TheStreet Crypto: Coindex Capital Launches 4 AI-Driven Crypto Funds – The Street Crypto: Bitcoin and cryptocurrency news, advice, analysis and more -…

While most people prepared for a long, holiday weekend, the team at Coindex Capital Management geared up to debut four artificial intelligence-backed crypto strategies.

The Coindex AI, which was trained to read and trade crypto markets, will be responsible for the minute-to-minute management of all the firms strategies, leaving the management team to focus on operations.

Each strategy Long/Short Crypto Series, Long/Short ETF Series, Market Neutral Series and Stable Yield Series will have a minimum $100,000 buy-in for accredited investors when live trading begins in the next two weeks.

AI hedge funds have picked up a lot of velocity. In the three years ending May 2020, AI-led funds saw 34% gains compared to 12% overall for the global hedge fund industry, according to a report from Cerulli Associates.

The Coindex team has invested proprietary capital although they declined to say how much into each of the strategies and will cover the startup and operating costs for the first year, said Shareef Abdou, Coindex director of strategy and finance.

None of the Coindex strategies will be entirely in the AIs control, but by now Abdou said the algorithms are good enough to go long periods without any help.

Human intervention has not been needed in approximately 9 months of live trading to date, he said Monday.

Thats possible because the team runs many variations of the code against one another, choosing the most viable iterations to maximize historical returns while minimizing historical volatility.

Ryan DeMattia, Coindex founder and managing director, used Darwins theory of evolution to explain how the Coindex team has refined its trading algorithm, where variations of the AI represent genomes competing over generations.

What were doing, specifically, is neuroevolutionary code, he said.

DeMattia has spent over a decade trading and modeling markets, launching startups and honing quant skills that have now been codified in the teams AI.

We can really select for the features we want and that might not necessarily be the absolute highest return, DeMattia said. If our very best, highest return comes with a really, really significant draw down, that may be technically interesting. But that might not be a compelling investment opportunity.

Abdou and DeMattia say the adaptability of their AI is most evident when applied to their Long/Short ETF fund, an option they wanted to include for investors still unsure of crypto. They say the AI gained enough general financial intelligence trading in crypto markets to remain competitive when it traded in leveraged ETFs.

As long as we see the indicators we need to see to validate [the AI], DeMattia said, we can step into new markets that it can thrive in.

Abdou and DeMattia met when they were both in New York City during the winter of 2019. It was the kind of chance meeting that could have only happened before COVID-19 lockdowns made travel nearly impossible. Abdou lives in Los Angeles and DeMattia in Atlanta, where Coindexs office will be located.

If Abdous name sounds familiar, its because he was one of four whistleblowers to receive part of a $16.65 billion federal penalty against Bank of America in 2014 for its mortgage practices in the run-up to the Great Recession.

He joined Countrywide Home Loans in 2006 and later became a senior vice president at Bank of Americas Los Angeles office, where he oversaw residential mortgage-backed securities claims.

Now, hes putting that risk management and securities background to work making sure Coindex partners with the right providers for cybersecurity, custody and valuation.

Were expecting money to continue to flow into the [crypto] space, Abdou said. Even novices are getting five to seven percent savings rates from retail [crypto] products.

While most people prepared for a long, holiday weekend, the team at Coindex Capital Management geared up to debut four artificial intelligence-backed crypto strategies.

The Coindex AI, which was trained to read and trade crypto markets, will be responsible for the minute-to-minute management of all the firms strategies, leaving the management team to focus on operations. Subscribe for full article

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TheStreet Crypto: Coindex Capital Launches 4 AI-Driven Crypto Funds - The Street Crypto: Bitcoin and cryptocurrency news, advice, analysis and more -...