IDX Risk-Managed Bitcoin Strategy

Bringing Risk-Managed Digital Assets to Institutional Investors

Why it does make sense to own Risk-Managed Bitcoin?

Bitcoin-Logo

The IDX Risk-Managed Bitcoin Strategy  seeks to Harvest the Volatility of the asset class via a rules-based, risk-managed approach to owning CME Bitcoin Futures and publicly traded Bitcoin Industry companies.

The IDX Risk-Managed Bitcoin Strategy seeks to mitigate the risk-of-loss (downside capture) relative to a long-only (passive) exposure to the asset class.

The IDX Risk-Managed Bitcoin Strategy is available on various “Turnkey Asset Management Platforms” (TAMPs), and therefore unlike owning Bitcoin (BTC) directly can be owned in US brokerage accounts and US retirement accounts held at US custodians.

The strategy does not invest in bitcoin or other digital assets directly. The strategy does not invest in, or seek exposure to, the current “spot” or cash price of bitcoin. Investors seeking direct exposure to the price of bitcoin should consider an investment other than the strategy.

Separate Accounts

Strategies are currently offered as model portfolios via separately managed account at either SMArtx Advisory Solutions or Amplify.  Please contact them for more information about how to set up an account.

Mutual Fund

For more information about the IDX Risk-Managed Bitcoin Mutual Fund please click below to be redirected to the mutual fund site.

IDX Over The Years

A brief history of our digital asset experience

What IDX Believes In

Volatility Can Be Favorable, But Not Without Downside Protection

Since Bitcoin’s inception, the growth of the asset class has only been rivaled by that of the internet and the “Dot Com” era. So, why have fiduciaries and professional investors approached the asset class with trepidation? Following our conversations with hundreds of financial advisors, family offices, and institutions, we’ve identified a pattern; downside volatility and principal protection are rarely a focus within the community of early adopters and practitioners.

Simple Access to Digital Assets for Fiduciaries and Wealth Managers

We began managing outside capital in the form of Separately Managed Accounts in 2019 with a dedicated focus on Risk-Mitigation, NOT Return Enhancement. Over time, the regulatory landscape has matured and the instruments available for gaining exposure to the asset class have evolved for the better. From our initial SMAs for fiduciaries, we created Risk-Managed Digital Asset Private Placements for accredited investors and institutions for Bitcoin, Ethereum, and DeFi. Now, we are proud to bring our Risk-Focused Bitcoin Strategy to market.

Constant Education and Research for a Rapidly Evolving Space

Similar to the ‘Internet Boom’ in the late 90s and early 2000s, digital assets have been subject to Moore’s Law, with new developments and improvements in technology (protocols) happening on a daily basis. Our research and investment teams are deeply involved in blockchain technology, evaluating our internally managed data (nodes), auditing the source code (smart contracts) of protocols, and participating in the ‘prudent’ development of the ecosystem. The fiduciaries who partner with IDX are able to benefit from these insights, and intelligently participate in the growth of the industry.

Growth & Volatility

Since its inception in 2009 in response to the Great Financial Crisis, Bitcoin (and blockchain technology, in general) has emerged as a disruptive asset class with early applications across multiple industries (including payments, finance & entertainment).  As such, the interest in bitcoin within institutional investors’ portfolios has increased accordingly.

Drawdowns

In traditional asset classes a “Bear” market is classically defined as a 20% or greater decline from recent highs amid widespread pessimism and negative sentiment. Many investors are surprised to learn that Bitcoin has commonly exceeded bear market territory, as classically defined, several times per annum since its inception in 2009. In addition to the relative frequency of bear market drawdowns, as compared against traditional asset classes (i.e gold, real estate, stocks and bonds, the severity of drawdown has exceeded 50% and even 80% thresholds several times during its existence.

How It Works

IDX, believes that the IDX Risk-Managed Bitcoin Strategy may provide investors with total returns over time, while reducing the volatility and the large drawdowns associated with passively owning CME Bitcoin Futures. Historical volatility is not necessarily indicative of future volatility, and therefore changes in market conditions, and other factors, might result in the actual realized volatility and drawdowns of the IDX Risk-Managed Bitcoin Strategy for any particular period to be materially higher. The return of the strategy for any given period might be materially different than the returns of Bitcoin or CME Bitcoin Futures depending on the allocation decisions made by the strategy’s manager in its efforts to implement the Risk-Managed Strategy.

In periods of waning Bitcoin momentum, our signals seek to avoid periods of “uncompensated risk” and reduces exposure.

In periods of positive, increasing Bitcoin Momentum, our signals seek to participate in periods of “compensated risk”, and increases exposure.

FAQ

The strategies are currently available as separate accounts offered through various "Turnkey Asset Management Platforms" (TAMPs): SMArtX advisory, Amplify, Adhesion Wealth Management, Axxcess Wealth. 

For information about the IDX Risk-Managed Bitcoin Fund visit the fund page here.

Bitcoin futures contracts are “cash-settled” which means no actual bitcoin is delivered at the expiration of the futures contract. Rather, the cash difference is settled between parties. In order to maintain exposure over time, futures contracts must be “rolled” from one month to another. When outer month contracts are trading at a premium, the “term structure” is in “contango” and there’s a cost of rolling contracts.

Bitcoin Futures-based mutual funds have liquidity once per day as opposed to throughout the day, as is the case with ETFs. To learn more about structural differences between the vehicles, <a href="https://idxdigitalassets.com/bitcoin-etfs-what-investors-need-to-know-about-this-structure/" target="_blank">click here</a> to see an overview from our CIO.

No the strategy does not produce a K-1. 

The strategy does not own digital assets or cryptocurrencies such as Bitcoin (BTC) directly, the fund gains exposure via the CME Bitcoin Futures market and publicly traded Bitcoin Industry Companies. The strategy also holds U.S. Treasuries  and other cash substitute instruments.