Mitchell Dong is a serial entrepreneur and savvy steward for investors. He is the CEO of Pythagoras Investment Management, a hedge fund which trades cryptocurrencies.
An astute investor and pioneer in the Bitcoin industry, Mitchell participated in a recent panel discussion at Hedge Week Europe. The panel addressed the risks, crisis, and tradingin the Crypto Market Infrastructure.
Read excerpts of Mitchell’s interview below.
With the current crisis, how are you assessing risk and how has it changed your assessment of risk compared to 6 months ago ?
“I think that during the bull market and not just this bull market but previous as well in crypto and in equity markets, people get a bit exuberant, and some use a bit too much leverage. Some of the current crisis, like Three Arrows, Celcius, I believe came from using too much leverage and/or not managing risk appropriately. I think the domino effect will continue, so risk management should be our priority. So, we should all be playing a good defense at this point.”
Tell us more about how you have dealt with recent crisis particularly with dealing with shareholders.
“We have never had any trouble taking money out of Deribit, have had a good experience with Deribit and have no concerns. But those of us who do not have non-(8.09) agreement, it is a little bit scary. But again, we have never had any trouble with Deribit.”
How is this crisis different from the last one we saw in 2017?
“Each crypto winter is very different from one another. It is like how the Lehman Brothers crisis compares to a long-term capital crisis. They all have their different reasons. Every time there is a crisis, one would have never thought of that. So, we are navigating in an area where you have to navigate the unknowns. It is like plying a ship without GPS or knowing the weather condition. There are several unknowns in the business because it is growing, but it also where the opportunities are. So, this crisis came because of bullishness, overleverage and a lot of it was due to experimentation. We are still a very nascent industry, so people do a lot of experiments. Most of these fail; some fail big but a lot of them work out. You have to look at the positive side of it as well like the growth of FTX, Deribit etc. You cannot forget the success stories just because of the crisis.”
How is this impacting D5 and what are the big concerns at this moment of D5 governance?
“Smart contracts are a fixed set of rules which provide certainty. But the problem is what happens if the game changes. I think that it was right that Soul had to survive and if it didn’t change the rules, then it would just go under. One way it is unfair that they changed the rules but its fair because the game changed.”
“In D5 in general, we used to enjoy relatively high yields, but some people say that was unsustainable, but I think it was sustainable because a lot of these early-stage companies would give out equity or tokens to rewards. So, from that perspective, those yields were sustainable. Since the crisis, the yields have come down. Instead of 20%, it’s now 5%. But I think that is a healthy adjustment to the current environment. When the Ethe merge comes along, when it changes from proof of work to proof of stake, it’s going to provide very interesting yields in Ethe proof of stake. So, I think that’s the next catalyst in D5.”
“D5 implies we can do everything peer-to-peer without essential authority and if you look at all the current D5, there is somewhat of a central authority that’s collecting some sort of fees. So, it’s not true D5 but its more D5 than traditional.”
What are the learnings in the last month?
“I am thinking about what catalyst would move the needle at this point in D5 in crypto. The market is waiting for a catalyst. Is Celcius going to go bankrupt and liquidate, would Goldman Sachs bailout Celsius?. Those would be positive sides. On the other hand, what if all of this did not happen and they all liquidate. So, I think the market is very nervous and watching for these events right now. I run a fund which does short-term trading, and we are carefully watching these events. We are not trying to predict these events, we are looking at these events and when there is volatility, as traders we would trade around the volatility. Hopefully, we would benefit from this.”
“There are so many more opportunities now than before the crisis. Before the crisis, things were good. But since the crisis, volatility has spiked, and short-term traders have really benefitted.”
Mitchell Dong is a solar power developer and cryptocurrency miner and trader. He has been developing solar, hydro, cogeneration power facilities for 40 years in the US, Africa and China. He has also been a trader of physical uranium and electric power for the US and Scandinavia. He runs a hedge fund that trades cryptocurrency on behalf of bitcoin miners in Asia and USA and is actively sourcing low cost power for bitcoin miners globally.
