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Arca Investment Management 2019 Q3 Update

Rayne Steinberg
Nov 11, 2019
Arca Investment Management examines 2Q and 3Q and explains the difference. Crypto sentiment changes on a dime -- and there was a big difference between 2Q and 3Q. In the second quarter of 2019, we saw the overall market cap of the digital assets ecosystem expand from $144B to $343B. The third quarter has been nearly a mirror opposite of that, with the overall market cap contracting to $220B at quarter-end. Most firms in this space have struggled to raise money, and many have closed their doors over the last quarter. This change in sentiment was due to:
 
  • Increased regulatory oversight globally 
  • Equities now up over 20% YTD, and fixed income up over 10%, has made evaluating alternative asset classes less urgent
  • The understandably long Institutional adoption process of digital assets taking longer than expected.
However, since inception, the Arca strategy has always accounted for the fact that we are pioneers in this space and that we will experience periods of rapid expansion and subsequent course correction (market contraction) over the next several years until we enter a phase of massive adoption. But even in this rapidly evolving space, our basic company tenets allow us to thrive, even in challenging times.
 
  1. Diversified Product Suite: It is too early to understand exactly how the digital asset space will evolve, and who will be the ultimate winners and losers. This is why we are building a diversified product suite that will eventually allow any investor, anywhere, to gain exposure to digital assets. This is accomplished through traditional investment vehicles (private funds) and by creating new investment vehicles using blockchain technology. 
  2. Thoughtful Innovation: Crypto is often discussed in conjunction with decentralized finance, where no single entity controls the flow of money and financial institutions cease to exist. However, we have no idea if this future will ever come to fruition. What the Arca team does know is that this technology can immediately solve inefficiencies in today’s financial system. Therefore, we’re creating products that are improvements over current products while also being flexible and adaptable as we move towards a more global, digital economy. By innovating in this iterative fashion, we keep what works, and offer something familiar for institutions to more easily adopt.
  3. Assembling a Strong Team: Being at an early-stage startup is hard, but being at an early-stage startup in an early-stage space is exponentially harder. We continue to build a team with not only finance and crypto backgrounds but also the soft skills of resilience, flexibility, and teamwork to weather the challenges we have faced and invariably will face in the upcoming months.
While these broad tenets help us stay true to our vision and mission, below we’ll cover what’s happened in each business line over the past quarter. 

Asset Management

The portfolio team continues to adapt and improve under Chief Investment Officer, Jeff Dorman. Again, longevity is key here as asymmetric upside doesn't happen overnight, or without hiccups along the way. A huge part of their mandate is observing this market and rationalizing it for sophisticated investors. Jeff and his team do this amazingly well with their weekly “That's Our Two Satoshis” crypto market recap, which helps investors see the deep thought process necessary to navigate this space. We believe transparent access to their thoughts demonstrates why you want a team like Arca stewarding your investment. 

Product Innovation

Once again, longevity is key. The SEC doesn't make quick decisions, or if they do, they are negative decisions. We are financial veterans who understand this process, while our competitors continue to rush and fail. ArCoin, the Arca US Treasury product, is getting close to launch and will be the first SEC 1940-Act fund on the Blockchain. This is becoming more concrete under the leadership of Arca Capital Management President, Jerry David. The executive team met with regulators at SEC headquarters for the second time in September and are diligently collaborating with regulators. Simultaneously, we are gaining traction with potential use cases for ArCoin and the Blockchain Traded Fund Structure (BTF). We see this as a transformative product that will collapse the space between payments and investments. Think about how important this is -- this product will allow your investments to be payment vehicles, and your payment vehicles to earn investment returns... this is revolutionary!
 

Marketing and Media

The Arca brand continues to grow under the direction of Chief Marketing Officer, Sumana Maitra.  We are increasingly seen as a source of rational thought leadership and the place where serious investors go to learn about crypto. We have also been featured heavily in traditional media, as each individual member of the Arca team has solidified his/her role as a leader in this evolving industry. This constant strengthening and burnishing of the Arca brand halos all our efforts, and eventually, the Arca brand will be synonymous with excellence in digital assets.
 
And that really is the point. At Arca, we are building the asset management company for the next hundred years. And we know that does not happen overnight. But it is this patience that differentiates us in a space that is constantly trying to force you into short-term thinking.
 
We are in it for the long haul. We thank our current investors and all of those who have committed to investing in this current round. It's time to put our foot on the gas and execute the next step of our vision! 

Onward and upward,
Rayne Signature
Rayne Steinberg, CEO
 Blue Logo Horizontal 
 
 
To learn more or talk to us about investing in digital assets and cryptocurrency
call us now at (424) 289-8068.
 
 

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©2018 by Arca Funds Past performance is not indicative of future results. Investors should carefully consider the investment objectives, risks, charges and expenses of Arca "(The "Funds"). This ad other important information about the Funds are in the respective Fund's offering documents which can be obtained by entering Arca Private Investor Portal. All of the offering documents should be read carefully before investing. Disclaimer: This commentary is provided as general information only and is in no way intended as investment advice, investment research, a research report or a recommendation. Any decision to invest or take any other action with respect to the securities discussed in this commentary may involve risks not discussed herein and such decisions should not be based solely on the information contained in this document.