As we reported onKriptokoin.com, the Bitcoin and altcoin market has yet to recover since falling from an all-time high in November last year. With this bear market, investors have to be creative with their investments to keep growing revenues. Institutional investors say that this is why they chose these two altcoin projects.
Initial bet Bitfinex’s native token Unus Sed Leo (LEO)
Bitcoin’s safe-haven status came to a head of late as the turmoil in Europe revealed how BTC reconnected to the overall market. debunked in time. BTC’s 60-day correlation with the S&P 500 is also at a record high at 0.6. Jeff Dorman, chief investment officer of Arca, a digital asset fund manager based in Los Angeles, said:
For some reason, people still think of Bitcoin as a defensive asset, even though it certainly doesn’t feature a defensive asset. The things that should be on the defensive are exchange tokens. Because they have real revenues, cash flows and depreciation.
The strategy for Arca was to invest in exchange tokens and one of their biggest bets was Bitfinex’s native token Unus Sed Leo (LEO). Arca first invested $3 million in the token in 2019, at $1 per token, just after Bitfinex launched it to address its cash crunch. Jeff Dorman describes this investment as “one of the best risk and return investments” the firm has ever made. The company then sold its holdings at $5.50 per token. Jeff Dormans says that at a time of extreme volatility, the biggest gains are in exchange tokens, explaining:
Basically, who benefits from volatility? Changes. Exchange tokens should outperform as their volume and revenue increase.
Second altcoin project selection, FTX Token (FTT)
Another highly flexible exchange token is FTT, the native token of the FTX exchange led by Sam Bankman-Fried. The derivatives trading platform has become the center of attention in recent years, not just with its $135 million naming rights deal with the Miami Heat NBA franchise, but through a series of sports partnerships. Clara Medalie, director of research at Kaiko, a crypto data company, says:
FTX’s token is strongly correlated with any positive news content. FTX had a better year than most other exchanges with their own exchange tokens. So it’s not surprising that FTT is positive.
Arca’s Jeff Dorman sums up, “Absolutely anyone who does any real fundamental analysis and cares about real business growth—smart investors, invest in stock market tokens.”
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