Eric Jackson's EMJ Capital is launching a crypto-focused treasury company designed to reduce volatility through active hedging while maintaining exposure to digital assets. The new venture, EMJX, will invest in Bitcoin, Ethereum and select smaller cryptocurrencies using proprietary artificial intelligence models to manage risk.
What Happened: Multi-Asset Treasury Launch
EMJ Capital is preparing to launch EMJX as a crypto-focused treasury company that will differentiate itself from existing players like Michael Saylor's Strategy Inc through its multi-asset approach and active hedging strategy. While the company will buy and hold digital assets, it aims to limit significant drawdowns during market declines while still capturing gains during rallies. Crypto treasury companies allocate cash reserves to holding Bitcoin or other cryptocurrencies as strategic assets.
Backtests of EMJX's strategy indicate the treasury company's investments would have gained 31% this year, even as Bitcoin and Ethereum have declined 3% and 10% respectively. Strategy's shares have fallen 41% over the same period.
Why It Matters: Risk Management Approach
"We think the next frontier is risk-managed digital treasuries," Jackson said in an interview. "It still allows us to hopefully capture the upside when bitcoin is doing well but helps insulate us from these massive drawdowns during these winter crypto markets."
The strategy relies on proprietary AI models that incorporate signals from both Bitcoin and Ethereum rather than focusing on a single asset, which Jackson argues makes the models more robust.
Jackson contends crypto markets offer richer data sets than traditional assets because blockchains record money flows in real time.
This transparency allows firms to study large market participants' behavior and track their performance patterns.
For smaller cryptocurrencies, EMJ will apply stock-picking expertise from Jackson's hedge fund.
He cited used-car retailer Carvana as an example: after the stock dropped to $3.50, his models flagged it as a buy at $11, and it traded at $378 on Tuesday. "We only have to be right on a handful and it could have a very significant impact on the value of the overall treasury as it plays out," he said.
Read Next: XRP Climbs From $1.98 Low But Must Clear $2.25 For Further Gains, Analysis Shows