Giant Steps Capital, Latin America’s biggest quantitative asset manager, with $1.1 billion assets under management (AUM), has acquired a minority stake in Polvo Technologies, a crypto-focused startup, and plans to launch a crypto fund before the year runs out.
Flavio Terni, the co-founder at Giant Steps, told Bloomberg today that the Sao Paulo-based asset manager invested an undisclosed amount as part of its efforts to enter into the crypto market fully.
Under the deal, Giant Steps will leverage Polvo’s algorithm to launch its cryptocurrency fund exclusively focused on Bitcoin and Ether futures trade.
Not Shaken By Market Volatility
Although there has been a major concern about the increased volatility associated with cryptocurrency investments, Terni said the asset manager is used to market fluctuations in its other funds and has developed strategies that have paid off.
“Crypto markets are highly volatile. That’s something the trend-following strategies we already use in our other funds can capture and gain from it,” Terni commented.
Giant Steps’ crypto fund, slated to go live by mid-2021, will also use Giant Steps’ special rule-based trading strategy alongside the quant-trading approach, Terni said.
A rule-based strategy helps a trader identify what asset is suitable to invest in at a specific time. Over time, various firms have modified their approach in ways that suit them to continue to record profit.
According to Bloomberg, Giant Steps was one of the first Brazilian hedge fund managers to adopt the quant-trading system, which involves using mathematical models to identify trading opportunities.
So far, the approach has paid off massively, as seen in Giant Steps’ Zarathustra fund.
Despite the market turmoil last year that caused the underperformance of popular financial instruments like gold, the Zarathustra fund still thrived while trading other securities.
“The fund’s strategies were designed to outperform when markets enter moments of panic or euphoria,” Terni added.
Increased Institutional Involvement In Crypto
While some big players are refusing to invest in cryptos due to high volatility, several others have taken the bull by the horn, committing large amounts of funds into the market.
Despite reports of increased volatility in the market, cryptocurrencies have been outstanding since last year, with Bitcoin (BTC) rallying by more than 500%.
Meanwhile, Coinfomania reported that Blackrock filed a prospectus with the United States Security and Exchange Commission that some of its funds may trade Bitcoin futures.
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