Asia MicroStrategy: Metalpha on hedging for sustainable investing

Metalpha Technology Holding Limited (NASDAQ: MATH) is a rising star in Asia similar to MicroStrategy (MSTR), providing boutique cryptocurrency asset management services to qualified investors and institutions. CEO Adrian Wang founded the company with the mission to build a sustainable cryptocurrency ecosystem through effective hedging solutions in an industry known for boom and bust cycles. When applied correctly, derivatives can help investors ‘win more and lose less’ during market turmoil.

“The cryptocurrency industry has room to continue to grow despite the challenges this year. Together with Antalpha and many of our other partners, we are looking very closely at how we can build a stronger, healthier global marketplace for digital assets.” – Adrian Wang, Founder and CEO

The company changed its name from Dragon Victory International Limited (NASDAQ: LYL) and is backed by Antalpha Technologies Limited, the world’s leading blockchain financial services company. Over the past year, Metalpha has not only built stronger trading, research, and compliance teams in-house, but also signed numerous partnerships with the likes of Litecoin Foundation, NextGen Digital Venture, GRVT, ParaX, and more. Metalpha, a Nasdaq-listed company, holds Type 4 (Securities Advisory) and Type 9 (Asset Management) licenses with the Hong Kong Securities and Futures Commission (SFC) through its wholly-owned subsidiary, LSQ Capital Limited.

The emphasis on compliance paid off when the SFC approved an enhancement to the Type 4 licence. Metalpha and LSQ Capital have been actively working with the SFC to advance Type 4 licensing. The enhanced Type 4 license allows LSQ Capital, in addition to providing securities advisory services, to now issue analysis and reports on virtual assets to qualified investors.

Advantages of the deal

As a leader in cryptocurrency derivatives, Metalpha offers its clients customized products such as Accumulator and Snowball, which are based on mathematical models with careful financial engineering. Our trading team has extensive experience with Wall Street banks. The company reported $382 million in notional derivatives issued by its asset management division, resulting in $5.7 million in income for the fiscal year, up 5,600% from $100,000 in fiscal 2022.

The company’s trading positions have always aimed at market neutrality. The company sets strict risk limits for its positions and strictly adheres to regulatory requirements in the regions where it operates.

Bitcoin strength

“The surge in Bitcoin prices signals strong demand from global investors, driven by the recent performance of Bitcoin ETF inflows. We believe the halving event later this year could push Bitcoin price to new heights.” – Adrian Wang, Founder and CEO

Metalpha is proud to be a long-term supporter of Bitcoin and blockchain technology. The company has expressed its belief in Bitcoin’s future mass adoption following the approval of its Bitcoin ETF. The company considers itself a growth-focused cryptocurrency stock and is similar to MicroStrategy in many ways. While both Metalpha and MicroStrategy focus on Bitcoin investing, Metalpha focuses specifically on the asset management sector. Following its successful restructuring, Metalpha’s stock price has driven strong performance, rising more than 86% year-over-year as of March 3, 2024, according to Yahoo Finance.

Metalpha vs MicroStrategy

“It has been a pleasure working with the great team at NextGen. The launch of the NextGen Fund was the first step toward bringing together a compliant yet rewarding product for both parties. We look forward to building an even stronger partnership in the future.” Adrian Wang, Founder and CEO

Although Metalpha shares many similarities with MicroStrategy, key differences remain in its business model, service locations, and products. Metalpha’s revenue is very growth-focused during bull markets as the price of Bitcoin rises, which expands its balance sheet and increases trading revenue. In a bull market, typically the more active the user base, the higher the subscription rate. Therefore, the company’s revenue and size experience high growth during bull markets.

MicroStrategy is headquartered in the United States, while Metalpha is headquartered in Hong Kong. The recent Web3 policy promoted by Hong Kong regulators has proven to be effective and forward-looking. It is reasonable to expect that the digital asset industry will also blossom in 2024 as Hong Kong fully embraces Bitcoin ETFs, STO/RWAs, and other groundbreaking innovations.

At the product level, Metalpha provides customized hedging solutions and derivatives to qualified investors and institutions. Compared to MicroStrategy, Metalpha’s business model is broad enough to encompass not only Bitcoin and Ethereum, but also other mainstream cryptocurrencies upon request. The company offers its clients a fully customized investment and trading experience.

The company aims to offer a range of institutional-focused products as well. Metalpha has launched Next Generation Fund I in collaboration with NextGen Digital Venture Limited. According to Bloomberg, the $100 million target fund will invest directly in Grayscale’s investment products and indirectly through structured derivatives in connection with Grayscale’s investment products, providing indirect exposure to cryptocurrencies to institutions, family offices and high-net-worth individuals. Provides a compliance channel through which you can be exposed.

For all its differences, Metalpha considers itself Asia’s MicroStrategy, built on the spirit of the cryptocurrency revolution and Bitcoin mass adoption.

This is a guest post by Yiwei Wang. The opinions expressed are solely personal and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.