A New York-based hedge firm called Fir Tree Partners is launching a brand-new fund that will specialize in distressed crypto assets in an effort to profit from the extreme volatility the sector has seen over the previous several months.According to an email, the Fir Tree Digital Asset Opportunities Fund will debut on August 1.
“Fir Tree is at its best when we identify opportunities that are mispriced, dislocated or complex. Rarely do we encounter situations that are all three, but that is precisely what we are seeing in digital assets right now,” Fir Tree wrote.
The year 2017 saw a record number of cryptocurrency failures and bankruptcies, including Three Arrows Capital, Voyager Digital, BlockFi, Celsius, FTX, and Genesis’ lending division (which, like CoinDesk, is controlled by the same company that owns Digital Currency Group).Fir Tree has experience in the cryptocurrency space; it has attempted to short Tether’s USDT stablecoin and engaged in legal disputes with bitcoin fund manager Grayscale (another DCG division).
In its email, Fir Tree pointed out that it has “no view on the direction of cryptocurrency or the reflation of any coins” and will try to “hedge any crypto exposure.”Fir Tree also said conventional crypto investors don’t have the experience needed to navigate “bankruptcy proceedings or [conduct] effective activist efforts,” giving Fir Tree an advantage. And Fir Tree said its edge versus other distressed investors is they will struggle to “get up to speed on this extremely complicated asset class” and “do not want to be associated with the moniker ‘crypto.'”