Off-The-Chain Fund: Unlocking Investment Opportunities

Off The Chain Capital is a cryptocurrency and blockchain-based investment fund that takes a unique approach to investing in digital assets and blockchain companies. The fund, which has been active since 2016, aims to outperform bitcoin with less downside risk. Off The Chain Capital has been recognised as one of the best-performing funds in the space, demonstrating that reliable performance and BTC can go hand in hand. The fund does not use leverage and is long-only, providing downside protection without sacrificing upside growth. With a focus on value investing, Off The Chain Capital has achieved remarkable returns, outpacing both the S&P 500 Index and the price of bitcoin.

Off The Chain Capital's unique approach to crypto investing

Off The Chain Capital, LLC (OTC) is a value-oriented investment manager that invests in digital assets and blockchain companies. The company has a unique approach to crypto investing, aiming to provide a value-centric investment solution for those seeking differentiated exposure to digital assets.

OTC leverages its industry relationships to acquire shares in late-stage private blockchain companies at early-stage valuations. They also use innovative methods to source Bitcoin at discounted prices. The fund was able to secure a 7% ownership in Bitpay, a large cryptocurrency payment services provider, at Seed round pricing after it had closed its Series B round.

OTC's strategy has resulted in a blended portfolio that has historically outperformed common investment benchmarks and comparable private funds. The fund does not use leverage and is long-only, providing downside protection without sacrificing upside growth. This makes it an attractive option for family offices, endowments, and foundations looking to diversify their portfolios and allocate assets into the blockchain space.

OTC's approach brings a traditional value lens to the crypto industry, using a Warren Buffet-style strategy to find deeply discounted investment opportunities. This has allowed them to capture all of the upside while providing a cushion during market declines, increasing investor confidence in an asset class that is often viewed as volatile.

With its unique strategy, OTC provides institutional investors with access to a proven, yet hard-to-replicate, digital asset investment solution.

The fund's downside protection and upside growth

Off The Chain Capital is a cryptocurrency and blockchain-based investment fund that aims to provide downside protection without sacrificing upside growth. The fund has a unique approach to investing in digital assets and blockchain companies.

The fund's strategy is to invest without leverage and to be long-only, providing downside protection for investors. This means that the fund does not use borrowed money to increase the size of its bets and only takes long positions, which limits potential losses. This approach is designed to reduce risk and protect investors' capital, particularly during market downturns.

Additionally, Off The Chain Capital employs a value investing approach, seeking to find undervalued investment opportunities in the blockchain space. The fund uses a traditional Graham/Dodd, Warren Buffett-style strategy to identify and invest in blockchain companies and digital assets with strong fundamentals and growth potential. By focusing on value investing, the fund aims to capture all of the upside potential while providing a cushion when markets decline, thus giving investors a margin of safety in their portfolio.

The fund has a strong track record of outperforming both the S&P 500 index and Bitcoin since its inception in 2016. Off The Chain Capital has achieved this by leveraging its industry relationships to acquire shares in late-stage private blockchain companies at early-stage valuations and sourcing Bitcoin at discounted prices. For example, the fund secured a 7% ownership stake in Bitpay, a large cryptocurrency payment services provider, at Seed round pricing. Additionally, they have acquired bankruptcy claims from Mt. Gox, an early crypto exchange that was hacked, allowing them to procure Bitcoin at a significant discount to market prices.

Off The Chain Capital's strategy of combining downside protection with upside growth potential makes it an attractive option for investors looking to diversify their portfolios and allocate assets into the blockchain space. The fund's value investing approach and focus on risk management help to set it apart from other investment options in the volatile cryptocurrency market.

Outperforming bitcoin with less risk

Bitcoin has been the best-performing asset of the past decade, with a 10-year compounded annual growth rate (CAGR) of about 63%. This has led many investors to seek opportunities to outperform Bitcoin, often by taking on more risk. However, strategies such as investing in low-liquidity altcoins or leverage trading frequently result in underperformance due to market volatility, lack of liquidity, and overexposure to downside risks.

A Less Risky Alternative

One alternative strategy to consider is investing in Bitcoin mining. Bitcoin miners are uniquely positioned to outperform spot BTC during bull cycles due to two main factors: mining profit margins and ASIC prices, which are correlated to the BTC price. When the Bitcoin price rises, miners experience exponential revenue growth, resulting in outsized benefits.

For example, if Bitcoin's price were to increase from $60,000 to $150,000, the monthly profitability for various ASICs would increase significantly. The S19 XP, for instance, would see a 939% increase in profitability, while the M66s and S21 would also experience substantial gains of 398% and 252%, respectively. This phenomenon is known as the "Mining Profit Multiple."

