2019 Market Update 004 - March In Review
Major Market News:
eToro launches in US
Circle acquires SeedInvest in preparation for the STO market
Binance Launchpad in full swing with IEOs
Coinbase announces staking compatibility for institutional clients (like us)
Kraken launches security lab to improve security of assets
Fidelity’s crypto business now live
Ernst & Young (EY) creates crypto tax tool
Arrington XRP Capital raises $100M in assets
Andreessen Horowitz do a massive restructure to do even bigger and bolder crypto bets
Lightning Network hits new network capacity all-time high
Lightning Labs releases “loop” improving bitcoin usability & scalability
Square hiring crypto engineers for open source projects
Binance takes cash for BTC in 1,300 stores in Australia
International Banking authorities raise concern that cryptocurrency may be a threat to the future of traditional banking. :)
Mystery buyer purchases 100 million USD worth on BTC on April 1st, causing a massive break out in the markets.
As Bitcoin climbed from $3,900 to $5,200 the past two days, it is safe to say that the bear market is over. That said we do not think the bull market is just here yet. A lot of technology and regulation still needs to be put in place from a fundamental perspective, and are likely to retest the 200 weekly Moving Average one more time from a charting perspective. We expect significant technological progress and releases over the next 6 months, at which point we see the Bull Market to officially kick off. This re-enforces our previous sentiment from 002 & 003: This is the period to accumulate, increase crypto count, and double down. April 1-3 was proof how fast crypto moves. This is a boat you don't want to miss. Once it takes off, it's gone.
Our Past Predictions
Prediction from Market Update 003 "[In February] we saw some rallies for the first half of the month among top 20 digital assets, the rest of the market continued on a decline. This is a pattern reminding us of the early 2017 market phase where major coins tended to lead, often followed with a month delay by the smaller coins."
Result: Small Cap coins led the charge in March. Coins outside of the top 50 produced massive returns ranging from 5-50%+ while large cap coins moved less than 4% over the entirety of the month. This allowed the fund to outperform large cap coins, despite only using 15% of it's capital, due to being on a 200 day dollar-cost averaging accumulation strategy. We completed 49/49 winning alt coin trades with an average 9.02% gain. This resulted in a net capital gain on total AUM of around 6.5% (to be verified by Trident)
Our Macro Prognostic for the coming months:
Short Term (February till October):
Markets are likely to be range-bound between $3,400 and $6,000. Intra-coin correlation remains high (80-90%), allowing fairly predictable arbitrage opportunities between daily gainers and daily losers. We expect this correlation to lower by the end of this phase as ill-intentioned projects will use the opportunity of every rally to sell off their 'bags' suppressing prices. This period is ideal for accumulation, breakout trades, and doing deep fundamental research to create a shortlist of verified high potential coins for the next phase.
Long Term (October onward):
The return of the bull market. Based on past similar market cycles, from the Bitcoin bubble in 2014 to the Tech Bubble in 2000, and the recession in 2008, most of these markets return to their next bull run after 600-800 days. Since we are nearly 480 days into the bitcoin bear market now, this timeline is closer than we think. Hence we believe by year end things are very likely to start going up, and when things go up in the Crypto space, they go up dramatically.
As pointed out last month, the 2017-2019 market cycle has performed wildly identical to the 2013-2015 market cycle.
There is one unique difference this month with the early April break out compared to last month. Pay particular attention to the Moving Average and RSI. While timeframes were almost always perfectly aligned, it seems that we have accelerated about 100 days further into the pattern. Whether this head start will get us 100 days faster to the Bull Market, or whether it will be spent with idle sideways moves is yet to be seen. Knowing so, we may accelerate our 200 day accumulation by adding a weighing factor providing heavier allocations to present day and smaller ones the further we go out.
... and like last week, it does not hurt to keep the big trend in mind...
The next bull market will likely start in 2019 and complete in 2022, before we head into another parabolic correction. That said there is no better time than now to allocate and accumulate.
Management Strategy Update:
After seeing much success with out 200 day accumulation strategy in March, we continue on. Currently sitting at 20% allocated, we aim to be 35-40% allocated by the end of April. This gives us enough 'dry powder' to buy the dip should we retest the bottom in late Q2. In the meantime we do active trades with our allocations amongst mid, small, and micro cap coins in the effort to increase our critical mass of 'blue chip' coins that we deem will be sure winners and players over the next 3-10 years. Our 'dry powder' meaning unused capital, will be put to work moving forward with institutional backed crypto loans, providing us an additional 7% annual return on dormant capital to be deployed over the coming months.
These positions will of course adapt over time, but they are based on taking a deeper look into similar market cycles and taking a lot of predictable catalysts into account.
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