A fund manager in Australia is achieving 32,000 per cent returns by building a “high-conviction, concentrated portfolio” of winning cryptocurrencies.
Richard Galvin, who runs investment firm Digital Asset Capital Management (DACM), says the crypto market is “inefficient” and as a result presents opportunities for significant capital growth.
One of his most successful investments has been the South Korean blockchain project, Terra Luna, which has been achieving adoption through use of its algorithmic stablecoins, including KRT (pegged to the Korean Won) and UST (pegged to the United States dollar.)
Discovering Terra Luna
Galvin has told the Sydney Morning Herald – one of Australia’s most-read newspapers – his fund took a “substantial position” in Terra Luna, after conducting in-depth research into the technology behind the project.
“I think at that point it had a market cap of around $230 million compared to some other apps with a market cap of $500 million,” he said.
He also points at that at time, the market cap of the more established blockchain Ethereum was trading at $50 billion – around 250 times higher than that of Luna.
“So we went through that process of reviewing (Terra’s) tech, doing the research, and accumulated a pretty substantial position at around about 23 US cents (a token),” he said.
At the time of publication, Terra is trading at $74 – an incredible 32,000 per cent increase on DACM’s investment price.
Much of the project’s success has been attributed to the company’s accomplished founder, Do Kwon, who earlier this year told Asia Markets that 160 individual projects were preparing to launch on the Terra platform before the end of 2021.
Cashing in on ‘inefficiencies’
Galvin says his company’s Terra Luna investment is an example of how ‘inefficiencies’ in the blockchain market can give fund managers an edge.
“From time to time, the crypto market can be pretty ‘goldfishy’ in terms of memory,” he said.
“That’s one of the things we like about this space, it can be super inefficient. It can get stuff really wrong in both directions.”
DACM looks to capitalise on those inefficiencies and has reportedly been so successful, it’s at times turned investors away.
“There’s a huge demand for people to be involved in this asset class,” he said.
“There’s a lot of FOMO (fear of missing out) on the one side, but on the other side there’s still a lot of nervousness around the volatility and regulation in the space.”
The funds confidence in the emerging asset class is a far cry from the mindset of more traditional investors like Berkshire Hathaway vice chairman Charlie Munger, who recently praised China for banning cryptocurrencies and said he wished they’d “never been invented.”
Which cryptocurrencies has DACM invested in?
DACM’s website lists a number of cryptocurrencies as being prominent in its portfolio. They are as follows:
- Terra Luna
- Aave
- Biconomy
- Cosmos
- Curve
- Solana
Galvin has more recently listed three core positions that were added to DACM’s Liquid Venture Fund through the third quarter of 2021.
The first is Zeta Markets, which Galvin says is building the premier under-collateralized DeFi options platform, providing liquid derivatives trading catering to both individuals and institutions.
“We believe that as the crypto market continues to mature, liquid derivates will only become more critical to the DeFi ecosystem and that Zeta is very well placed to capture this opportunity,” he said.
DACM has also invested in Splinterlands, a unique digital trading card game that allows players to truly own their cards and other in-game assets, and NFT project Altered State Machine.
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