Crypto Market Commentary
18 July 2019
Doc's Daily Commentary
Look for the next Trade School session to be posted in the OMNIA Discord channel for Friday July 19 at 1100am ET/1600 UTC.
Our most recent “ReadySetLive” session from 7/17 is listed below.
Mind Of Mav
Why You Need To Think Like A VC
Grayscale Investments, a digital currency fund company that caters to institutional investors, just put out their Digital Asset Investment Report for Q2 2019.
You can check it out here: Grayscale-Digital-Asset-Investment-Report-Q2-2019-July-19
These are some of their takeaways:
Recent rally in digital asset prices is supported by fresh investment:Strongest quarterly inflows since Q2 2018, with inflows into Grayscale Products nearly doubling quarter-over-quarter. Total Investment into Grayscale Products in Q2 2019 was $84.8 million, bringing total investment into Grayscale Products for the first half of the year to $127.4 million.
With a digital asset market resurgence, Grayscale assets under management (AUM) nearly tripled: Grayscale AUM grew from $926 million at the end of Q1 2019 million to $2.7 billion at the end of Q2, and all ten investment vehicles included in the Grayscale family of products generated positive performance, net of fees for the first time.
“Alt” investment cycle resumes: Led by Grayscale Ethereum Trust and Grayscale Ethereum Classic Trust Grayscale products — products excluding Grayscale Bitcoin Trust accounted for 24% of inflows this quarter, versus 1% in Q1 2019.
So, what can we takeaway from this?
Essentially, there’s been a resurgence from institutional investors as crypto has become a hot investment again.
Of course, you probably implicitly knew that, but it’s nice to see the data to back that up.
If you’re a data oriented person like me, you can go deep into this spreadsheet which lists what nearly 800 crypto-centric investment funds and hedge firms are putting in their portfolio.
For those not wanting to undergo death by speadsheet, here’s a quick CTRL-F analysis:
BTC: Held by 231/772 funds
ETH: Held by 135 funds
XRP: Held by 79 funds
LTC: Held by 59 funds
BCH: Held by 41 funds
EOS: Held by 39 funds
BNB: Held by 37 funds
Perlin: Held by 36 funds
Zilliqa: Held by 34 funds
Dash: Held by 32 funds
Fantom: Held by 31 funds
0x: Held by 31 funds
Stellar: Held by 29 funds
Mainframe: Held by 28 funds
Coinbase: Held by 27 funds
Origin Protocol: Held by 26 funds
XMR: Held by 25 funds
Zcash: Held by 24 funds
Basis: Held by 23 funds
NuCypher: Held by 21 funds
Celer Network: Held by 20 funds
Hedera Hashgraph: Held by 20 funds
Bluzelle: Held by 19 funds
Wax: Held by 17 funds
Blockstack: Held by 15 funds
Polkadot: Held by 14 funds
Filecoin: Held by 14 funds
That’s just barely scratching the surface.
So what’s the takeaway here?
- Institutional players love Bitcoin
- Funds like any degree of stability or at least something to justify these high risk assets
- They love infrastructure plays (sell pick axes).
- They love hedging for and against blockchain with alternative consensus models and alternative DLT solutions
- This goes for why so many Bitcoin forks are here: they hedge Bitcoin and have a tolerable loss threshold even in tough markets
- They build portfolios around the top 10, and hardly go outside that except for very specific plays
- There is no consistent portfolio allocation except for a preference towards large caps
- Funds like investing in other funds
- Funds like investing in fiat on-ramps
- Funds like investing in trading infrastructure.
There’s certainly more we can glean from so much data, but hopefully you can begin to see how funds operate in this space, hedge risk, and look for key opportunities.
Many funds focus on being venture capital rather than hedge firms, but those of the latter tend to focus on quantitative strategies.
To round this out, I think it’s prudent to employ an evaluation model that a VC would use in evaluating any of these projects for potential investment. Intentional investment, while somewhat intimidating or pedantic, will help you better separate logic from reason.
Opportunities exist in this space, even as Bitcoin controls 2/3’s of the market. Go find it.
— THREE KEY ELEMENTS
1) Smart Founders
2) The Idea
3) The Execution
ABOUT THE PROJECT
Which key problem does the project solve?
What valuable aspect of human nature is the protocol serving?
What is the Massively Transformative Purpose (MTP) of the protocol?
What are some key applications of the protocol?
Why would the protocol reach super dominance?
Who is the starting market?
How is the project leveraging network effects / Metcalfe’s Law?
(Developer Ecosystem / Marketplace & User / Investor, Speculation & Hype)
How does the protocol tackle the blockchain trilemma?
(Decentralization / Security / Scalability)
In what programming languages can developers build on top of the protocol?
Is the protocol interoperable with other blockchains?
Does the protocol have centralized and/or distributed competition?
Why does the protocol have a good chance at beating those competitors?
If this protocol has its own token, why does it need it?
How does this protocol generate and capture value?
TEAM & COMMUNITY
Why is the team credible?
How is the community engagement?
FUNDING & GOVERNANCE MODEL
How and when was the protocol funded?
Are the technology and governance model both decentralized?
STATUS & CRITIQUES
What is the current status of the protocol?
Is the blockchain actually used with transactions (check blockchain explorer)
Is there an innovation gap?
Critiques / Flaws / Disadvantages?
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An Update Regarding Our Portfolio
We are pleased to share with you our Community Portfolio V3!
Add your own voice to our portfolio by clicking here.
We intend on this portfolio being balanced between the Three Pillars of the Token Economy & Interchain:
Crypto, STOs, and DeFi projects
We will also make a concerted effort to draw from community involvement and make this portfolio community driven.
Here’s our past portfolios for reference:
RSC Managed Portfolio (V2)
RSC Unmanaged Altcoin Portfolio (V2)
RSC Managed Portfolio (V1)