Appreciation of Cryptocurrency Investment Fund by 1,332% within Four Years

Profits boomed above 2,200% in 2017, but losses were 60% in 2018. Investors recorded gains for 20 months and losses for 19 months.

An investor provided a document that charts the dramatic ups and downs of the first four years of the cryptocurrency investment fund of Polychain Capital. It provides a comprehensive view of the performance of one of the main investment funds of the sector.

According to the document, the annual returns recorded a change from 2.7% of losses in 2016 to 2,279% of profits in 2017, which represented the returns until November of 2019. These witnessed a precipitous drop of 60.4% in 2018 and then increased to 56.1% of gains in 2019.

This roller coaster is emblematic of wild changes, familiar to big or small investors in cryptocurrencies. At the same time, the performance of the investment fund is totally against common sense and traditional markets. According to the document, some investors kept their money during the life of the investment fund. This could have led them to obtain a net profit of 1,332.3%, which increases the possibility of a longer period to offset the incremental risk.

According to the Bloomberg Mutual Funds Index, non-cryptocurrency mutual funds generally posted losses of 5.9% in 2018, and gains of 4.0%, 9.2% and 9.0% in 2016, 2017 and 2019, respectively. As a reference, leading investment funds not belonging to the cryptocurrency ecosystem have generated profits between 15% and 35% throughout their lives.

The taking of gains will depend on when investors deposit and withdraw their funds. Among them are distinguished venture companies such as Andreessen-Hortowitz, Founders Fund, Sequoia Capita, and Union Square Ventures.

The capital block period of Polychain Capital’s investment fund is at least six months. This timeline produces very conflicting images due to the monthly volatility of the market. It also poses a danger to short-term investors, who operate with less liquidity.

Polychain Capital’s Token Deals

Matt Perona, the current COO, and CFO of Polychain Capital, is the former CFO of Criterion Capital, a closed-end investment fund that owned the site of the outdated social network Bebo. Former COO of the investment fund Tiger Legatus, Joe Eagan, is the current president of Polychain Capital.

Olaf Carlson-Wee, the chief investment officer at Polychain Capital, founded the cryptocurrency investment company in 2016. The hedge fund is Polychain Capital’s first fund and invests in parallel with a venture capital arm.

In 2020, Polychain Capital started raising USD 200 million for a second venture fund. The March 2019 documents, filed with the US Securities and Exchange Commission (SEC), reported USD 595.1 million held by Polychain Capital and included the USD 175 million raised for the first venture fund in 2018.

According to an attached investment platform, more than 20 cryptocurrency assets have positions of USD 20 million on average. Each of them is out of the USD 550 million in shares that the investment fund claims to have managed in the last quarter of 2019.

According to the platform, half of the crypto assets are liquid currencies that investors trade in cryptocurrency exchange houses. The other half are non-liquid currencies that they sold through digital token sales structured under a Simple Agreement for Future Tokens (SAFT).

Despite being viewed as a regulatory concession by investors and token issuers, the SEC does not officially recognize a SAFT as a valid legal framework.

By Alexander Salazar