Sector with best $ opportunity?

Do you enjoy the sector you're covering? Non-sexy industries can be really fun since it exercises a different set of analytical skills. Sure everyone's got a view on the AI bubble, but how many people have a view on the geopolitics of rare earth metals?

You might also be underestimating what I mean by liquidity.. lot of names in the s&p trade sub 100m a day, even sub 50m a day. If you really want scale, you can’t be messing around with 20m positions. 

"Right way volatility"? September's been an absolute bloodbath for tech pods.

PM in HF - Other

The problem with crypto is the concentration of liquidity. Bitcoin & Ether are 75% of the total crypto market cap, most of the $ on the table is in a few bets. If you want a diversified portfolio of bets (i.e. any ratio) you are going to sacrifice liquidity. 

It's certainly difficult but is undoubtedly improving by the day. There are lots of exchanges/DEXs already where its becoming increasingly easier for institutional-size to move between tokens instead of having to reset to fiat without sacrificing liquidity (largely thanks to the massive interest in stablecoins). As institutional access continues to ramp and crypto is more widely adopted by retail around the world that should in theory become less of a problem over time. 

Just to emphasize again, I'm not saying crypto companies are good investments, just that I think this is the best "sector" in terms of opportunity to generate profit. Frankly I think 90%+ of businesses operating in the space are absolute dogs.  

Today you can't be a $5b+ HF effectively deploying wholly into crypto expecting public markets-like liquidity comfortably, which is why so many of the bigger funds have large VC components that more or less operate on the "greater fool" theory for achieving any real monetization. But I do think that day is coming and quicker than most would expect. You're right that 90%+ of strategies today are basically locked into just focusing on BTC or ETH and their derivatives if they want to have real scale, but that in and of itself isn't exactly a bad constraint to have. I know multiple 9-digit funds (almost exclusively quant given the programmatic nature of crypto) that are posting consistent double digit returns with sharpe and sortino ratios above 4x over multi-year timeframes. That kind of performance will continue to draw attention from allocators and by extension the broader cap markets ecosystem, which in combination with governments becoming increasingly friendly to crypto (in part because it lets them pump their own bags for things like sovereign debt/political corruption - I'm not at all arguing this moral hazard is a positive, just that it is a meaningful factor) helps spur the infrastructure buildout necessary to loosen those liquidity constraints.

As far as diversification goes, in my opinion it's less important in practice to be diversified across different tokens than it is to have a diversity of strategies being deployed on the same chain. All tokens regardless of how much liquidity there is have high betas tied to those main 2. It's not terribly difficult to (for illustrative purposes) have a 30/60/10 structure to your portfolio where 30% can rip when BTC/ETH is on a bull run (and can be titrated down as markets turn), majority is just steady eddying it, and have the other 10% structured as an aggressive hedge for the inevitable sudden down swings. The markets as they operate today seem much more applicable to what macro/vol traders are good at, with a smattering of credit (just going off the backgrounds of people I know) than it is for those coming from equities. Because quite frankly, none of these tokens have any intrinsic value/cashflow which makes traditional valuation methods completely pointless. It's much more about exploiting the psychology and behavior of retail than any sort of fundamental analysis.