoin Conference.