How HODL Capital Launched a Crypto-Focused Israeli Hedge Fund

Tal Alroy was an early adopter to crypto, “After university, I realized there were so many people who were curious about cryptocurrencies, but they didn’t have the ability or knowledge. They wanted someone to help them manage their investments and teach them about the industry. So I started to help people to learn.” From teaching people about bitcoin and blockchain to diving into altcoins, Tal’s conversations took off, “So many people were asking for my opinion on how to invest and where to invest, so I founded HODL capital. Now, this year, we’ve launched an Israeli hedge fund seeking to invest in the crypto industry.”

As HODL capital’s goals grew, Tal faced a few specific challenges, “When we started, most people didn’t have the ability to convert funds back to fiat if they didn’t buy from authorized companies. Even if you bought directly through those companies, banks in Israel made it difficult to receive the funds back to your bank account.” His options were limited, “There were only a few companies who would be willing to bring your money back to fiat.” The clients Tal was attracting weren’t used to the volatility experienced in the crypto market, “Most of our investors come from the finance industry, real estate, or agriculture. They don’t come from crypto and they want support from an entity that can help them manage their investments.” To serve his clients and grow HODL Capital, Tal needed to make it easy for investors to onboard to crypto exposure and grow their portfolio without exposing them to unnecessary risks.

Providing Crypto Allocation

For Tal, onboarding clients to crypto gave him an outline of requirements:

• Clients needed the ability to convert their crypto into fiat at any time
• HODLcapital needed a transparent and secure way to invest in crypto that his clients would understand.
• Tal needed to develop strategies that would help grow his fund’s portfolio

Reflecting on his own experiences, “I started investing in 2017, but in Israel, banks have a hard time converting money back to fiat and depositing it into your account. After two or three years, I found that investing in products listed on a mainstream stock exchange helped me to solve this issue.” Beyond the complexities of conversion, Tal had to consider regulatory restrictions, “The authorities in Israel only allow us to invest in products from the stock exchange. We’re not allowed to buy the underlying asset. So we have to focus on products in capital markets.” Surfacing products that were listed on mainstream exchanges solved two issues for Tal: allowing clients to convert their assets at any time, and delivering a trusted and secure investment vehicle that felt familiar to his clients.

Next, Tal sought to build an investment strategy that would support the fund’s growth goals, “We want to provide our customers with the best allocation to crypto. In our experience, altcoins are more likely to deliver a better performance than ETH or BTC.” That meant searching for a partner that had strong operational expertise and deep liquidity, “We had the intention of investing in altcoins,” but without many products in the market, “we just didn't have the option.”

After conducting a lot of research to find a company to fit his criteria, Tal found 21Shares.

Onboarding with 21Shares

Tal and 21Shares immediately got to work. Recalling his initial investments, Tal laughs, “The first product we invested in was HODL, maybe that’s why I named the company HODL Capital.” HODL, an acronym for “Hold On For Dear Life,” indicates the desire to hold assets for a long period of time, “We believe in that strategy. We don’t want to time the markets, but hold for midterm and long-term periods.”

Tal goes on, “The other product we invested in was ABNB. That’s the great thing about you guys, you gave me the ability to gain that exposure. You still can’t get regulated exposure to BNB anywhere else, in Europe, Canada, or the US.”

After getting started, HODL Capital inevitably had questions, “Our clients are from more traditional backgrounds, so when we first started there were a lot of day-to-day concerns and questions.” Tal’s team was supported by Alex Pollak—21Shares Managing Director and Head of UK and Israel. The two worked together closely to navigate HODL Capital’s first few months, “Working with Alex… he’s like family. He’s worked with a lot of people in Israel, he knows the Israeli mentality and how things work here. Working with him was so convenient and we’ve developed a good relationship.”

Looking Towards the Future

In 2023 HODL Capital launched their fund, and while their first year has been full of excitement, they’ve got their eye on the future. Tal explains, “Our first fund is smaller. It acts as a pilot to validate our strategies. In the future, we want to start another fund to expand opportunities for personal investors and support active allocation strategies.” He sees 21Shares as part of that future, “Together with the growth of the crypto industry, 21Shares will develop more products, and I’ll want to invest in them.”