Market News

BY  Hannah Miller, Bloomberg News

(Bloomberg) -- A group of investors has set out to raise $100 million for a Bitcoin-focused fund even as implosions and scandals rock the crypto world. 

Dubbed The Bitcoin Opportunity Fund, the investment vehicle caters to high-net worth investors looking to diversify into the world’s largest cryptocurrency. Led by six investors, including managing partners James Lavish and David Foley, the fund will target both public and private Bitcoin-adjacent companies. The team told Bloomberg that they are putting “a significant portion of their own net worth” toward the fund.

Its debut comes in the midst of a long-running crypto bear market, a deep rout in the tech sector and more recently, the collapse of a trio of US banks in quick succession. “The banking crisis just highlights the need for Bitcoin,” said Cory Klippsten, one of the fund’s partners and CEO of automated Bitcoin savings plans provider Swan Bitcoin. “Everyone needs some money they own and control.” 

Even before the fall of Silicon Valley Bank and crypto-friendly Signature Bank and Silvergate Capital Corp., the digital-asset industry had been reeling from a slew of crises, ranging from the demise of hedge fund Three Arrows Capital to the spectacular crash of Sam Bankman-Fried’s FTX. 

While these scandals have “damaged” the industry, they’ve also created ample opportunity for distressed investing, according to Lavish, former chief operating officer of alternative investments at Luther King Capital Management. Specifically, the new fund has been looking at buying up debt belonging to publicly-listed Bitcoin miners that has been trading for “pennies on the dollar,” he said. 

Meanwhile, some private companies are seeing their value plummet by 60% as they try to raise more capital, added Foley. “That’s a massive discount to where reputable venture funds were valuing these businesses a year-and-a-half ago, but those are interesting opportunities to delve during this distress,” he said.   

Foley is a managing partner at investment firm Equity Management Associates. The firm’s founder, Larry Lepard, is also a partner in the new Bitcoin Opportunity fund, as is Greg Foss, an executive director at Canadian energy firm Validus Power Corp., and Mark Moss, founder of media company Market Disruptors. 

Bitcoin rallied earlier in the week to breach the $26,000 mark for the first time since June but has since fallen to $24,939 as of Thursday. It’s still down about 62% from an all-time high of almost $70,000 in November 2021.