Union Square Ventures, the New York-based venture capital firm, is betting on yet another cryptocurrency hedge fund startup. Fred Wilson, the cofounder of USV, confirmed that Multicoin is the sixth cryptocurrency fund the firm has invested in over the last 18 months. It’s also USV’s ninth active investment in the blockchain industry, including startups harnessing the decentralized technology behind Bitcoin.
Austin-based Multicoin is a long/short fund, meaning it bets on digital assets it believes will rise in value, but also seeks to profit when the prices of other cryptocurrencies fall. Multicoin shorted the virtual asset market in March, when cryptocurrency hedge funds as a whole lost 34%, according to performance-tracking firm Hedge Fund Research. At the time Multicoin went bearish, Bitcoin had just enjoyed a brief but frenzied mid-February rally, which many investors believed would continue.
Union Square Ventures has also invested in cryptocurrency funds Polychain Capital, Metastable Capital, Blocktower Capital, Autonomous Partners and Placeholder (the only VC-style fund among these).
“USV has not become, and has no plans to become, a fund of funds,” Wilson wrote in his post. “But the blockchain/crypto/token sector has some unique challenges for us and others in the venture capital business and we have taken a network approach to solving them, at least for now.”
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