Pension fund-backed Parataxis Capital is shaking off the crypto winter with a new fund

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Parataxis Capital, a multi-strategy crypto investment firm rarely backed by a US pension fund system, is launching a new fund with a long/short relative value trading strategy and $25-$50 million in initial committed capital, CEO Edward Chin told CoinDesk in an interview.

Parataxis made headlines in August when Fairfax County Retirement Systems, Fairfax County, Virginia’s $6.8 billion retirement fund, announced it would invest $35 million in the company’s yield farming fund. Parataxis had about $116 million in assets under management when it spoke to CoinDesk in late October — just weeks before crypto giant FTX collapsed — and was targeting $500 million in assets this year. Despite the mounting turmoil, this income fund is up 7% since its inception last May and 1% so far this year, and Parataxis holds total assets of $75 million, Chin said.

The new Parataxis Relative Value Momentum Fund (RVM) will use machine learning and momentum-based quantitative signals to generate returns. The dollar-neutral strategy is expected to carry less risk than a purely directional approach, an important distinction in the cautious investing environment. The RVM fund was launched due to growing institutional interest and will initially only be available to general partners and a small circle of investors. The fund will open to more investors in the near future.

Parataxis avoided the risk of FTX collapse due to its policy of not trading on offshore exchanges, Chin said, and did not face a rush of investor redemptions. Although crypto is obviously in a bear market, the atmosphere is different than before, Chin said as the conversation turned to whether crypto would continue to exist as an asset class.

“The conversations we now have with institutional allocators are no longer ‘Will this go away’ but rather ‘We’re trying to figure out the right kind of exposure to the asset class’ – particularly given the volatility in the market that is likely to persist ‘ Chin said.

Despite the challenging environment, Parataxis plans to launch a fifth fund in the second half of the year, according to Chin. The quantitative smart beta strategy would be done through either an interval fund registered with the US Securities and Exchange Commission or an exchange traded fund (ETF). The goal would be to outperform a Bitcoin portfolio.

Read more: How a crypto quant firm shook off the bear market – and FTX exposure

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