Benefits of Investing in Bitcoin Mining

There are several advantages to investing in Bitcoin mining over other strategies:

• Better fleet efficiency: Controlling your own fleet of ASIC miners allows for higher operational efficiency compared to public mining companies, which may have diverse priorities affecting overall productivity.
• No executive compensation packages or equity dilution: Publicly traded mining companies often dilute their shares in pursuit of growth, and significant overhead costs are associated with executive compensation and stock options. By mining Bitcoin yourself, you eliminate these risk factors and capture more of the mining upside.
• More balance sheet strategy optionality: By controlling your own mining operations, you gain greater flexibility and autonomy in executing balance sheet strategies, including reinvesting in mining equipment or taking profits.
• Direct Bitcoin accumulation and cold storage: Mining Bitcoin allows you to accumulate BTC directly and store it in cold storage, providing both security and control over your holdings without the counterparty risks associated with mining stocks or holding assets on exchanges.

Off The Chain Capital

One example of an investment firm that has successfully outperformed Bitcoin with less risk is Off The Chain Capital. This digital currency investment firm focuses on value investing in Bitcoin using a Warren Buffett-style approach to find deeply discounted investment opportunities. By not using leverage and maintaining a long-only position, Off The Chain Capital provides downside protection while still capturing upside growth.

As of August 2020, Off The Chain Capital had over $30 million in assets under management and was ranked as the number one blockchain fund by financial services companies Vision Hill Group and Hedge Fund Research, Inc. The fund's performance has proven that reliable performance and BTC can go hand in hand. Over the last three years, its returns have far outpaced both the S&P 500 Index and the price of Bitcoin itself.

The fund's outlook on BTC in the near future

Off The Chain Capital is a digital currency investment firm that focuses on value investing in bitcoin. The fund does not use leverage, is long-only, and has very little turnover. It has a bullish outlook on BTC in the near future, utilizing four models to determine the future price of bitcoin. All four models indicate that BTC could be over $100,000 by the end of 2021.

The fund's performance has been impressive, reporting returns that outpaced both the S&P 500 Index and the price of bitcoin itself. Its actual returns for investors over the last three years were more than five times that of bitcoin and 27 times the S&P 500. Off The Chain Capital is challenging the traditional view of bitcoin as a risky and volatile investment by demonstrating a conservative and successful investing approach.

The fund achieves this by employing creative strategies to procure bitcoin at discounted prices. For instance, they are the world's largest buyer of Mt. Gox bankruptcy claims, which yields up to 90% discounts on bitcoin. They also enter into hash rate contracts with miners that result in 40% discounts on BTC. By using a Graham/Dodd, Warren Buffett-style value approach, the fund aims to capture all the upside potential while providing a cushion during market declines.

In summary, Off The Chain Capital's outlook on BTC in the near future is very positive. They predict that the price of bitcoin will exceed $100,000 by the end of 2021. Their unique value-oriented investment strategy has allowed them to outperform both the S&P 500 and bitcoin since the fund's inception in 2016. By acquiring bitcoin at discounted prices and utilizing a conservative investment approach, they are challenging the notion that bitcoin is a risky investment.

The fund's performance compared to the S&P 500 Index and the price of bitcoin

Off the Chain Capital is a blockchain fund that uses a traditional value investing strategy to find undervalued assets in the blockchain space. The fund aims to buy blockchain assets for less than their market value and make returns on those purchases. This approach is similar to the value investing strategy of Warren Buffet, who is quoted as saying, "We’re trying to buy dollars-worth of bitcoin with 50 cents".

Since its inception in 2016, the fund has averaged 133% per year, compared to about 108% per year on average for bitcoin. Over the last three years, Off The Chain has reported returns that far outpaced both the S&P 500 Index and the price of bitcoin. Its dollar-weighted (actual) returns for investors over this period were more than five times that of bitcoin and 27 times the S&P 500.

In the period from December 31, 2016, to February 28, 2022, Off the Chain Capital outperformed the S&P 500 by 3,653%. The fund's performance was also 99.99% uncorrelated to the broad market index, meaning the two did not move up and down together. This makes the fund a diversification opportunity for allocators.

Bitcoin has been called the best-performing asset of the decade by some. However, Off the Chain Capital has outperformed bitcoin in each of the last five years with 80% less volatility. The fund's CEO and chief investment officer, Brian Estes, said, "We've outperformed bitcoin five out of five years, and we've done it with 80% less volatility than bitcoin. That's what I'm really proud of, because I built this so endowments, foundations and other conservative investors could gain exposure to blockchain assets and get that downside protection."

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