Chris Solarz, the head of digital asset investments at Amitis Capital, stated that investment strategies in the cryptocurrency markets are immature. Hedge fund managers can still apply strategies that were abandoned in traditional markets years ago. Solarz emphasized that current market conditions offer great opportunities for crypto hedge funds, but he claimed that the majority of the ecosystem’s 40 million tokens will eventually drop to zero.

GOLDEN AGE FOR CRYPTO HEDGE FUNDS Chris Solarz from Amitis Capital, managing a crypto-focused fund of funds, stated in an interview with CoinDesk that the competition in the sector remains low compared to traditional financial markets. Solarz mentioned that hedge fund managers in the crypto markets continue to use investment strategies that were once used in the traditional hedge fund market in the 1990s. In 1990, there were only 127 hedge funds worldwide, managing a total of $39 billion in assets. By 2024, the number of hedge funds had risen to over 10,000, managing $5 trillion in assets. Solarz pointed out that this transformation led to intensified competition and made success more challenging in traditional markets. However, Solarz claimed that the crypto hedge fund sector is still not very competitive, and old investment strategies can be applied here.

Solarz emphasized the importance of evaluating investment processes and risk management when selecting funds to invest in. He mentioned that if the investment process is not replicable or if macroeconomic thinking is weak, he can easily eliminate such funds. Solarz also mentioned that strategy remains highly profitable and institutional investors can still profit independently from market volatility. Furthermore, he pointed out the need for at least $300 billion of new capital inflow for the crypto ecosystem to maintain its current levels due to oversupply in the market and large-scale token unlocks.

Token Season Ends: 99.99% of Tokens Headed to Zero Solarz expressed that around 40 million tokens in the crypto ecosystem will become worthless in the long term. He mentioned that only 100 tokens are worth discussing. Solarz also noted that market conditions have shifted, signaling the end of periods when all altcoins rose together. He stated that without a widespread buyer base in the market, a bull run for altcoins seems unlikely in the near future.

Market-Neutral Strategies and Arbitrage Opportunities Solarz highlighted market-neutral strategies as still being highly profitable, where institutional investors can earn interest of up to 30% annually, mentioning the importance of time for the market to be fully embraced by institutional investors. Solarz concluded by stating that the crypto market will eventually integrate fully with the rest of the finance sector, no longer discussing crypto as a separate asset class once Bitcoin’s market value reaches that of gold. Solarz believed this process would be completed within the next ten years.