Astronaut Capital Quarterly Report Q1 2020
From the CEO
Volatility continues to plague the crypto market in 2020 with a global black-swan event driving most currencies down in excess of 40%.
Our analysis concludes that the significant decrease was exacerbated by over-leveraged positions, which resulted in a market-wise ‘long-squeeze’.
While investors have high hopes that the upcoming having on May 13 will lead to the price appreciation of major currencies, risk-on/risk-off correlations could impede such performance.
Performance of the fund was lacklustre for this period, consistent with the returns in the overall market. Fortunately, no leverage was utilized in core positions which would have resulted in a forced liquidation.
The fund still has exposure to several unlisted tokens which the team is consistently talking to project owners about. More substantial holdings such as Trust Token were seeking listing in Q2 2020, however recent events may once again delay such a TGE.
AUM has consistently decreased, based on the core nature of the dividend-paying mechanics of the token. Our focus remains solely on increasing liquid assets as much as possible over the course of the coming quarters, therefore passing on as much capital gain to holders as possible.
Once volatility has subsided, the fund may utilize a small amount of leverage together with options for potential upside in the market. As of writing this however, there is not a large degree of confidence that we have yet hit bottom should macro-economic factors continue to worsen.
The team at Astronaut will continue to service token holders to the best of our ability, and we once again thank you for your ongoing loyalty.
CEO of Astronaut Capital
Battered markets seeking strength and resilience going into next quarter
Q1 2020 began on the right footing with the cryptocurrency market rallying 65% from Jan to mid-Feb. The recovery, however, quickly became muted towards the end of Feb as we experience a global market shock on the back of the Corona Virus pandemic. US equities fell 35%, the worst decline since 1987, as investors panic sell in preference of fiat and safe-haven assets (e.g. gold).
Contrary to the traditional narrative, correlations between Bitcoin and equities spiked during this period, causing the former asset to fall from its high of $10.5k to a low of $3.8k (-63%), wiping out 1y worth of gains. Altcoin markets also took a -68% nosedive from $116b to $37b. Bitcoin dominance snapped its 70% handle to a low of 62% but has since recovered.
Markets remain volatile as we continue to observe a risk-on / risk-off approach by investors, as they seek stabilisation of this pandemic. On a positive note, the total market cap has since recovered slightly, while trying to find support at $170b level.
News and Developments
A series of positive news hit the market at the start of the year only to be overshadowed by the global market shakeout, which saw a hundred billion dollars wiped out across a few days. Media outlets mainly published negative news, as we observed constant amalgamated reports between cryptocurrencies and traditional markets during this period when extreme fears are prevalent.
However, despite the decline, there was a tinge of positivity, as major announcements were seen on the national level that include India lifting its crypto ban, and China stepping up the launch on its digital currency.
Positive news includes:
- India lifts its 2-year ban on cryptocurrency trading
- China closing in on its digital currency issuance
- Bitcoin futures open interest surge above $5b with CME and Bakkt raking record volumes
- Binance officially announced its crypto-backed card, allowing payment of crypto globally
- Coinbase to integrate DeFi apps, allowing users to borrow and lend straight from their wallets
Negative news includes:
- Bitcoin Fear and Greed Index reach levels of “Extreme Fear” as Bitcoin price plunge this quarter
- Bitcoin showing signs of heightened correlations with traditional equities in global market sell-off
- BitMEX flash crash triggered $700m of liquidations, highest since 2018
- Telegram investors seeking a refund as TON launch date becomes seemingly less viable
- Adaptive Capital shuts down after losing more than 50% of its funds
During this quarter, Astro exited on a portion of SNX holdings into ETH as we look to increase portfolio holdings of major cryptocurrencies. The fund also took a small strategic position in Elrond in view of its strong fundamentals and implementation of staking rewards. A significant amount of Multivac and Perlin tokens have been unlocked as well.
Changes to Portfolio Holdings in this Quarter
Assets that have been entered into at early-stages are still to be considered illiquid or not viable to factor into performance measures.
There will be no dividend distributions for Q1 2020.
*For more clarity, please refer to our Dividend Distribution Policy
Net Fund Figures
Dividend Distribution Figures
High Water Mark
Performance Fees (10%)
Astronaut Capital will not take any performance fees this quarter, as the FUM value did not exceed the prior high-water mark. Therefore, this portion will be reinvested back into the fund.
Q1 2020 In Review
In lieu of the global market shakeout, the crypto market too experienced more than 50% decline across a few days in March, the worst since 2018. The main difference is this major sell-off did not only affect cryptocurrencies but other traditional asset classes as well. Having said that, Astro continuous allocation into major cryptocurrencies, mainly BTC and ETH, has helped to minimise downside risks, as the latter was only down 1.4% QoQ basis.
In addition, the fund also has a significant portion of illiquid tokens unlocked, namely Multivac and Perlin, where a drawdown of value was recognised after they were marked to market.
We discuss some of the metrics relating to the fund’s performance below.
Fund Performance Since Inception
The fund has paid a cumulative dividend amount of $2.07m since inception. The audit indicates that Astronaut Capital’s overall fund performance with paid dividends is $3.51m, which is 59% higher as compared to the value when the fund was launched in October 2017.
Liquidation of Holdings
During this quarter, Astro liquidated another portion of SNX into ETH for tactical asset allocation into major tokens, while maintaining about 30% of our original SNX holdings. The fund sold a small portion of ETH for ERD in view of Elrond’s strong fundamentals.
Astro also had to burn 16,540 SNX (~$12k) to unstake our SNX holdings given the debt registered by the overall staking pool.
Outlook for Q2 2020
Our analysts expect a quiet Q2 2020 on the back of a battered market. With the uncertainties surrounding the virus situation, investors’ sentiment on the global outlook remains dim. Despite this downturn, the cryptocurrency market did display significant recovery after both Bitcoin and Ethereum bounced off strongly from its lows of $3850 and $90 respectively. Nevertheless, Astro will take a cautious approach as there could be more pain ahead with the recovery taking longer than expected.
The investment committee (IC) will continue sticking to the mandate of liquidity with a focus on allocating into large-cap tokens, aligning the fund towards the macro view of bitcoin halving event and the emergence of more on-ramps for institutional adoption of Bitcoins.
Astronaut Capital: https://www.astronaut.capital/
Picolo Research: https://picoloresearch.com/
This report has been compiled by Astronaut Capital together with Picolo Research. Picolo Research is an independent provider of research on cryptocurrency ICO’s. We have not been paid, nor mandated for this research report. The views expressed within this report are Picolo’s in its entirety.
The contents of this report and its attached documents have been prepared without taking account of your objectives, financial situation or needs. Because of that you should, before taking any action to acquire or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in or downloaded from or through this website, consult your own investment advisor to consider whether it is appropriate having regard to your own objectives, financial situation and needs.
Whilst Picolo believes the information contained in this report is based on information which is considered to be reliable, its accuracy and completeness are not guaranteed and no warranty of accuracy or reliability is given or implied and no responsibility for any loss or damage arising in any way for any representation, act or omission is accepted by Picolo or by any officer, agent or employee of Picolo or its related entities. Picolo at all times reserves the right to at any time vary, without notice, the range of services offered by Picolo and its subsidiaries, and the terms under which such services are offered. The information in this report may have been used by Astronaut Capital (www.astronaut.capital) in making an investment decision. The information within this report is our own opinion only and is not to be used in making a decision for investment.
Taxation and Investment Disclaimer
Astronaut and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. We disclaim all liability and responsibility arising from any non-compliance placed on such materials by you or any other visitor to Astronaut or by anyone who may be informed of any of its contents. This is not investment advice.