Ben Strack

Dunhill Family Office is joining forces with Mocha Ventures to lead a 30 million euro fund set to invest in traditional companies moving into the Web3 space.&nbsp;



The London-based family office and its advisory arm are contributing 3 million euros to the fund. It so far has two commitments from family offices in the UK and EU, said Mocha Ventures General Partner Renato Brioni, who did not name the firms.&nbsp;



Mocha Ventures, a regulated digital assets fund in the EU, operates under the Liechtenstein Blockchain Act. The regulation, passed in 2019, was designed to create an innovation-friendly framework for rendering services on so-called “trustworthy technologies” systems.&nbsp;



Dunhill Ventures — the advisory division of Dunhill Family Office — is set to assist Mocha Ventures in raising the rest of the money through its “inner circle” of family offices by the end of the year, the companies said Tuesday.



Offering bespoke finance products, Dunhill Ventures co-invests with other family offices into disruptive tech and blockchain-focused deals. It <a href="https://dunhillventures.io/">lists</a> crypto, the metaverse and NFTs as some of its areas of focus.



But the company is set to move away from some of those segments to differentiate itself from other blockchain-related funds, according to Brioni.



“Unlike many funds in the space, we will shift our investment target from NFTs, metaverses, and gaming to [business-to-business] Web2 companies,” he told Blockworks. “Our priority is to work with traditional companies looking to enter Web3 and solving real-life issues.”



Brioni said he expects layer-1 infrastructure, DeFi protocols in emerging markets and zero-knowledge proof projects as segments that could see the largest scalability.&nbsp;&nbsp;&nbsp;&nbsp;



“In the current environment, tangible utility is the key prerequisite for growth,” he added. “Web2 companies with clear use cases have immense potential to evolve into Web3 and scale rapidly via existing sales channels.”



The family office’s interest in crypto’s underlying technology comes as investment in the segment across such wealth management firms is mixed.&nbsp;



Though 26% of family offices are invested in crypto, <a href="https://blockworks.co/news/family-office-crypto-interest-plummets">a May Goldman Sachs report found</a> — up from 16% in 2021 — those that show no interest in entering the space have grown from 39% to 62% in the last two years.



<a href="https://blockworks.co/news/crypto-family-offices-regulatory-clarity">A separate study commissioned by capital markets firm Ocorian</a>, which included 134 family office professionals managing roughly $62.4 billion in assets, <a href="https://www.ocorian.com/press-release/us-family-offices-look-alternative-asset-classes">found</a> 90% noticed a client-driven push to include crypto in their investment strategies. Amy Collins, Ocorian’s family office head, noted, however, that 80% of respondents labeled the lack of adequate regulatory and reporting support as a challenge.



Read more: <a href="https://blockworks.co/news/miami-family-office-backing-nft-fund-launch-helmed-by-fine-art-collector">Miami family office backing NFT fund launch helmed by fine art collector</a>



&#8220;This partnership underscores our dedication to identifying transformative technologies and supporting visionary entrepreneurs who are reshaping the future generation,” Dunhill Family Office Principal Piers Dunhill said in a statement.



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Family office to anchor fund investing in firms transitioning to Web3

Assets under management in crypto investment products have hit a two-year low as investors have increasingly moved toward offerings that short bitcoin and ether.&nbsp;



Crypto products tallied inflows of $44 million last week, according to a Monday CoinShares report, yet sentiment among investors is mixed.&nbsp;



“Short investment product inflows represented 75% of the total inflows, suggesting, on aggregate, sentiment was deeply negative for the asset class, likely being a direct result of the ongoing fallout from the FTX collapse,” CoinShares research head James Butterfill wrote.



The $22 billion of assets under management in crypto investment products, as of last week, is its lowest level in nearly two years, according to CoinShares.



<blockquote class="wp-block-quote">“I suspect it will take some time for confidence to improve and this time it&#8217;ll be more about better defined use cases rather than speculative,” Butterfill told Blockworks. “So a more fundamentals based approach is likely to drive more inflows into the crypto world.”</blockquote>



Crypto exchange FTX <a href="https://blockworks.co/news/whats-next-for-ftx-and-its-customers-after-bankruptcy-filing/" target="_blank" rel="noreferrer noopener">filed for bankruptcy</a> last week. Lawyers representing FTX and affiliates said in a bankruptcy <a href="https://pacer-documents.s3.amazonaws.com/33/188450/042120644082.pdf" target="_blank" rel="noreferrer noopener">motion</a> on Monday that as many as <a href="https://blockworks.co/news/ftx-doom-draws-dozens-of-federal-state-international-agencies" target="_blank" rel="noreferrer noopener">one million creditors could be named in the suit</a>.



