Pythagoras Fund Achieves 204% Return, Outpacing Bitcoin’s 121% Surge
Bitcoin (BTC), the leading cryptocurrency by market value, increased 121% last year, surpassing the six-figure mark. However, this performance was outperformed by Pythagoras Investment Management’s Alpha Long Biased Strategy, which achieved a return of 204% in 2024.
The fund combines a BTC base position with two uncorrelated strategies, resulting in a threefold gain, significantly exceeding the typical twofold return of a buy-and-hold bitcoin investor. The fund charges an incentive fee only when it outperforms bitcoin.
The Bitcoin base position provides direct exposure to long-term appreciation, while the two uncorrelated strategies—momentum market timing and long-short market selection—generate additional returns. The momentum strategy uses machine learning and pattern recognition for dynamic exposure adjustments, capturing short-term market fluctuations. The long-short strategy employs an AI-based forecasting model to maintain a dollar-neutral portfolio, investing in tokens expected to perform well while shorting those anticipated to underperform.
Despite its strong performance, the Alpha Long Biased Strategy was Pythagoras' smallest fund, with assets under management (AUM) of $7 million. It experienced a 2% drawdown in December as BTC fell from record highs above $108,000 to $93,000.
Pythagoras' Arbitrage strategy returned 3% in December, ending the year with an 18% gain and $45 million AUM. The Quant Long Short Fund generated a 30% return in 2024 with $23 million AUM, and the Absolute Return Strategy produced a 41.7% return, gathering $158 million in client funds. The total AUM of the four funds rose to over $230 million from $80 million in 2023, driven by increased investor confidence in the bull market.
Bullish Outlook
Pythagoras anticipates that the bull market will persist, fueled by positive regulatory developments in the U.S. and corporate demand for bitcoin. CEO Mitchell Dong noted that the incoming Trump administration's proposal for a national strategic Bitcoin reserve and appointments of pro-crypto individuals may serve as significant catalysts. With over 290 pro-crypto members in Congress, supportive legislation for the cryptocurrency industry is expected to gain traction.
Dong suggested that other countries might seek to accumulate Bitcoin ahead of the U.S. should the national reserve initiative materialize, and he mentioned the potential for listed companies to follow MicroStrategy in adopting BTC.