The Pythagoras Alpha Long Biased Strategy offers an innovative investment model by combining a foundational Bitcoin (BTC) position with two distinct, uncorrelated strategies, aiming to significantly outperform traditional buy-and-hold approaches.
Bitcoin, the largest cryptocurrency by market capitalization, rose by 121% in 2024, crossing the $100,000 threshold. While this was a remarkable performance, the Pythagoras Alpha Long Biased Strategy achieved even greater success, delivering an outstanding 204% return over the same period.
According to Pythagoras, the Alpha Long Biased Strategy generated a 3x return in 2024, far surpassing the 2x return that typical Bitcoin investors would have experienced. The fund operates with a unique performance-based fee structure, where it only charges incentive fees if it outperforms Bitcoin itself. The strategy consists of three components: a core Bitcoin position that benefits from long-term appreciation, and two complementary uncorrelated strategies designed to generate additional alpha.
The momentum strategy uses advanced machine learning techniques and pattern recognition to dynamically adjust exposure based on market conditions, effectively capturing short-term price fluctuations. The long-short strategy leverages a proprietary AI forecasting model to create a dollar-neutral portfolio, which goes long on tokens expected to perform well while shorting those projected to underperform.
By calibrating the allocations between these strategies, the fund is optimized to maximize returns relative to Bitcoin’s performance.
Despite its impressive results, the Alpha Long Biased Strategy is Pythagoras’ smallest fund, managing assets worth $7 million. It did experience a 2% drawdown in December as Bitcoin’s price corrected from its all-time high above $108,000 to approximately $93,000.
Pythagoras’ other strategies also performed well in 2024. The Arbitrage Strategy returned 3% in December, finishing the year with an 18% gain and $45 million in AUM. The Quant Long Short Fund generated a 30% return in 2024, managing $23 million in assets, while the Absolute Return Strategy posted an impressive 41.7% return, attracting $158 million in client investments. Pythagoras revealed that the Absolute Return Strategy will be closed to new investors starting February 1, 2025.
The combined AUM of Pythagoras’ four funds grew substantially, rising from $80 million in 2023 to over $230 million by the close of 2024, fueled by the bullish market environment.
Pythagoras remains optimistic about the market’s future, citing favorable regulatory developments in the U.S. and growing corporate adoption of Bitcoin as key drivers of continued growth. Mitchell Dong, CEO of Pythagoras, emphasized that the incoming Trump administration’s proposal to establish a national Bitcoin reserve, alongside the appointment of pro-crypto figures in government, will likely serve as a major catalyst for the sector. With more than 290 pro-crypto members in Congress, Dong anticipates that cryptocurrency-friendly legislation will continue to gain momentum.
As the concept of a national Bitcoin reserve evolves, Dong suggested that other countries may try to accumulate Bitcoin in advance, while he also foresees more publicly listed companies following MicroStrategy’s lead by integrating Bitcoin into their corporate balance sheets.
