Asia’s MicroStrategy: Metalpha on Hedging for Sustainable Investing

Metalpha Technology Holding Limited (NASDAQ: MATH) provides qualified investors and institutions with boutique crypto wealth management services, as a rising star in Asia akin to MicroStrategy (MSTR). CEO Adrian Wang founded the company on a mission to build a sustainable crypto ecosystem with effective hedging solutions in an industry known for its boom and bust cycles. With the right application of derivative products, investors can ‘earn higher and lose less’ when the market is in turmoil.

“The crypto industry continues to have room for growth, despite its challenges this year. We are looking very closely at how to build a stronger and healthier global market for digital assets, which we are doing together with our partners, such as Antalpha, and many others.” - Adrian Wang, Founder and CEO

The company changed its name from Dragon Victory International Limited (NASDAQ: LYL) and is backed up by Antalpha Technologies Limited, the world’s leading blockchain financial services. In the past year, Metalpha not only built a stronger trading, research, and compliance team in-house but also sealed numerous partnerships such as Litecoin Foundation, NextGen Digital Venture, GRVT, ParaX, and many more. As a Nasdaq-listed company, Metalpha holds Type 4 (advising on securities) and Type 9 (asset management) licenses through its wholly-owned subsidiary, LSQ Capital Limited, by the Securities and Futures Commission of Hong Kong (SFC).

The emphasis on compliance paid off when the SFC granted an uplift on the Type 4 license. Metalpha and LSQ Capital have been actively working with the SFC on the Type 4 license uplift. With the uplifted Type 4 license, in addition to offering securities advising services, LSQ Capital is now able to issue analyses and reports on virtual assets to qualified investors.

Advantages in Trading

As a leader in crypto derivatives, Metalpha offers clients customized products, such as Accumulator and Snowball, that are based on mathematical models with careful financial engineering. The trading team comes with rich experience with Wall Street banks. The company reported the notional amount of derivative products issued of $382 million under its wealth management business arm, which generated a fiscal-year income of $5.7 million jumped from $0.1 million in the fiscal year 2022, a 5,600% increase.

The company’s trading positions have always been targeted to be market-neutral. The company has set out strict risk limits on its positions and strictly abides by the regulation requirements in the region it operates.

Bullish on Bitcoin

“The surging of Bitcoin’s price indicates a strong demand from global investors as they are encouraged by the recent performance of Bitcoin ETF inflows. We believe the halving event later this year could further push Bitcoin price to a new height.” - Adrian Wang, Founder and CEO

Metalpha prides itself on being the long-term advocate of Bitcoin and blockchain technology. The company has been vocal about its belief in the future mass adoption of Bitcoin since the approval of the Bitcoin ETFs. The company considers itself to be a growth-driven crypto stock and is comparable to MicroStrategy in many ways. Both Metalpha and MicroStrategy focus on Bitcoin investing, whereas Metalpha focuses particularly on the wealth management sector. Since the successful restructuring, Metalpha’s stock has led a strong performance, rising more than 86% year on year as of March 3, 2024, according to Yahoo Finance.

Metalpha vs. MicroStrategy

"Working with the brilliant team at NextGen has been delightful. The launch of the NextGen Fund marked the first step by both sides to roll out compliant yet rewarding products together. We look forward to building a more robust partnership going forward.”Adrian Wang, Founder and CEO

While Metalpha shares many similarities with MicroStrategy, key differences remain in the business model, service locations, and products. Metalpha’s revenue is highly growth-focused in a bull market as Bitcoin’s price increases, resulting in balance sheet expansion and trading revenue increases. In a bull market, a more active user base generally results in a higher subscription rate. Therefore the company’s revenue and scale experience high growth in a bull market.

While MicroStrategy is headquartered in the U.S., Metalpha is based in Hong Kong. Recent Web3 policies promoted by the Hong Kong regulators have proven effective and forward-looking. It is reasonable to anticipate the digital assets industry will also bloom in 2024 as Hong Kong fully embraces Bitcoin ETFs, STO/RWA, and other milestone innovations.

On the product level, Metalpha offers bespoke hedging solutions and derivative products to qualified investors and institutions. Compared to MicroStrategy, Metalpha’s business model is expansive, covering not only Bitcoin and Ethereum but also other mainstream cryptos upon request. The company offers a fully customized investing and trading experience to its customers.

The company aims to offer a wide range of institutional-focused products as well. Metalpha launched Next Generation Fund I, in partnership with NextGen Digital Venture Limited. According to Bloomberg, The $100 million target fund invests directly in Grayscale's investment products and indirectly through structured derivatives in respect of Grayscale's investment products, giving institutions, family offices, and high-net-worth individuals a compliant channel to gain indirect exposure to crypto.

Despite all the differences, Metalpha considers itself Asia’s MicroStrategy in the spirit of the crypto revolution and Bitcoin mass adoption.

This is a guest post by Yiwei Wang. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.