Jeroen Tielman (Theta Capital Management): Attractiveness of crypto based on ‘decentralised trust’

Jeroen Tielman (Theta Capital Management): Attractiveness of crypto based on ‘decentralised trust’

January 24, 2025

Crypto
Jeroen Tielman (QStone Capital)

This text was originally written in Dutch

By Esther Waal

Following Trump's election victory, Bitcoin's share price rose significantly, peaking well over $107,000 on 16 December 2024. This rise is attributed in part to Trump's pledge to make the United States the ‘crypto capital of the world’ and his announcement to strategically hold Bitcoin as a national reserve and support Bitcoin mining activities in the US. Is the time ripe for institutional investors to do more with crypto? Financial Investigator spoke to Jeroen Tielman, Head of Institutional Relations at Theta Capital Management. 

To what extent does cryptocurrency correlate with traditional asset classes?

'Blockchain technology introduces a new, alternative way of carrying out economic activities that currently requires a central intermediary. As the technology is new, the first investable assets are ‘venture’ investments. In terms of estimating correlation, we can look at it from two angles. As a venture asset, it is at the upper end of the risk spectrum and high correlation with other risky investments can be expected. As far as the BITWISE 10 Large Cap Crypto Index can be seen as a proxy for blockchain applications, low correlation has been measured over the period January 2014 to December 2020.'

As an institutional investor, can you afford not to invest in cryptocurrency?

'In our view, very definitely not. The appeal of the crypto market - with tokens as economic ownership certificates of specific applications - is based on the underlying blockchain technology of ‘decentralised trust’. With about a third of global GDP related to trust, a significant part of the economy has the potential to migrate to autonomous decentralised ‘on-chain’ networks, and this is apart from all the new economic applications that are becoming possible.

It is therefore important that institutional investors form an informed opinion on the potential impact of the introduction of blockchain technology, partly by virtue of their ‘fiduciary duty’. Not only as an opportunity, but also in the form of a potential threat to the current portfolio (e.g. listed financials). It is clear that the potential impact of the technology could be very large, and in our view even larger than that of the current internet. Also, we believe that institutional investors should also look at blockchain technology because of ESG considerations.'

'The appeal of the crypto market is based on ‘decentralised trust.’
 

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