The Asian microstrategy: Metalpha for hedging for sustainable investing

Metalpha Technology Holding Limited (NASDAQ: MATH) offers qualified investors and institutions boutique crypto asset management services, as a rising star in Asia, similar to MicroStrategy (MSTR). CEO Adrian Wang founded the company with the mission to build a sustainable crypto ecosystem with effective hedging solutions in an industry known for its boom and bust cycles. With the right use of derivatives, investors can ‘earn more and lose less’ when the market is in turmoil.

“The crypto industry remains room for growth despite the challenges this year. We are looking very closely at how we can build a stronger and healthier global digital asset market, which we are doing together with our partners, like Antalpha, and many others.” – 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 financial blockchain services company. Over the past year, Metalpha has not only built a stronger trading, research and compliance team internally, but also forged numerous partnerships such as Litecoin Foundation, NextGen Digital Venture, GRVT, ParaX and many more. As a Nasdaq-listed company, Metalpha holds Type 4 (securities advisory) and Type 9 (asset management) licenses through its wholly owned subsidiary, LSQ Capital Limited, from the Securities and Futures Commission of Hong Kong (SFC).

The emphasis on compliance paid off when the SFC granted an increase in the Type 4 license. Metalpha and LSQ Capital have been actively working with the SFC on the extension of the Type 4 license. With the increased Type 4 license, in addition to offering securities advisory services, LSQ Capital can now also provide analysis and reports on virtual assets to qualified investors.

Benefits of trading

As a leader in crypto derivatives, Metalpha offers clients customized products, such as Accumulator and Snowball, that are based on mathematical models with careful financial engineering. The trading team has rich experience with Wall Street banks. The company reported a notional amount of derivatives issued of $382 million under its asset management business, generating fiscal year income of $5.7 million, up from $0.1 million in fiscal 2022, an increase of 5,600%.

The company’s trading positions have always been intended to be market neutral. The company has established strict risk limits for its positions and strictly adheres to regulatory requirements in the region in which it operates.

Bullish on Bitcoin

“The rise in the price of Bitcoin indicates strong demand from global investors as they are encouraged by the recent performance of Bitcoin ETF inflows. We believe the halving later this year could push the Bitcoin price further to a new high.” – Adrian Wang, Founder and CEO

Metalpha is proud to be a long-term advocate of Bitcoin and blockchain technology. The company has been vocal about its belief in the future mass adoption of Bitcoin since the approval of the Bitcoin ETFs. The company considers itself a growth-driven crypto stock and is similar in many ways to MicroStrategy. Both Metalpha and MicroStrategy focus on Bitcoin investing, while Metalpha focuses primarily on the asset management industry. Since the successful restructuring, Metalpha’s shares have performed strongly, rising more than 86% year-over-year as of March 3, 2024, according to Yahoo Finance.

Metalpha vs MicroStrategy

“It was a pleasure to work with the brilliant team at NextGen. The launch of the NextGen Fund marked the first step by both parties to roll out compliant yet rewarding products together. We look forward to building a more robust partnership in the future build.” Adrian Wang, Founder and Director

While Metalpha shares many similarities with MicroStrategy, key differences remain in its business model, service locations, and products. Metalpha’s earnings are heavily focused on growth in a bull market as the price of Bitcoin rises, resulting in balance sheet expansion and trading income. In a bull market, a more active user base generally results in a higher subscription rate. Therefore, the company’s revenue and scale experience high growth in a bull market.

While MicroStrategy is headquartered in the US, Metalpha is based in Hong Kong. Recent Web3 policies promoted by Hong Kong regulators have proven effective and forward-looking. It is reasonable to expect the digital asset industry to flourish in 2024 as well, as Hong Kong fully embraces Bitcoin ETFs, STO/RWA, and other milestone innovations.

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

The company also aims to offer a wide range of institutionally focused products. Metalpha launched Next Generation Fund I, in partnership with NextGen Digital Venture Limited. According to Bloomberg, the $100 million target fund invests directly in Grayscale’s investment products and indirectly through structured derivatives related to Grayscale’s investment products, providing institutions, family offices and high-net-worth individuals a compliant channel to gain indirect exposure to crypto.

Despite all the differences, Metalpha considers itself the Asian MicroStrategy in the spirit of the crypto revolution and the mass adoption of Bitcoin.

This is a guest post by Yiwei Wang. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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