The Brazilian stock exchange could be a pioneer in crypto-asset index funds (ETFs) with a quantitative strategy. The principal of iVi Technologies, based in Belo Horizonte (MG), is negotiating with the Securities and Exchange Commission (CVM) to list a Type B3 product in the second quarter of 2023.
The fund will reflect a new index that should be launched by March, developed in partnership with MIAX, the Miami Stock Exchange. Unlike other crypto indices, the new product will be calibrated monthly with the help of artificial intelligence and algorithms with the aim of surfacing short-term movements in the notoriously volatile asset class – thus maximizing gains for the investor.
Looking at the top 10 cryptocurrencies in the market, says iVi Technologies CEO Lendel Lucas, the iVi MIAX Quant will seek to navigate a possible new bull run starting in 2023, but with the possibility of liquidating positions and buying cryptocurrencies indexed to dollars, the so-called Stablecoins, in eventual decline.
Unlike quantum managers who take riskier trades – including in FTX – to achieve higher returns, iVi uses algorithms to automate the manager’s work and further change the face of the portfolio with each arbitrage. The iVi fund has been open in the US for about two years using the same technology, and typically sees changes of 30% to 40% of the portfolio each month.
“When we say ‘quantity,’ a lot of people think of that High frequency trading (High Frequency Trading), which is an automated money that stays translating All the time. We have a low-frequency algorithm, which is more consistent with US and European quantitative funds,” says the CEO.
The idea for the fund has been coming since at least 2017, but was held back due to the small amount of cryptocurrency with the highest market cap at the time. Today, iVi confirms that the maturity of the sector is able to feed the algorithm the necessary data to take better advantage of the rapid market fluctuations.
At the start of the year alone, bitcoin was up nearly 40%, completely erasing losses as FTX went bankrupt. However, smaller cryptocurrencies have skyrocketed, some as much as 100% each. Lucas explains that a quarterly balanced mutual fund is less able to capture the movements of this system in such a short period.
Continue after the announcement
Betting on the recovery of the sector in 2023, iVi expects to raise significant funds, around R$1 billion, by the end of the year.
For now, the manager is talking to CVM to better understand how to structure an ETF with a design like this. For this reason, the possibility of investing in cryptocurrencies abroad or directly in Brazil remains open to the fund, taking advantage of a new decision by the self-system, which, according to the CEO, may allow it to obtain operating gains in the exchange rate when carrying out financing and redemption.
The launch of the index and the European Training Fund in Brazil are also the first steps taken by the Miami Stock Exchange to fight for the NASDAQ figure in Latin America. In the crypto space, MIAX is looking to capitalize on the city of Florida’s growing reputation as a “crypto hub” in the US after mining companies and even Mayor Francis Suarez began receiving his salary in bitcoin.
They want to be more recognized in Latin America, to be a gateway to the United States. They’re already the largest private exchange in the US, and they’re growing a lot, and they’re still anticipating that [realizar um] An IPO in 2023. They wanted this vision in Brazil,” says Lucas.
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