The asset management arm of Mike Novogratz’s cryptocurrency firm Galaxy Digital has acquired crypto fund-of-funds provider Vision Hill Group, Institutional Investor has learned.
Vision Hill manages about $30 million in assets in addition to offering consulting, research, and crypto hedge fund indices. The deal is expected to be announced on Monday.
The deal comes amid increased interest from institutional investors in the crypto industry and volatility among currencies like Bitcoin and Ethereum.
Novogratz, a former macro manager, has been a big booster of crypto, growing Galaxy through the industry's ups and downs.
Dealmakers Had Close Ties
Steve Kurz, head of Galaxy’s $1.6 billion asset management business, said the firm had been close with Vision Hill’s founder and chief executive officer Scott Army for a few years now.
“He has been one of the most impressive institutional-oriented builders in the crypto space,” Kurz said of Army. “We were always thinking about partnering together. This confluence of the world waking up to crypto and the inbound feedback we were seeing made us roll up our sleeves and get to work.”
Vision Hill will become a subsidiary of Galaxy’s asset management business once the acquisition closes. Terms of the deal were not disclosed.
To Kurz, the timing was right for this deal. “Active management has started to become more interesting,” Kurz said, referring to one of the current priorities of cryptocurrency investors.
He added that there are over 500 actively managed crypto funds — both venture and hedge funds — that manage about $25 billion in assets. Part of what Vision Hill does is track those active hedge funds via their indices. The firm separately offers actively-managed investments in the asset class.
Institutions Saw Downdraft as an Opportunity
Asset owners and consultants are growing more interested in investing in cryptocurrency, Kurz believes. According to Kurz, Galaxy has conducted “hundreds, if not thousands” of educational meetings with allocators about their crypto investment options. Consultants are taking notice, too. Kurz said that one large consulting firm has conducted operational due diligence on Galaxy.
“The world woke up to crypto in the first quarter of 2021,” Kurz said. And Bitcoin’s price shows it: On December 31, 2020, the currency’s price was $29,111.52, according to a price tracker published by Coindesk, a crypto-focused media company.
On April 15, Bitcoin hit a high of $63,346.79. The price has since fallen after having a volatile week, which included a 30 percent drop in the currency’s price between Sunday and Wednesday.
“We've been genuinely surprised in a positive way about the reactions of institutional clients,” Kurz said of the market’s swings. “The volatility of crypto is well-telegraphed.”
He added that some clients even viewed Bitcoin’s downward turn as a “buying opportunity.”
“There's nothing that has changed about the adoption story,” Kurz said. “Being able to think about active management and hedged market strategies now will be another tool in the tool kit.”