Written by 13:46 Analys, Research

HILBERT GROUP: Light at the end of the tunnel | Read our interview with Niclas Sandström, CEO Hilbert Group

In the first half of 2022 we have seen the collapse of Luna, several big crypto companies struggle and both Bitcoin and Ether price tumble below USD 18 000 and USD 1 000 respectively. Since the low in June, Ether has bounced back with a 100% gain, driven by the forthcoming transition from PoW to PoS, expected on September 15th. We had a chat with Niclas Sandström, CEO of crypto investment company Hilbert Group, about his views on a potential crypto winter, the latest updates on Hilbert and the outlook for Bitcoin.

Andreas Eriksson | 2022-08-25 11:00 

This commissioned research report is for informational purposes only and is to be considered marketing communication. This research report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and Emergers is not subject to any prohibition on dealing ahead of the dissemination of investment research. This research does not constitute investment advice and is not a solicitation to buy shares. For more information, please refer to disclaimer.  

In times of insecurity, worries and perhaps a crypto winter, how do you address this at Hilbert Group?
– I think it’s important to note that what we saw earlier this year with the collapse of Luna happened because of big ventures and many retail investors, investing in blockchain protocols they knew nothing or very little about in terms of counterparty risk. Dealing with immature technologies the human factor took its toll, and it was centralized decisions leading to the collapse, while we could see that the pure de-fi-protocols worked throughout the whole crisis. At Hilbert we have a more patient investment approach, with more conservative and transparent products that stays away from exotic yield generation.
Are there any bright spots and what’s the feeling in the segment?
– Of course it has been a bit of a rough patch, we’ve seen big successful companies, such as Coinbase etc., letting people go, but one has to realise that that is a natural part of a bear cycle. A lot of these companies are growing aggressively when the market is good, which inevitably means they will have to cut aggressively when the market is bad. During bad times it is all about cost control. On the positive side we have noted a huge difference in in institutional interest in this asset class in 2022 . Over the past 6 months, we’ve spoken to over a hundred institutions, like Deutsche Bank, Blackrock and Investcorp etc. and these types of players weren’t interested at all only two years ago. Morover, all these players are now building up internal teams focusing on digital assets and many have already started to review external managers and allocated to this asset class. The sentiment is long term positive and maybe the worst is behind us. We are now in a position where we have a more diverse product offering ready when the market turns around.

Read our latest report on Hilbert Group here 

Has this first half of 2022 separated “the winners from the losers”?

– Well in a way, yes. Some of the big companies brought down by the collapse were, from our perspective, not serious players. They were running a big organization with very irresponsible risk management, or in some cases, no risk management at all. The collapse means less competition for us which is a good thing, but it was unfortunate that so many retail investors got mixed up as collateral. No one knows yet whether we are in the beginning of a crypto winter or not – and the true winners will be the operators that survives that winter (if there is one) – because they will have an excellent position when the market turns around again.

What’s the status on your existing VC-investments: Coin360, Capchap and HAYVN?

– Regarding HAYVN, because of the current difficult market environment they decided to postpone their series B fund raise. They have continued to grow their platform and have many big institutional clients, such as sovereign wealth funds to whom they will distribute our funds. Capchap is still in a very early stage where they continue to develop their blockchain corporate administration product. For Coin360 we’ve completely redone the backend, to ensure a faster scaling and high stability of the website. Over the near future, we’re launching new features in the theme of “crypto visualized” with several new tools for users that will aid in their crypto trading/investing and portfolio construction. Short-term priority is to get users hooked on those new features and then later translate those users into paying customers in 2023.

You’ve recently hired Richard Murray as Head of asset management, what does he bring to the table?

– Richard is a great asset for Hilbert Capital, he has 18 years of experience from business development from senior positions with different hedge funds. Most recently, and probably most recognizable in Sweden, he worked at Cevian Capital in a similar role but prior to that he also worked many years for Brevan Howard which is one of the world’s largest hedge funds. Richard’s main responsibility is to raise capital for all our fund products, and he’s brought with him a senior team of ex Brevan Howard people which covers all major continents in that respect.

What is your view on the bitcoin price specifically?

– It’s always difficult to predict of course, but when we saw bitcoin trading around USD 17-18 000 there were a lot of buyers, despite bad news every day. Personally, I’m still very optimistic on Bitcoin. It’s the number one digital asset, it’s the biggest and most secure network being 100% de-centralized. It’s also very cheap to transfer (at least for larger amounts), while being a lot easier to move around than gold. For those reasons, I believe more and more firms will choose Bitcoin over gold in the future.

Where will your main focus be during the second half of 2022?

– To grow our asset management division as much as possible, meaning, getting more investors and raising more money together with Richard. But I also want to highlight the fact that compared to just eight months ago, we now have a solid organization with all the key recruitments in place. Thus, we have more organisational bandwidth and can do things a lot quicker now – something which is key in terms of the future expansion of the firm.


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