As discussed in a previous post, I have been an active investor in crypto since 2016 and had been looking for ways to incorporate liquid crypto into FJ Labs’ most recent fund. After all, crypto is the ultimate network effects business. In 2022, we hired Chris Keshian to establish a more formal process around our liquid crypto investment activities. Since then, I have written about the research and data due diligence processes we developed to make portfolio allocation and rebalancing decisions. 

We initially allocated ~$28M to this strategy, and patiently waited for valuations to come down from the euphoria we saw in 2021 and 2022. Since November 2023, we have increased our market exposure from 20% to 100%.

Given the success of this approach, we have elected to back Chris and spin the strategy out into a new fund where he can offer investors direct exposure to the liquid crypto approach incubated at FJ Labs. We are excited to announce Triton Liquid Fund, which just went live this week.

From our current fund, we allocated ~10% to liquid crypto. We elected to spin it outside of FJ Labs, allowing Chris to scale the strategy and operate like a more traditional hedge fund. As a standalone vehicle, the Triton team will be able to stake assets to earn additional yield and actively manage and rebalance the portfolio, leading to better returns.

We believe now is the optimal time to allocate to liquid crypto. There are several tailwinds that are propelling the space this year:

• The macro climate has shifted more favorably toward risk assets, with expected rate cuts this year.
• The bitcoin halving on April 20 further reduced the supply of bitcoin – an event which has historically been a positive catalyst for the broader crypto market.
• 9 bitcoin ETFs were approved in January, and we have seen record inflows for ETF products, a trend we think will continue.
• Major financial institutions like Blackrock have begun building products on crypto rails, such as BUIDL for institutional investors, providing direct on-chain ownership, trading, and settlement of the tokenized positions. 
• Election years in the US tend to be positive for markets, and if there is a regime change in the US, the country’s stance toward crypto could change more favorably.
• We continue to see exciting new projects and protocols emerge across various crypto verticals, including AI, decentralized physical infrastructure, real world assets, and decentralized finance.

You can learn more about the Triton approach in the below series:

• The Origins of Triton Liquid
• Liquid Venture Capital
• Process & Market Segmentation
• Data Dashboards for LVC
• Research Process

You can also visit the research repository here or sign up for future market updates here.

If you are interested in discussing Triton, please email Triton CIO Chris Keshian at [email protected].