The $44 million of inflows are nearly the same as the prior week’s total, which <a href="https://blockworks.co/news/what-fud-coinshares-reports-largest-inflows-in-months" target="_blank" rel="noreferrer noopener">marked the highest level in 14 weeks</a>. 



Bitcoin investment products saw inflows of $14 million last week, according to CoinShares. Separately, those shorting bitcoin had $18.4 million of inflows. Meanwhile, investment products shorting ether notched a weekly record of $14 million of inflows.



Assets under management within short bitcoin products stood at $173 million at the end of last week — close to the all-time high of $186 million. 



The trading volumes for ProShares’ Short Bitcoin Strategy ETF (BITI) <a href="https://blockworks.co/news/bitcoin-futures-and-short-etfs-record-huge-volume-spike-tuesday" target="_blank" rel="noreferrer noopener">spiked to a record 7.2 million shares</a> on Nov. 8 as news about FTX’s liquidity issues developed. The fund aims to profit from the price decline of bitcoin by tracking the inverse daily price movements of an index of front-month CME bitcoin futures.



BITI, up nearly 12% from a month ago, currently has roughly $110 million in assets under management, according to ETF.com.



“Concerns regarding cryptocurrency exchanges have led many investors to consider moving their bitcoin holdings out of exchanges and into ‘cold’ storage,” ProShares Global Investment Strategist Simeon Hyman said in an email. “For those interested in bitcoin exposure who may not even know what cold storage of bitcoin is, the bitcoin futures market offers a compelling and regulated alternative that has functioned well.”



Butterfill said that short strategies typically make up between 1% and 5% of various ETP segments.&nbsp;&nbsp;



“The high fees tend to limit appetite for them,” he added. “Currently with the short-bitcoin AUM at 1.25% of long bitcoin, it could easily double in size.”



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Assets in Crypto Investment Products Hit 2-year Low

Casey Wagner

<div id="highlights-block_626aac6b01e5b" class="highlights">
 <ul>
 <li>Bitcoin led in outflows, with investors pulling $67.3 million on average each week in April</li>
 <li>Multi-asset investment funds are faring better than their single-asset counterparts</li>
 </ul>
 
</div>



The month of April saw an average of $79.5 million leave crypto investment products each week, the largest so far in 2022, according to blockchain data firm CryptoCompare. Bitcoin led the decline, with investors pulling an average of $67.3 million each week.&nbsp;



Cryptocurrency exchanges reported lower trading volumes in April as well, marking the sixth straight month of declines. Average daily trading volumes fell 16.3% to $244 million in April. In total, trading volumes are down 71.0% since October 2021 and 83.8% since the all-time high in January 2021 of $1.51 trillion.&nbsp;



Multi-asset cryptocurrency investment products have fared better than their single-asset counterparts, CryptoCompare researchers found. Multi-asset products have posted inflows for the past three months, with average weekly flows hitting $4.23 million so far in April — compared with $18.9 million in average weekly inflows in February and $7.08 million in March. 



Despite an increase in outflows and trading volume decline, digital asset investment products have maintained relatively steady assets under management (AUM), CryptoCompare researchers noted.&nbsp;



“Total aggregate AUM across digital asset investment products fell marginally by 1.34% to $48.1 billion from the end of March to the 27th of April,” analysts wrote in their latest <a href="https://data.cryptocompare.com/reports/digital-asset-management-review-april-2022?mc_cid=7d9efe36ec&amp;mc_eid=bda2a2e884" target="_blank" rel="noreferrer noopener">report</a>. “AUM have remained relatively stable so far this year — with March seeing the highest month-end AUM at $48.7 billion.”&nbsp;



Bitcoin and ether experienced price declines of 16.3% and 14.4%, respectively, through April 27. Bitcoin has experienced a slight rally this week as big tech led a rebound in equities, but the largest digital currency has been unable to break $40,000. 



“If risk appetite remains strong on Wall Street, bitcoin could continue to rally — if earnings continue to impress — but shortly after Thursday’s mega-cap tech earnings, markets may enter a trading range until next week’s FOMC decision,” Edward Moya, senior market analyst at OANDA, said.



Sentiment also seems to have declined, with <a href="https://trends.google.com/trends/explore?date=today%203-m&amp;q=bitcoin" target="_blank" rel="noreferrer noopener">Google Trends data</a> showing a decline in searches for bitcoin since the start of the year. The crypto <a href="https://alternative.me/crypto/fear-and-greed-index/" target="_blank" rel="noreferrer noopener">fear and greed index</a>, a popular tool used to measure investors’ attitude, has dipped into the “extreme fear” zone in recent weeks, showing that sellers vastly outweigh buyers.



Bitcoin&#8217;s hashrate and mining difficulty have remained steady, <a href="https://mempool.space/mining" target="_blank" rel="noreferrer noopener">near all-time highs</a>, indicating the health of the Bitcoin network remains unaffected by short-term price swings.



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