Guest
Jesse Proudman
#545: Jesse Proudman on Automated Crypto Investing
- Strix Leviathan operates as a defensive crypto hedge fund using momentum and machine learning strategies to capture 60-70% of bull market gains while limiting losses to 0-20% in bear markets, with a three-year track record. - Makara is spinning out as a standalone SEC-registered robo-advisor product designed for mainstream investors who find crypto intimidating; it offers curated investment baskets (like Bitcoin-only or inflation-hedge portfolios) paired with educational content. - SEC registration for Makara provides regulatory legitimacy and allows transparent fee structures; it demonstrates a willingness to work within the traditional financial system rather than circumvent it. - The Bitcoin ETF narrative, while positive for the asset class, is overstated because it wraps a 24/7 asset into banker hours and prevents direct Bitcoin ownership or participation in the technological revolution. - Institutional adoption in 2021 differs materially from 2017 retail speculation; institutions are deploying dry powder incrementally and buying dips quickly, preventing prolonged drawdowns seen in prior cycles. - Regulatory clarity has improved significantly since 2018, with the SEC becoming more cooperative than state regulators; however, hostile tax policies (such as Washington State's capital gains tax) are pushing entrepreneurs toward more crypto-friendly jurisdictions like Miami.
333: Jesse Proudman On Quantitative Investing In Crypto
- Jesse Proudman co-founded Strix Leviathan, a quantitative crypto hedge fund that uses algorithms to identify trading patterns rather than relying on narratives or price predictions. - The fund trades using capital flow analysis and detects patterns across fragmented exchange liquidity, adapting to volatile and calm market periods differently. - Institutional infrastructure for crypto remains underdeveloped; prime brokerage services with unified spot, shorting, and lending capabilities via APIs do not yet exist in the US market. - The stock-to-flow model lacks predictive power because its underlying theory—that gold's scarcity drives value—does not hold statistical analysis, making it a marketing narrative rather than a sound valuation framework. - Strix built proprietary software (Octopus) to manage thousands of small signals and trading strategies simultaneously, a capability most crypto funds lack because they operate from spreadsheets. - The crypto space is transitioning from a retail-driven era (2017) toward institutional adoption via asset allocators (pensions, endowments, foundations) who will eventually control trillions in capital.