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Strategy


Novum Alpha Global Opportunity Digital Asset Fund manages a quantitative-discretionary long-short strategy that represents years of experience trading opaque digital asset markets while leveraging cutting edge quantitative models.



Our Investment Process



Idea Generation


Using a mosaic approach, disparate data points are collated from public and private sources and supplied to in-house data science tools to identify opportunities. Research infrastructure scans blockchains, price data, order books, social media, and news.

The best opportunities are revealed through research.

In depth-research of underlying digital asset technology is conducted, from blockchain flow analysis, to smart contract audits, as well as applications in development, to identify potential price dislocations and market inefficiencies.

  • Narrow the Universe
    Data acquisition tools flag, funnel and filter the flood of information in digital asset markets for consideration
  • Source Ideas
    Data from both public and private sources is analyzed and leveraging deep industry knowledge and networks, used to identify potential material price impact

Digital Asset Selection


Homing in on dislocations and inefficiencies, quantitative analysis identifies opportunities and sets up appropriate long and/or short entry points as well as caters for trade duration and sizing.

Long Positions

Long positions are not entered just because a digital asset is cheap (value trap) or solely when its price is rising (momentum). As the digital asset market matures, underlying technology and blockchain development becomes more important than ever.

  • Search for digital assets whose prices are dislocated from technological fundamentals due to short-term internal or external factors.
  • Look for digital assets that are “under valued” because of lack of understanding of a new application or technology.
  • Determine the catalysts and drivers of future digital asset price appreciation versus market mispricing.

1. Analytical

Data processing tools identify price dislocations and material price-impact based on proprietary factors


2. Blockchain Analysis

Blockchain flow data is analyzed to determine if digital asset is in accumulation or capitulation phases


3. Quantitative

Mathematical models are used to analyze trade data and order books to determine ideal long entry and exit points




Short Positions

We leverage our experience in the industry and scrutinize the price, order book and blockchain data to discern if a digital asset has reached the high end of its price range and is positioned for a reversion to the mean or a sharp correction.


  • Search for digital assets whose technological fundamentals are dislocated from the current price due to shorter-term internal (manipulation) or external (sentiment) factors.
  • Look for digital assets that are being driven primarily by a hype-cycle fueled by marketing, with limited technological application, development or community engagement.
  • Determine the magnitude of mispricing and the drivers which will catalyze a correction or reversal.

1. Analytical

Data processing tools identify price dislocations and material price-impact based on proprietary factors


2. Blockchain Analysis

Blockchain flow data is analyzed to determine if digital asset is in accumulation or capitulation phases


3. Quantitative

Mathematical models are used to analyze trade data and order books to determine ideal long entry and exit points


Risk Management


Portfolio monitoring systems manage portfolio risk 24/7 to prevent trade concentration and manage exposure.
Trades are automatically sized according to strength of conviction and trade frequency optimized to ensure minimal slippage.

Just because digital assets are volatile doesn’t mean they are inherently risky. Utilizing a multilayered approach to risk, that covers every aspect of our operations, from cybersecurity and physical hardware, to trading and counterparty risk, risk management is at the heart of everything we do.


Concentration

We believe that an actively managed digital asset strategy should be fairly concentrated during times of market dislocations and periods of gross inefficiencies, to generate above-benchmark long-term returns.


Sizing

We will invest greater amounts of capital in digital assets where we find greater risk-adjusted value and vice versa. If blockchain flow data suggests that target prices can no longer be supported, we will reduce the weighting of that position or exit the position altogether.


Active Hedging

We believe our risk-adjusted value approach to digital asset selection that melds blockchain data analytics and in-depth research, with active hedging using derivatives, can generate superior risk-adjusted returns over a three-year to five-year time horizon.


Automated Execution


Automated, algorithmic trading programs trade multiple short to mid- term strategies 24/7 to capture digital asset price movements using rules-based, signal-generating logic, ensuring stable performance and low instrument correlation.

Digital asset markets run round-the-clock and require relentless monitoring. Automated trading algorithms scan prices and order books 24/7 and execute both position entry and exit according to pre-programed parameters.


Data Driven

Automated bots scour price information, order books, sentiment and blockchain data


Factor Driven Analysis

Quantitative tools identify digital asset price dislocations and inefficiencies automatically


Automated Entry & Exit

Trading algorithms enter and exit positions automatically according to preset profit targets

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Important Risk Information



Carefully consider each Product’s investment objectives, risk factors, fees and expenses before investing. This and other information can be found in each Product’s private placement memorandum, which may be obtained from Grayscale and, for each Product registered with the SEC and/or listed on the OTC Markets, such Product’s annual report or information statement, which may be obtained by visiting the SEC’s website for Grayscale Bitcoin Trust (Symbol: GBTC) and Grayscale Ethereum Trust (Symbol: ETHE) or the OTC Markets website for Grayscale Bitcoin Cash Trust (Symbol: BCHG), Grayscale Ethereum Classic Trust (Symbol: ETCG), Grayscale Litecoin Trust (Symbol: LTCN) and Grayscale Digital Large Cap Fund (Symbol: GDLC). Reports on OTC Markets are not prepared in accordance with SEC requirements and may not contain all information that is useful for an informed investment decision. Read these documents carefully before investing.


Investments in the Products are speculative investments that involve high degrees of risk, including a partial or total loss of invested funds. Grayscale Products are not suitable for any investor that cannot afford loss of the entire investment. The shares of each Product are intended to reflect the price of the digital asset(s) held by such Product (based on digital asset(s) per share), less such Product’s expenses and other liabilities. Because each Product does not currently operate a redemption program, there can be no assurance that the value of such Product’s shares will reflect the value of the assets held by such Product, less such Product’s expenses and other liabilities, and the shares of such Product, if traded on any secondary market, may trade at a substantial premium over, or a substantial discount to, the value of the assets held by such Product, less such Product’s expenses and other liabilities, and such Product may be unable to meet its investment objective.


This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change.


The shares of each Product are not registered under the Securities Act of 1933 (the “Securities Act”), the Securities Exchange Act of 1934 (except for Grayscale Bitcoin Trust and Grayscale Ethereum Trust), the Investment Company Act of 1940, or any state securities laws. The Products are offered in private placements pursuant to the exemption from registration provided by Rule 506(c) under Regulation D of the Securities Act and are only available to accredited investors. As a result, the shares of each Product are restricted and subject to significant limitations on resales and transfers. Potential investors in any Product should carefully consider the long-term nature of an investment in that Product prior to making an investment decision. The shares of certain Products are also publicly quoted on OTC Markets and shares that have become unrestricted in accordance with the rules and regulations of the SEC may be bought and sold throughout the day through any brokerage account.