O.D. Kobo, is the former co-founder of PIR Equities, the London-based private equity firm that in 2018 became one of the first institutional investors to enter the crypto space with a $50 million investment in Bitcoin (when it was $6938) and Ethereum (at $283), says that most crypto hedge funds will not make it through this crypto winter. In 2020, Kobo founded Annex Capital a digital asset investment firm, with holdings in various projects, he is an active investor in the space and was recently ranked amongst the 50 richest in crypto.
At the recent Blockchain Hub Davos, Kobo was interviewed and stated that he believes two-thirds of the hedge funds that invest in cryptocurrencies will fail as a consequence of the current market downtown and blames the challenging global macro backdrop for the current down cycle.
“Trading volume will go down, hedge funds will have to restructure,” Kobo said. “There are so many new crypto hedge funds, it is overwhelming. My estimate is two-thirds will go out of business, they’re not all built for this.” He added, “crypto investors are a different breed of investor, you can’t be at Goldman one day, and then decide to open a crypto hedge fund the next, with the intense volatility in the crypto space I don’t see the majority of crypto hedge funds sustaining.”
Kobo cited the digital-asset market’s reaction to the Federal Reserve’s removal of stimulus as the reason for the collapse in token prices over the past six months. Bitcoin has dropped more than 50% from the record highs reached in November, but Kobo is in it for the long term.
Kobo commented on the recent collapse of the Terra blockchain by saying that the coin’s collapse dented confidence in the cryptocurrency and decentralized finance space and adding, “luckily I never touched Terra or UST, the algorithmic stablecoin never convinced me. I rely on USDC for a stablecoin, and think Ethereum’s future is far more interesting”.
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