Dear Clients and Partners,
After July offered us some relief, the markets turned red (again) in August. Digital assets and the traditional markets continue to walk hand-in-hand when it comes to the FED and their rate hikes, as well as to the gloomy macro-outlook being gaged by indicators such as CPI or Inflation. Glancing at the Tech sector, Nasdaq was down by -5.22% as the “heat” is now also being felt by heavyweights like my alma mater, Facebook / Meta, who announced a downsizing. They join a growing number of tech giants in their recent awakening to a tougher-looking future. Bitcoin was down by -15.17% and the Bloomberg Galaxy Crypto Index by -12.96%.
Numbers aside, the Ethereum merge happened without any drama or action, which is a good thing! This was a big milestone for the community to have met, but since then, the good vibes (i.e. price gains) leading up the event have evaporated some as it didn’t provide the escape velocity for ETH to climb to new heights.
What also continues to surprise is the growing number of high-caliber, traditional institutions joining the digital assets space. After BlackRock, we now also have the Nasdaq creating an institutional offering for the storage of cryptos. The investment bank Nomura has also thrown its hat into the ring, and private equity titan KKR will be tokenizing their first fund. Furthermore, the Saudi Central Bank hired a “Crypto Chief” and Starbucks is cooperating with the Polygon blockchain for a loyalty card program. To this day, some of these institutions are still regularly coming out and publicly slamming the digital assets space. Yet, at the same time, they are investing heavily in building up their crypto / blockchain operations. As I said last time, “do as I do and not as I say”.
For August we were down by -2.13%. We continue to outperform the market YTD with +22.20% vs. BGCI and +18.63% vs. BTC at reduced volatility levels. Our aggressive positions were all able to outperform their benchmarks through their active approach, while our more defensive positions were able to make some gains aiding the overall performance. With storm clouds still forming in the sky, we do have our eyes on the next opportunities as times like these can produce interesting deals for the long haul. I don’t want to call it a bottom yet, as there still could be some headwinds we'll have to endure, but looking at the activity mentioned at the beginning and current price levels, things are starting to look very interesting.
I’ll leave you with the words of Mark Twain: “The secret of getting ahead is getting started”.
Have a great day and feel free to let us know if you have any questions.
Marc, and your AltAlpha Digital Team