Bitcoin (BTC), the leading cryptocurrency by market value, rose 121% last year to cross the six-figure mark, eclipsing traditional assets. However, this performance falls short compared to Pythagoras Investment Management’s Alpha Long Biased strategy, which went even further.
The fund, which combines a base position in BTC with two uncorrelated strategies, achieved an impressive 204% return in 2024, Pythagoras said in an email to CoinDesk. That equates to a 3x gain, significantly exceeding the 2x return a typical buy-and-hold bitcoin investor would have made. The fund charges an incentive fee only when it outperforms bitcoin.
The fund’s base position in bitcoin provides direct exposure to long-term appreciation, and the two uncorrelated strategies (a momentum market timing strategy and a long-short market selection strategy) generate alpha.
The momentum strategy uses machine learning and pattern recognition to dynamically adjust and optimize exposure, allowing you to capture short-term market fluctuations. Meanwhile, the long-short strategy uses a proprietary AI-based forecasting model to create a dollar-neutral portfolio, making long investments in tokens that are expected to generate outperformance while simultaneously shorting those that are expected to. have lower performance.
The allocation to the three components is calibrated to maximize returns relative to bitcoin.
Despite its performance, Alpha Long Biased Strategy was Pythagoras’ smallest fund, with assets under management (AUM) of $7 million. It suffered a 2% drop in December as BTC fell from all-time highs above $108,000 to $93,000 at the end of the year.
Meanwhile, the Pythagoras arbitrage strategy generated a 3% return in December, ending the year with an 18% gain and $45 million in assets under management. The Quant Long Short Fund generated a 30% return in 2024, with $23 million in assets under management, and the Absolute Return strategy generated a 41.7% return, raising $158 million in client funds. Pythagoras said the main 2024 asset accumulator will be closed to new investors starting February 1.
The four funds’ combined assets under management rose to more than $230 million from $80 million in 2023 as the bull market accelerated investor confidence.
Bullish outlook
Pythagoras expects the bull market to continue this year, driven by positive regulatory developments in the United States and corporate sovereign demand for bitcoin.
“The incoming Trump administration, with its proposal to create a national strategic reserve of Bitcoin and appoint people favorable to our industry to key positions in the Executive Branch, is expected to be a major catalyst. With more than 290 members of Congress who are in “We anticipate that legislation supporting the cryptocurrency industry will gain momentum,” said Mitchell Dong, CEO of Pythagoras, in a note to CoinDesk.
“As the US Congress explores the idea of a national strategic reserve of Bitcoin, we expect some countries to try to get ahead of the US in Bitcoin accumulation, should this initiative come to fruition” Dong added, mentioning the possibility of publicly traded companies following MicroStrategy’s lead. lead BTC adoption.
