Chain Venturer: Zaheer Ebtikar of Split Capital

The rebirth of liquid funds in the digital assets space.

Marco Manoppo
January 27, 2024

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Happy Weekend 🙋🏻‍♂️,

Welcome to Chain Venturer, a series of intriguing conversations with crypto investors. This week, we have Zaheer Ebtikar from Split Capital.

Split Capital is a US-based, regulated fund focusing on a blend of long-term token investing and derivatives trading.

Split Capital just launched! You can learn more about them below.

It's been a long time coming but I'm thrilled to announce the official launch of Split Capital, a liquid digital assets fund.
Split Capital, as a concept, has been in my mind for years now and it's been a dream to finally see it come to fruition.
— Zaheer (@SplitCapital)
2:09 PM • Jan 19, 2024

Before that, Zaheer has been involved in the crypto space for around seven years, focusing primarily on liquid assets while also engaging in activities like angel investing and research. He served as Research Partner at Deribit from 2021 to 2023 and was a Portfolio Manager at LedgerPrime from 2022 to 2023.

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-Marco

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4:22 AM • Jan 26, 2024

Zaheer Ebtikar of Split Capital

Zaheer Ebtikar is the founder of Split Capital, a liquid fund that specializes in trading and investing across a wide range of assets, with a particular focus on long-term strategies.

Zaheer has been involved in the crypto space for around seven years, focusing primarily on liquid assets while also engaging in activities like angel investing and research. He recently launched a venture called Split Capital. In addition to managing Split Capital, Zaheer maintains a portfolio of angel investments and offers guidance to companies he believes in.

Before that, Zaheer co-founded Immutable Capital, a prop fund that primarily focused on derivatives trading and early involvement in the DeFi sector. He then served as Research Partner at Deribit from 2021 to 2023 and was the Portfolio Manager at LedgerPrime from 2022 to 2023.

Zaheer studied at the University of California, Berkeley, Haas School of Business and earned a Bachelor of Science in Business Administration - Finance.

Split Capital just launched and is eager to support protocols and token projects in various capacities beyond venture funding. Split Capital’s goal is to redefine the landscape of liquid crypto funds, overcoming existing biases to establish a new standard for success and sustainability in the sector. Despite its size, Split Capital is committed to leading and promoting liquid crypto as a pivotal growth strategy for the entire space.

If you're a protocol or a token project, please feel free to reach out to Zaheer if you think Split Capital can be helpful.

Here’s my conversation with Zaheer Ebtikar.

Quick takeaways:

Split Capital distinguishes itself by not chasing the latest trends in crypto. Instead, it takes a more sustainable approach, working closely with various protocols while being mindful of the risks involved.
Split Capital anticipated that the ETF would not create immediate upheaval upon launch.
Zaheer did his research on FTX claims, predicting that it would catalyze a surge in cryptocurrency buying, particularly rebuying, propelling both crypto and claim prices upwards.
The ability to not just follow but also understand and anticipate the second and third-order effects of market changes is what separates the best traders from the rest.
It's about developing a nuanced understanding of the intricate interplay of factors that drive market movements, recognizing that trading is not a science but an art that one continually hones and refines.

The following paragraphs are not verbatim quotes. These are paraphrases of our conversations optimized for written media formats. Some context and nuances might not have been conveyed properly in the process.

The author of this issue is not responsible for any misconstrued statements made in the issue.

All 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.

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What was the defining moment that drew you into the world of crypto?

Zaheer, who comes from an Afghan background and grew up in the United States, recognized the potential of crypto to address significant issues like capital control and KYC/AML regulations, especially in countries facing financial system challenges.

The defining moment: This realization shaped Zaheer's commitment to the industry and reinforced his belief in the potential of crypto to provide broader access to financial markets.

Even during his university years, Zaheer was actively involved in the crypto sector, balancing his studies with work experiences that included acting as a prop trader and gaining extensive knowledge in trading markets and derivatives.

This experience contributed to Zaheer's understanding of the market and affirmed his dedication to staying at the forefront of the evolving crypto landscape.

What is Split Capital? And What sectors are you most excited about these days?

Split Capital is a US-based, regulated fund focusing on a blend of long-term token investing and derivatives trading. This approach is essential in managing the high volatility of assets like Lido or less volatile assets like Solana. The fund uses active strategies to hedge portfolio risks and smooth out returns, aiming to provide consistent value to investors.

While the fund has the capability to engage in venture deals, this is not its primary focus. Zaheer, along with the team, occasionally participates in angel investments, but Split Capital primarily concentrates on liquid markets. Starting a liquid fund was a strategic decision for Zaheer, reflecting his belief in its potential as the most effective vehicle for current market conditions.

Split Capital distinguishes itself by not chasing the latest trends in crypto. Instead, it takes a more sustainable approach, working closely with various protocols while being mindful of the risks involved. The fund is not about avoiding risk altogether but about managing it effectively to protect investors' interests.

