Chain Venturer: Hassan Bassiri of Nima Capital

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Sorry I missed last week’s issue as I was occupied at a crypto conference. We’re back to our regularly scheduled programming.

Happy Weekend 🙋🏻‍♂️,

Welcome to Chain Venturer, a series of intriguing conversations with crypto investors. For this week’s issue, we have Hassan Bassiri from Nima Capital.

Hassan is a Portfolio Manager at Nima Capital. He joined crypto in 2018 as a Vice President at Arca, a crypto asset management firm, after previously working in Big 4 consulting.

Now, he’s handling all things crypto in Nima Capital.

If you would like to participate in a future episode, DM me here.

-Marco

We’ve retraced the entire crypto market pump from the Grayscale ruling in one day. At the same time, the SEC has postponed the decision for all of the spot Bitcoin ETFs. How surprising.

On a side note, Swift (yes, that Swift), has just published a report showcasing its recent experiment with Chainlink and 12 financial institutions on using the CCIP (Cross-Chain Interoperability Protocol)

• CCIP is Chainlink’s infrastructure solution to connect multiple public and private blockchains.

This news matters a lot more than one would think.

Remember, there are always two sides to the crypto market.

• The developers pushing what’s possible by building blockchain infrastructure and neat apps like Friend Tech.

• The institutions that will legitimize and expand the TAM of the crypto markets by integrating the crypto economy with the existing capital markets more and more.

The former is cool, but the latter will bring new money into crypto.

Chainlink is working in the middle of these two (disclaimer: I hold no LINK)

Anyway, enjoy this week’s conversation!

This week in governance shenanigans.

Hassan Bassiri, Portfolio Manager at Nima Capital

Hassan Bassiri is a Portfolio Manager at Nima Capital, a family office investing in all asset classes, across geographies, industries, and stages.

After a stint as an international M&A consultant at KPMG US, Hassan made his foray into the crypto world in 2018. He held the position of Vice President at Arca, a digital asset management firm, from late 2018 to early 2023. Currently, Hassan assumes the role of portfolio manager at Nima Capital.

Here’s my conversation with Hassan Bassiri.

Quick takeaways:

• The XRP ruling emphasizes the need for clear congressional crypto regulations to replace the complex and lengthy court approach.

• In crypto, timing the market is arguably more important than time in the market.

• Crypto seed deals above $20M valuation are not interesting in the current market.

• LSDFi has a lot of yield farming potential.

• The next crypto bull cycle will prioritize projects with tangible revenues and value accrual mechanisms.

BROUGHT TO YOU BY

Launchy

What Was the Defining Moment That Propelled You Into the Crypto Space?

In the 2017 bull market, when Bitcoin soared to $20,000, Hassan saw his investments multiply, achieving a 3-4x return. During a job interview with Guggenheim Partners, a leading global investment firm, he presented a compelling thesis on Bitcoin as a trading opportunity. Although he didn't secure the job, he established a valuable connection.

The Turning Point: In 2018, this connection led to a pivotal career move. Hassan joined Arca, a specialized crypto asset management firm, serving as Vice President from late 2018 until early 2023.

What is Nima Capital?

Hassan is currently the Portfolio Manager at Nima Capital, overseeing the firm's crypto investments. Unlike a traditional hedge fund, Nima Capital operates as a family office with a diversified investment strategy.

Investment Philosophy: Nima Capital's portfolio is a complex blend of various asset classes, including cryptocurrencies, real estate, equities, and commodities. The guiding principle is to align investment opportunities with favorable risk-reward profiles.

Crypto Operations: The firm engages in both on-chain and OTC trading, maintains its own cold storage solutions, and avoids keeping capital in centralized exchanges due to counterparty risks.

How Do Family Offices Approach Crypto Investments?

Hassan differentiates cryptocurrency investments from traditional asset classes like the S&P 500 by emphasizing the importance of market timing over long-term holding. Given the high volatility inherent in the crypto markets, a strategic focus on timing market movements is essential.

Strategic Fit for Family Offices: Hassan posits that family offices, particularly those with significant financial resources, are uniquely positioned to thrive in the crypto ecosystem. He suggests that a commitment to substantial investments, coupled with a 3-4 year holding period, could yield favorable returns in the crypto sector.

What Is Your Investment Focus and Interest Now?

During his tenure at Arca, Hassan showcased his versatility by taking on multiple roles—ranging from market trading and derivatives management to venture capital investments and yield farming strategies.

Upon joining Nima, Hassan shifted his focus towards a more patient, long-term strategy, centered primarily on on-chain trading activities.

Nima Capital exercises caution when it comes to valuations, showing a marked preference for seed deals valued below $20 million while avoiding those exceeding $25 million.

Market Dynamics and VC Allocations: Hassan observes that venture capitalists were more successful during 2018-2020 due to lower market participation. However, the influx of approximately $36-$40 billion in capital into the crypto venture space during the 2021-2022 cycle has inflated valuations and dampened returns. Despite this, Hassan believes that the crypto venture market is ripe for a rebound, particularly as venture capital allocations have started to wane.

What Investment Themes and Products Are Currently Captivating Your Interest?

In the post-2019-2020 crypto landscape, marked by the rise of NFTs, stablecoins, and DeFi, Hassan notes that true innovation has been relatively limited.

Real-World Assets (RWAs): Hassan adopts a cautiously optimistic stance on the integration of RWAs into the crypto ecosystem, tempered by concerns over valuation accuracy and oracle complexities.

Next Investment Cycle: Hassan anticipates that the next wave of crypto ventures will prioritize projects with tangible revenue streams and value accrual mechanisms, such as Unibot, over meme coins. His investment criteria focus on robust business economics rather than governance models or staking yields. Nima Capital is also bullish on LSDFi, particularly from a yield farming standpoint.

What are your thoughts on the ruling of XRP?

The ongoing SEC appeal adds a layer of uncertainty to the regulatory status of XRP. A court-based system generally takes years to fully resolve, which is not a time frame that crypto founders can comfortably operate on.

The ideal outcome would be for a US legislative approach to replace the current, cumbersome court-based system. Clear-cut regulations that would eliminate the need for exchanges to determine a project's security status or eligibility for listing are critical.

The Road Ahead: It's crucial to note that the recent legal developments may not provide a definitive resolution, especially with the possibility of an SEC appeal. Achieving regulatory clarity in the crypto space remains a formidable challenge.

How do you systemize your approach towards the market?

Hassan employs anecdotal insights to time his exits, suggesting that a surge in meme coins could signal an opportune moment to sell. He generally advises selling during periods of high liquidity or when the market fundamentals appear strong.

When on-chain activities are robust but liquidity is lacking, Hassan views it as a strategic point to consider taking profits to mitigate potential downturns.

Hassan recommends buying during significant support levels and uses the Market Value to Realized Value (MVRV) ratio as a key indicator for entry points.

Rapid Fire Questions

1. What’s one book that any aspiring investment professional should read?

   • Best Loser Wins: Why Normal Thinking Never Wins the Trading Game by Tom Hougaard

2. What’s your biggest investment mistake?

   • Luna (UST)

3. What’s the most underrated use case of crypto?

   • Gambling

4. What’s your most contrarian view in crypto right now?

   • L2s will be very good in the next bull market, anything ETH base will outperform anything L1 base

5. What’s the biggest risk that the crypto space is facing?

   • Lack of new inflows

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.