Interview with Daniele Bernardi, Diaman Group CEO.
When Daniele Bernardi talks about Bitcoin, Crypto and volatility, you get the impression that he knows what it is very well and that he has studied the tools to “tame” the whims of the market.
Here’s what he told us …
Over the last few months you have been meeting with professionals from the world of finance in Europe to present the new AIF Digital Asset Fund and to talk, more generally, about how to invest professionally in crypto.
What’s it like to talk about these topics? How is your perspective received?
Finance is actually still quite skeptical. It is approaching the sector, but with great caution: this is what I found during the conferences I held in Switzerland, in the UK, in Italy and in Malta. I realized that there is interest, but also that the sector is still difficult to understand. I decided to create this fund to allow investors who want to access crypto, with their very high growth potential, to do it without the typical complications of this new technology.
It spontaneously occurs to me to ask you if you wrote your book, “The Genesis of Crypto Assets” (https://www.amazon.it/Genesis-Crypto-Assets-investment-opportunity/dp/1691859087) precisely because you were expecting some skepticism and wanted to somehow prepare the field through an introduction to this still little-known world…
Well, even in my book I wrote that less than 1% of the world population has invested so far in crypto currencies, so it is clear that there is still a lot of work to do to spread the culture of crypto among the remaining 99%. Part of this population already has a basic knowledge, but has never operated, and the other part does not have the basis to understand this phenomenon.
… And there are also those who venture into the world of crypto independently, without understanding the difficulties and risks …
Approaching cryptos on your own is risky, riskier than approaching stock markets alone. Statistics say that when the markets are doing well, 75% of the traders (in equity I mean) lose money and they can even lose up to 97% when the markets go wrong. This means that investing in the stock market is not so easy. As a result, investing in crypto is even more complicated because the volatility in crypto is at least 6/7 times higher than in the stock markets. In fact, many have been affected by the recent bubble of 2018.
At point blank, can you give me 3 words to describe the cryptos.
It is usually said that cryptos are disruptive, that they disintermediate the current financial system, and then that they are digital. In English, the 3 Ds: disruption, disintermediation, digital.
In reality, crypto currencies are an innovation that can radically improve our lifes if they are used intelligently. They should be regulated, but without the kind of over-regulation that happens in the financial markets. In fact, as crypto and the blockchain incorporate technology that guarantees absolute transparency, then it is not useful to hyper-regulate. This makes it practically impossible to perpetrate any kind of fraud.
During your conferences, you have often talked about your personal journey, how you started out in the field of crypto … Not without some caution …
I myself was affected by the bubble of the new economy, in 2000, when I had just started to work in finance. In 1999, I thought I could handle my clients very well, but in 2000 I started having some doubts, and in 2001 a number of uncertainties had arisen.
So I approached the highs of 2017 in the world of crypto well aware of the phenomenon, of the bubble effect we were experiencing, and trying to avoid a second crash.
The Bitcoin and other crypto markets have such volatility that an 80% loss may seem a bubble, but it is comparable to a 15% loss in the stock market. It is inherent to the type of market. If we look at Bitcoin from a financial point of view, we can count 3 very pronounced bubbles. But, from the statistical point of view, it has only corrected its dramatic upward trend.
It is a market that still has an incredibly high growth potential, therefore today it is worth exploiting it … With professionalism and with mathematical models of course! In fact, mathematical models are the only ones that can add value to investments in crypto currencies because there is still no fair value price or a model that can tell us that the price of Bitcoin is over or underestimated.
So, in a nutshell, what do quantitative models do?
I can manage crypto with quantitative models, reducing losses and increasing subsequent potential returns.
So, the recipe is composed as follows: quantitative models plus “a pinch of chili pepper”, that is a percentage of Digital Asset Fund, as you said during your conferences.
Tell us about this new fund managed by Diaman.
The chili pepper metaphor gives the impression that investing in crypto currencies can be scary. However, if it is integrated into an asset allocation, into a diversified portfolio of investments, it makes absolute sense to exist, a bit like the pinch of chili pepper” in pasta with clams.
Digital Asset Fund is an alternative fund, the first AIF in Malta, and it is a fund of funds.
In fact, Digital Asset Fund invests in Crypto Timing Fund, that is managed by Diaman and invests directly in crypto currencies.
This structure is necessary to be perfectly compliant with the legislation.
This fund that invests in crypto currencies buys and remains invested when the markets and cryptos are in an upward trend, while it closes the positions when cryptos start to go wrong. It’s strategic in order to avoid the losses that can be registered in this sector and can be considerable.
We must therefore handle with care. This fund, as I said before, is the optimal vehicle to be included in a client’s investment asset allocation. Moreover, investing with Diaman saves you the trouble related to wallet management, such as public key, private key, password, and all the difficulties that currently exist.
Digital Asset Fund is the first AIF authorized by MFSA in Malta. What did you think when the authorization arrived after such a long journey?
I thought it was simply the first step, the first chapter of the story, which I hope I will be able to pass on to my children. In fact, this is a fund that, being among the first and very few existing, has the opportunity to become a benchmark for the sector in the next few years. In fact, in the next few years crypto will express their full potential in various fields: economic, technological, and in various developing areas that are now still working behind the scenes.
For this reason, to understand the epochal phenomenon, I invite you to read my book and develop an interest, and then exploit it, albeit in “chilli pepper” doses.
And then, ideally write a dedication to all your readers…
I hope this book can help you understand a complicated but fascinating sector that incorporates a potential that could even change your life.
One last curiosity: more than one guest at your conferences asked if you really like spaghetti with clams…
Yes, I really like pasta with clams: when I worked as a designer engineer at Aprilia I often went with other colleagues to a restaurant that cooked them very well and I keep an excellent memory of it.