Veteran crypto traders raise 1,000 Bitcoin for BTC-denominated fund

While the financial world still revolves around fiat currency, crypto hedge fund BXB Capital takes a different approach with its latest fund: It raises capital exclusively in Bitcoin, which can also be the sole instrument of the trading strategy .

In an exclusive interview with luckfounders JJ Petersen and Alex Friedberg said they already have about 400 Bitcoins—worth nearly $10 million—delivered from investors, with plans to raise 1,000 Bitcoins and launch the fund in July.

Petersen and Friedberg began trading in the so-called kimchi premiuma strategy that takes advantage of cost differences between the spot price of Bitcoin in South Korea and other markets and has been popularized by traders such as Three Arrow Capital and Sam Bankman-Fried’s Alameda Research.

“There aren’t a lot of people in 2017 and 2018 who are doing big things,” Petersen said. “And it put us in a lot of rooms.”

In 2019, Petersen and Friedberg Cebu launched KRWb, the first stablecoin backed by the Korean won. They are also cofounders of Binance KR, the Korean arm of the giant crypto exchange, which closed in 2020 after eight months of operation due to low trading volume.

Outside of other businesses, Petersen said BXB Capital continues to use its own capital to implement proprietary trading strategies. While many crypto hedge funds focus on arbitrage and market making, or helping facilitate liquidity on exchanges, BXB Capital focuses on pattern recognition.

The new fund represents BXB’s first major foray into getting outside capital—Petersen said the limited partners, or investors, are high-profile crypto figures, but declined to name any— as well as a new operating structure through its foregrounding of Bitcoin.

Many acolytes argue that Bitcoin is a safer asset to hold than fiat currencies like the US dollar. Because Bitcoin has a set limit on how many can be mined—21 million—it is a deflationary asset, unlike the dollar, whose money supply is constantly expanding.

“You have to earn [more] dollar to exceed inflation,” said Petersen. “When you earn more Bitcoin, you are the sole owner of your token, so you increase your total percentage of the circulating supply permanently.”

The fund takes a unique approach by investing its LPs directly in Bitcoin, with all trading strategies and returns in Bitcoin as well. Petersen said that many crypto native investors do not want to hold more dollars, so the new fund allows them the opportunity to make money in Bitcoin without having to participate in lending or harvesting products.

BXB Capital will focus on margin futures trading, meaning it will commit to opening larger positions in the future price of Bitcoin. The company is registered in the British Virgin Islands, which allows it to use crypto-trading strategies that are prohibited in the US

“There are very few funds that see Bitcoin as the asset that you want more of,” Petersen said. “People are starting to change their framework and are no longer trying to just get more wealth in USD or fiat.”

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