Frequently Asked Questions
Who is this for?
The Fund uses arbitrage to create predictable returns while minimising exposure to crypto currency price movements. Since the Fund targets net annual returns of 60% while minimising the risk of loss, it will attract investors that have the patience to see their money double in 1-2 years.
SCP: The Skye Crypto Fund is aimed at investors who want to participate and profit from the growing crypto currency market but to not wish to make bets on the future of particular currencies, or even baskets of currencies.
SCB: The Skye Crypto Bitcoin Fund targets the same returns and uses the same strategies as the Skye Crypto Fund, but since it is denominated in Bitcoin investors will be exposed to changes in the USD price of Bitcoin. Thus only investors that believe Bitcoin will gain in value should chose SCB over SCP.
Who is this not for?
Both funds target annual net returns of 60% by capturing safe and predictable arbitrage profits from cryptocurrency markets. This will not be attractive to investors that are looking for significantly higher returns and consequently are willing to take extreme risks.
What is arbitrage?
Arbitrage is a highly profitable trading strategy where an asset is simultaneously bought and sold at favourable prices on different exchanges. This sophisticated investing technique minimises risk to the price volatility of the asset bought and sold.
Opportunities for arbitrage in traditional fiat markets are rare with very thin margins, and mostly confined to complex derivatives. However, in the cryptocurrency space, opportunities for successful arbitrage are larger and more persistent, since crypto markets are still very inefficient in their price discovery.
The Skye Crypto Arbitrage Fund exclusively targets these opportunities to deliver robust returns which do not suffer from fiat or crypto market volatility.
How do I invest?
How can I withdraw my money?
An existing investor who wishes to sell part or all of their stake in the Fund can do so on the secondary market by simply placing a sell order. If the offer price is less than par value it is likely that the order will be filled by a third party, but in order to guarantee liquidity and easy redemption the Fund will fill any orders with prices less than 97% of par within 24 hours. This guarantee covers 5% of the total fund value per 24 hours. An investor that wishes to quickly liquidate a larger amount can contact the Fund and we will work with them to find a solution.
What if Bitcoin loses value?
SCP: On top of its arbitrage strategy, the fund hedges its cryptocurrency exposure to maintain a constant price is USD. So if Bitcoin loses value, then the hedges will profit by an amount equal to the value the account's bitcoin lost. Simply put, we do not make bets on which direction a particular coin's price will take, but instead use arbitrage techniques to extract stable profits from mispriced assets.
SCB: Holders of SCB will be fully exposed to price movements in Bitcoin.
How can mispricings exist – aren't the markets right?
In highly liquid fiat markets, mispricings are located and eliminated almost instantly, so quickly in fact that in order to do arbitrage in these markets one typically needs to have ones computers physically located at the exchange. Crypto markets however are considerably less mature, they are less liquid and dominated by retail traders with limited understanding of quantitative finance.
Will arbitrage opportunities go away?
The kind of opportunities that exist today will not persist forever, as the market matures they will gradually disappear. In a few years time the markets may look different. However, with maturity also comes greater liquidity, lower transaction costs, more markets and more derivatives, which opens up vast new opportunities. Skye Crypto will always strive to be at the forefront of quantitative crypto trading.
What if your algorithms fail?
The algorithms we have devised are constantly searching for the optimal trades to enter and will alert us when an opportunity appears, but each trade has to be confirmed by a human operator, to minimise the risk for mistakes.
What trading software do you use?
Skye Crypto uses proprietary software. We have published some components of it on our GitHub account , more will follow. Eventually we will be releasing all our tools, without of course exposing our strategies.
Do you invest your own money?
Certainly, a substantial part of our capital has long been traded using these strategies and is now transferred to the Fund. Our fee is also mostly reinvested in the Fund.