From crypto skeptic to partner at Hack VC, we sit down with Alex Botte to unpack why she left the conventional quant investing world to join a crypto fund
Jul 9, 2024
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Alex Botte, a former quant investor turned crypto advocate, shares her fascinating journey from traditional finance to becoming a partner at Hack VC. She discusses her groundbreaking research revealing that 91% of Bitcoin's risk was unexplained. Botte also dives into BlackRock’s BUIDL fund and the potential of public vs. permissioned chains. With a keen eye on Berachain's Proof of Liquidity mechanism, she explores how ETFs and tokenization are reshaping institutional investment in crypto, marking a significant shift in the financial landscape.
Alex Botte transitioned to the crypto industry recognizing Bitcoin's unexplained risk factors, emphasizing the potential of crypto as a revolutionary asset class.
Hack VC's investment strategy focuses on early-stage infrastructure projects in crypto, aiming to support innovative technologies while avoiding sectors like NFTs and gaming.
Deep dives
Alex Bodie's Journey into Crypto
Alex Bodie shares his background as a former investment banker who transitioned into the cryptocurrency space while working at Two Sigma. His initial foray into crypto began through thematic research, where he explored Bitcoin's risk factors using traditional models, revealing that much of its risk was unexplained. His research gained traction, capturing the attention of major institutional consultants, leading him to a position at a liquid token hedge fund. This pivotal experience sparked his interest in crypto as an emerging asset class and its potential to revolutionize various sectors beyond finance.
The Culture Shift in Smaller Firms
Transitioning from large organizations to smaller firms, Alex notes significant differences in work culture and responsibilities. At larger companies, roles are often clearly defined, whereas smaller firms encourage employees to wear multiple hats and engage in various aspects of the business. This environment allows generalists to thrive, as Alex describes enjoying the opportunity to explore tasks related to investor relations, research, and marketing at Hack. The collaborative atmosphere fosters personal growth and innovation while responding to the dynamic nature of the crypto industry.
Hack's Investment Focus and Strategies
Hack DC is positioned as a crypto-focused VC firm primarily investing in early-stage infrastructure projects within the blockchain ecosystem. The firm emphasizes thesis-driven investments, supporting category creators and innovative technologies in the crypto space while avoiding sectors like NFTs and gaming. Their investment philosophy relies on a robust understanding of both traditional and digital assets, helping maintain a strong reputation in the industry. This strategic focus allows Hack to remain agile and capitalize on opportunities within complex technological landscapes.
Trends in Crypto Adoption and ETF Development
The conversation highlights the growing interest in digital asset ETFs and their potential to legitimize the crypto industry for mainstream investors. With the launch of Ethereum spot ETFs, there is optimism that these financial products might bridge the gap between traditional finance and digital assets, broadening retail access. As institutional players like BlackRock and asset managers evolve their approaches, retail platforms such as Robinhood are also integrating crypto offerings. Overall, the industry appears poised for widespread adoption, with a focus on enhancing user experiences and simplifying market entry for new investors.
➱ Her original paper running Bitcoin through a traditional risk factor model (91% of Bitcoin’s risk was unexplained!)
➱ BlackRock’s BUIDL fund and their commitment to public vs permissioned chains
➱ Why she’s watching Berachain and their Proof of Liquidity mechanism closely
Hosts: Avi Mash, Jody Flournoy, Sean Ristau
Production: Brad Parsons at Train Sound Studio
Chapters
00:00 Introduction and Background
01:25 Alex's Journey into the Crypto Industry
08:24 Hack VC's Investment Thesis
13:32Trends in the Crypto Industry and Hack VC's Focus