As the latest wave in this sea of change, TechCrunch founder Michael Arrington announced that he will be acquiring over $100 million for a hedge fund that will purchase and hold crypto assets and make investments in token sales, debt, and equities.
The fund, which was introduced under a new entity called the Arrington XRP Capital, claims to be the first of its kind that will oblige all limited partners to make investments in XRP, which is the digital currency that powers the RippleNet software of Ripple, a San Francisco-based startup. In addition, all fees and distributions will also be using XRP.
However, what’s most noteworthy about this recent debut is how the TechCrunch founder stressed out how this recent move marks the “next phase” of his career, a career that already saw him founding Crunchfund (which is a venture fund with 55 exits as of the moment), and TechCrunch, an internet-era media startup that has seen a huge amount of success.
“In the last several months, I’ve gone from crypto enthusiast to 100 percent crypto. I’ve only been looking at crypto deals. This is what I think I’ll be doing the rest of my career,” Arrington said in a recent interview.
Moreover, Arrington also believes that the current $300 billion cryptocurrency market is only a representation of what’s to come, which he says is a much bigger and diverse ecosystem.
“I seriously think that we’ll be in the trillions next year, and that we’ll start to see institutional money. I think next year you’ll see significant gains,” he explains.
Former TechCrunch CEO Heather Harde will be joining Arrington in this new venture, plus two more unnamed partners. So far, $50 million has been committed to the fund, and they plan to close it before the year ends.
In this venture, however, Arrington notes that he is targeting a more specific demographic of investors in the cryptocurrency market, saying that he’s looking to engage wealthy individuals who already have remarkable holdings in the market, as opposed to new buyers of digital currencies.
“If they want to invest in a hedge fund, they have to convert to fiat, the hedge fund will convert it into crypto for investments. With this, you can do a quick swap,” he stated.
However, in an interview, Arrington notes that there’s this idea that given the process of approval venture funds need to conduct with limited partners, they are “not ideal” for crypto investments. He also added that the fund’s use of Ripple’s XRP token hopes to improve the existing model for cryptocurrency hedge funds by easing pain points.
For Arrington however, one of the most noteworthy issues is how these hedge funds usually invest in fiat currencies, only to then make investments in Bitcoin or Ether in a new cryptocurrency launch.
“We think XRP is a particularly useful currency because of the transaction times,” he surmised. “I think it makes a lot of sense to denominate a hedge fund in a cryptocurrency, the only downside is [potential] volatility against fiat.”
Arrington then went on to say that he hopes the size of the fund will bring a more diversified use for cryptocurrency in the token sales.
“I think investors are maybe heavier in bitcoin and ether than they should be,” he then finishes, saying that since the market relies heavily on Bitcoin and Ether, his fund is staking its claim for a solution.