Arbor Digital Quarterly Report – Q2 2022

Arbor Digital Quarterly Report

Note: Please see Arbor Digital’s Glossary Page or Gemini’s Cryptopedia for definitions of any crypto jargon you come across. We understand the learning curve of a new language and hope to help guide you in this area.

Before diving into our quarterly market update, we wanted to highlight the following regarding our portfolio offer:

Given what has happened over the last quarter with centralized digital asset investment companies going bankrupt due to mismanaging risk and poor planning for long-term success (like Three Arrows Capital) which happened as well back in 2018 after the 2017 bull run, we felt it important to reiterate comments we have made in prior newsletters about how we approach digital asset investing.

  • Arbor Digital purposefully chose a Separately Managed Account (SMA) as our investment vehicle: Our vision was to serve needs beyond just a simple gathering of assets via a fund structure. The efficiencies that come with an SMA on top of our belief that clients take more direct ownership of their investments guided us. We also knew education, operations support, and compliance consulting were of high importance.
  • We are not traders, we are investors
  • We do not invest in crypto hedge funds as a core strategy
  • We do not use leverage
  • We have never participated in staking, yield management, or other new and unproven strategies, and we believe that no one should until counterparty risk is well understood
  • The core of the current crypto crisis is that traders and fund managers took significant levels of risk and leverage

There is no reason to change our investment thesis. We continue to focus our portfolio strategies in the following ways:

  1. Flagship: This is our “Beta Portfolio” providing market exposure via an actively managed balance between the two largest assets, BTC and ETH, which account for roughly 60% of digital asset markets.
  2. Compass: This is our “Early and Mid-Stage” decentralized blockchain opportunities portfolio. We have a disciplined approach to taking best practices from venture-style investing to diversifying across Gemini’s investible universe of digital assets.

We hope this gives clarity into why and how we do what we do.

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