Split Capital is keen on protocols that offer growth opportunities and require careful risk management. The focus is on finding value in the market and supporting the development of the crypto space in a sustainable manner.

What are your thoughts on the current situation with the spot ETF and how do you view this in contrast to the extreme speculations circulating on social media?

In the context of the recent developments around the spot ETF, Zaheer's perspective is nuanced and grounded in a deep understanding of market dynamics. Split Capital anticipated that the ETF would not create immediate upheaval upon launch, a prediction that was validated when they observed significant price adjustments in assets like GBTC and BITO.

Zaheer highlighted the structural inefficiencies of products like BITO, predicting its underperformance relative to Bitcoin and a consequential shift in CME futures—a forecast that materialized swiftly.

Zaheer also pointed out the strategic conversion into ETH, advising investors not just to focus on ETH vs. BTC but to consider leveraging the ETH spot and short BTC futures to capitalize on the collapsing premium. This approach, as Split Capital predicted, yielded substantial returns in a remarkably short time.

Addressing the widespread speculations on social media, Zaheer emphasized the importance of looking beyond simplistic "buy the news, sell the news" heuristics. He criticized the superficial analysis that fails to account for the underlying complexities and nuances of market movements.

While acknowledging the run-up in prices and the resultant volatility, Zaheer views these developments as far more substantial and transformative than what is generally portrayed in social media discussions.

Could you share one or two key tips or areas of focus for individuals aiming to become more active and proficient in trading the markets?

Zaheer strongly advises against trading derivatives and, more broadly, against trading in general unless one possesses a genuine passion for it. Success in trading requires not just a fleeting interest but a deep, enduring commitment to the craft.

Zaheer emphasizes the importance of self-reflection in trading, urging individuals to continually question whether their successes are a result of luck or skill and to promptly recognize and correct any misguided strategies.

Drawing from his own experience and insights shared on various platforms, Zaheer notes the harsh realities of the trading world.

He points out that even high-ranking professionals in major financial institutions eventually leave the industry, not due to a loss of passion for trading but because of the immense challenges it presents. Consistency and excellence in trading are rare, making it a relentlessly demanding field where success is often fleeting and not easily replicable.

Zaheer advises aspiring traders to go beyond superficial market indicators. He challenges them to understand the underlying mechanics and the reasons behind common practices, like selling when funding rates are high or buying when they're low. The ability to not just follow but also understand and anticipate the second and third-order effects of market changes is what separates the best traders from the rest.

In his journey, Zaheer has had the privilege of learning from exceptional mentors who instilled in him the habit of deep analytical thinking. They encouraged him to look beyond the obvious, to unravel the more profound implications of market dynamics, and to piece together the puzzle of causality in market movements. This level of analysis, akin to playing a complex game, is crucial for anyone serious about mastering the art of trading.

It's about developing a nuanced understanding of the intricate interplay of factors that drive market movements, recognizing that trading is not a science but an art that one continually hones and refines.

I recently read your writing titled “Melting Crypto Winter”. Any stories you can tell from that event?

In early October, Zaheer wrote an insightful article titled "Melting Crypto Winter," published in mid-October 2023. The article aligned with the closure of the (FTX) claims window on September 29th, a crucial event that had significant potential to influence market dynamics.

Zaheer accurately predicted the consequences of this event. He invested substantial time in comprehending the claims market, learning its structure, key stakeholders, timelines, and methods to acquire information beyond the usual scope. This effort involved proactive engagement and networking with experts, aiming for a well-informed viewpoint.

Zaheer's research led to a notable conclusion: the claims would catalyze a surge in cryptocurrency buying, particularly rebuying, propelling both crypto and claim prices upwards. He observed and documented a direct correlation between Solana and FTX claim prices, supported by both anecdotal and empirical data.

His methodical approach to market analysis focused on understanding the underlying forces behind market trends. This approach was particularly insightful in analyzing Solana's trends, which benefited from its alignment with FTX stakeholders eager to regain their market position.

Zaheer's insights, especially the diminishing of the bid in early December and the balancing of flows as Galaxy finished selling Spot Solana were more than mere observations; they were reflections of his profound understanding of market dynamics. His article "Melting Crypto Winter" effectively conveys the lessons and narratives from that time, underscoring a detailed, informed approach to market analysis.

Rapid Fire Questions

What's one piece of content every aspiring investment professional should read/watch?
- Liquidity Cascades: The Coordinated Risk of Uncoordinated Market Participants by Corey Hoffstein
What’s your biggest investment mistake?
- FOMO (fear of missing out) as crypto is very much an emotional market.
What’s the most underrated use case of crypto?
- Transparency and being able to interact with like a purely 24/7 market.
What’s your most contrarian view in crypto right now?
- If things don't work out in the next two years, I think our space is pretty cooked.
What’s the biggest risk that the crypto space is facing?
- The technical constraints at which the largest chains like Bitcoin, ETH, and Solana - the ability for these chains to kind of reach their limit versus just it being theory and then such as being like actual practice.

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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.