Crypto Investing Tips, Why Kevin Hu Left $10T BlackRock for DeFi

In 2016, an associate at BlackRock tried to pitch the world’s largest asset manager to buy $25 million worth of Ethereum. 

At the time, ether was trading at $2, an investment today that would be worth around $13.5 billion, per Messari, with returns of 54,000%. Kevin Hu, the former employee of the financial giant, spent three years looking into alternative investments at BlackRock for its hedge fund solutions group. 

“This was back when the whole narrative on Wall Street was that Bitcoin was for drug money,” Hu told Insider, citing illicit marketplace Silk Road. “It was too much of a reputational risk.”

The money manager, however, has since changed its tune on the industry. BlackRock added bitcoin futures as a potential investment for a couple of its funds last year, per company filings, and later announced an investment in stablecoin issuer Circle’s $400 million fundraising round. 

Hu, who studied mathematics and statistics at the University of Toronto, said that he began studying cryptography to keep his “technical background intact” while at BlackRock, which was when Bitcoin originally caught his attention.

“I was just a geeky person who really fell in love with crypto,” Hu said.

He later joined Dragonfly Capital as the fourth of fifth employee of the crypto-focused investment firm. Founded in 2018, Dragonfly made successful bets on layer-1 Avalanche, the NEAR protocol, decentralized exchange 1inch, and blockchain gaming developer and backer Animoca Brands. Dragonfly has raised $1.5 billion in committed capital, per Hu, with its assets under management at one point notching above $3 billion. (The firm’s AUM, however, is subject to the throes of market


volatility

so this figure can vary.)

Hu currently manages Dragonfly’s liquid investment platform with Ashwin Ramachandran and Lawrence Diao, and has raised over $450 million including SPVs and internal capital, as of April 2022. 

In a recent press release announcing the new offering, Hu said that most of “the capital in crypto is allocated to privates/venture, so there is a lack of dedicated capital and ability to underwrite altcoins once they become liquid. We believe this is creating massive dislocation and long-term opportunities as many liquid assets are trading well below their previous private rounds.” 

Surviving a bear market

Hu has been in crypto for some of the most bearish market cycles such as the Covid-induced bitcoin crash of March 2020, when the token slashed half of its value in a day. Some in the industry billed this as “Black Thursday.” 

“The number one thing that I’ve learned over the years is always just to survive,” Hu said. “When you’re really early and what you believe is a secular trend that you think can can go on for decades, the only thing you need to do is really survive.” 

How do you do this? Well, Hu says it’s important to always prioritize managing risk even in the most bullish cycles. This means being willing not to just “FOMO” invest because “your friends are making money.”

“I think the common mistake that investors make is as things go up, they take profits really fast. When things go down, they double down,” Wu said. “So they’re almost short volatility when you follow that strategy.”

The industry is seeing the aftermath of this unfold, as some of the biggest names in the nascent space undergo


liquidity

challenges, insolvency, or even file for bankruptcy. Crypto’s


market cap

has slashed more than 60% of its value since its peak in November, per Messari.

“We basically just had the equivalent of the 2008 financial crisis in crypto, where all these financial institutions failed, from the biggest hedge funds to the top lenders have been in trouble and everyone’s going belly up,” Hu said. 

This news is republished from another source. You can check the original article here

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