Financial services firm M3Sixty recently filed with the U.S. Securities and Exchange Commission (SEC) to launch the IDX Risk-Managed Bitcoin Fund. The fund will invest mainly in bitcoin futures contracts and pooled investment vehicles to achieve its objective of capital appreciation over time.
However, the filing details that the fund does not seek exposure to the bitcoin spot price and thus will not invest directly in BTC or popular over-the-counter investment vehicles such as the Grayscale Bitcoin Trust (GBTC). Instead, the fund will use a proprietary quantitative statistical model to engage in high-frequency trading of bitcoin futures contracts, resulting in a portfolio turnover of over 100% while seeking to increase its capital in dollar terms.
Additionally, M3Sixty expects the fund to hold significant amounts of cash, as well as U.S. government securities and other investment-grade fixed-income securities to provide liquidity and serve as collateral for the futures contracts. But M3Sixty doesn't plan to hold contracts with maturity periods longer than 90 days, the filing said.
High-frequency trading not only goes against the Bitcoiner HODL mentality but also entails indirect exposure to bitcoin. M3Sixty, by not committing to purchase and hold BTC directly, effectively distances itself from Bitcoin and might end up not providing a good alternative for bitcoin exposure. The fund at least makes it clear that it doesn't seek to become one.
Focused on the long term, Bitcoiners have grown accustomed to buying BTC in a wide range of prices while the currency undergoes its monetization path, sometimes buying the bottom and other times buying the top. Nonetheless, dollar-cost-averaging (DCA) has been demonstrated to be the most effective investment strategy with bitcoin. While traders choose to apply fancy models to predict the future, the patient DCA army will slowly drive a $1 million bitcoin price, eating up supply and ensuring true financial transformation for the people – beyond mere dollar profits.