NapoleonX Newsletter — April 8, 2020
Dear Napoleonians,
What a month !!!! It’s been a historic market to trade, and the painful journey for some traditional assets is only just starting. Judging by the sharpness and the depth of the initial plunge, we should all be prepared for 1929 depression environment. Let’s hope the leaders of this world have learned their history lessons and will play this as well as possible.
Market update
In this context, the crypto markets were not immune to this turmoils and had one of their sharpest fall ever. It has been quite puzzling for advocates of decorrelation and sound “monetary system”.
However, if you understand how the traditional asset market function is such crisis mode, then it is not that strange. Indeed, when you have a sharp plunge in one market, you usually have the investors in the market that get margin calls from their brokers or their banks and most markets use leverage these days.
As most investors are invested across various asset classes, they usually need to liquidate some positions to raise the necessary cash. The market into which the first crash happens often become very illiquid and “undervalued” and thus is not the best candidate to raise cash.
Therefore, these multi-asset investors cut some exposure elsewhere to raise cash. That is the very reason why in epic crisis correlation between risky assets goes up very rapidly. This time was no exception, and crypto assets are one risky asset class like plenty of others. Even gold consolidated at the climax of this month.
In a profound crisis, you usually enter a second stage where decorrelation makes a comeback, and asset classes start living their lives separately once again. So it is about now that we will be able to see whether crypto assets, like gold, will become immune and even benefit from this acute crisis. And given what the Central Banks and the governments have announced the debasement of money is assured now.
Governments will issue tones of debt to try to fill the gaps of the plunging economy. The Central Banks will be the ultimate lender for existing debt as well as the debt that will be issued by these governments. And people do not necessarily realize that we are starting this historic crisis from a very weak position with highest debt levels by corporates, governments, retail and Central Banks.
Bitcoin was born during the banking crisis and will become an adult during this depression. It might become the modern version of gold as it is much easier to make run an economy with a digital currency than with a barbaric one such as gold.
In this context, we are proud to say that all of our strategies, that you can implement if you are registered on our napoleonx.ai platform made fresh All Time High during this month. For example, our BTC.USD LO strategy that has been live since the launch of our platform on April 30, 2018, returned 3,9% when BTC was down 25% thanks to some tactical long trades. The ETH.USD LO returned 13,6% when ETH was down 39% also thank to nicely timed tactical long trades.
Sales activity report
In this challenging environment, we have seen several well-known crypto hedge funds shutting down their funds, returning back the proceeds to investors. No need to precise that sales activity was completely frozen during this month where clients were more looking to protect themselves for safe seeking rather than looking for investment opportunity.
On our side, this awful month allowed us to prove our robust process in terms of organization (full remote), structuring (the Napoleon Bitcoin Fund has a negligible tracking error vs its BRR benchmark) and performance generation ability (see above the positive return posted by our algos).
Even if the decorrelation was not significant in March, we are still convinced that cryptos will have a major role in the coming future as a credible alternative to full-loaded Central Banks and their fiat currencies. Even Madam Irma could not tell exactly how this COVID-19 will end and how long time it will take, but everybody can easily understand that free lunch only exists in a fairy tale. Somebody will have to pay those explosive and massive public debts. Hence, alternative assets will have a growing influence in a classic financial world where trust and confidence could disappear.
This specific crisis coupling with our regulatory and robust set up explains why we are still confident to onboard institutional clients within the cryptoworld even sooner as expected. And we are more than ever concerned to evangelize cryptos as singular investment solutions.
Performance fees / management fees payment
As announced in our latest newsletters, the napoleonx.ai platform has been updated on March 2020 to onboard NPX holders who want to receive the share of fees they are eligible to.
As of today, NPX holders registered for the perception of their license fees have access to a dashboard (portfolio tab) where they can see the Accrued License Fee, which is the License Fee computed since the beginning of the period (currently from April 1) and updated every day at midnight, the License Fee Balance which is the sum of previous computed License Fees that have still not been paid (because the threshold has not been reached) and the next monthly Payment Balance which is the amount to be paid on said month, which include an ETH value which corresponds to the ETH equivalent amount of this fee.
For this period, one external (not a member of the team) NPX holder is eligible for a payment that will occur this month.
Conclusion
In this historical context, we are hopeful that history is being written and that cryptocurrencies will emerge as one of the few winners which should validate our business case for setting up a dedicated asset manager. In this context, our strategies are also proving very resilient and even profitable for you if you are disciplined enough to follow them.
If not, then Napbots has been set up for you as we are proposing to automate the implementation of these strategies and even providing you with much more sophisticated strategies that run every hour, 24/7.
Remember to trade wisely and to adjust your risk to the historical context.
Sincerely yours,
The co-founders of the NapoleonX project
