Astronaut Capital Quarterly Report Q1 2023
From the CEO
Life is looking slightly better for those in the crypto world since the onset of 2023. If we wind back the clock just six months ago, the ecosystem looked dire with bankruptcies and liquidations everywhere across the board.
A level of optimism is certainly back, with BTC leading the pack and dominance suggesting a consolidation of holdings towards blue chip coins. From a technical perspective, there’s a decent chance we have seen the lows for BTC and ETH.
Conversely, with the outperformance in blue chips, we have also seen a lot of altcoins continue to be sold off. Those who struggled to break out of the small capitalization band during the bull market are now haunted by dried-up liquidity.
Quarter on quarter, we have seen growth in our portfolio as we previously consolidated (most) holdings to majors such as ETH and BTC. We have also subsequently written off several very small investments that the fund made around ~2021 which are showing very little liquidity and traction.
It’s difficult to say where things go next. Retail money isn’t exactly lining up at the door to get into crypto, but on the other hand, one could make the case that everyone who ‘would have sold’ likely already has. For now, it’s likely crypto will continue to be affected by the ebbs and flows of the equities market volatility that we have become so well accustomed to over the past years.
Over the next quarter, our aim is to further consolidate the portfolio where possible and seek to allocate capital to only a select few coins. We may, in the near future, also seek to write down (revalue) any illiquid holdings valuations to better mark to market the portfolio at these times of illiquidity.
In the following pages, you will find Astro’s performance highlights, as the team is pleased to announce the details of this quarter’s airdrop distribution.
As always, the team will continue to keep the community updated on any portfolio changes moving forward.
Until then, be well and stay safe.
Matthew Dibb
CEO of Astronaut Capital
Macro Outlook
Surprise uplift in markets albeit macro turmoil
It was an unreal but surprisingly fruitful quarter for crypto. A contrast of two different sides of the macro spectrum — with banks like SVB, Silvergate, Signature and even Credit Suisse putting traditional financial markets into turmoil. Whereas, total crypto market has seen its winter thawing, providing a glimpse that the bottom might be in. One thing for sure is volatility had spiked to almost 200% this quarter.
Total crypto market cap has rallied ~45% this quarter. BTC and ETH led the race as they traded just shy of $26k and $1.7k a piece, posting returns of 61% and 43%, respectively. Momentum is looking good so far and the formation of a base support provides further confidence for potential upside in the coming quarters.
Despite the bullishness in crypto, we believe sentiments remain mix with many calling out this rally as unsustainable. At the most recent FOMC meeting, we have seen the Fed opting to continue interest rate hikes as tightening remains on the cards. Crypto markets are still very sensitive to macro headwinds, hence expect volatility spikes going into Q2.
News and Developments
The most prominent news this quarter evolved from a global banking fallout, causing instability in stablecoins. USDC de-pegged to as low as 20% from par, causing chaos before the Fed steps up to secure depositors in SVB, easing the markets.
On the flipside, there continue to be strong developments within the space with ETH Shanghai upgrade round the corner, and more actual deployments from governments and institutions have also taken shape.
Positive News
- ETH one step away from Shanghai upgrade, with anticipated launch in April
- Starbucks entering into Web3 on Polygon for their rewards program
- Creditors of Mt Gox getting close to compensation after 9 years
- Australia RBA announces pilot for eAUD
- Number of BTC and ETH addresses (with at least $1,000) grew 28.1% and 27.5% the past year
Negative News
- Global banking crisis deepens following a series of collapse in US and Europe
- Circle’s USDC de-pegged after SVB Collapse, causing chaos
- Crypto layoff’s top 2,000 jobs in 2023 alone
- Paxos to stop minting BUSD following SEC legal action
- Another Bitcoin ETF by ARK and 21Shares rejected by SEC
Astronaut Holdings
Changes to Portfolio Holdings in this Quarter
Total Portfolio (Liquid Assets)
Illiquid Assets
Assets that have been entered into at early-stages are still to be considered illiquid or not viable to factor into performance measures.
Dividends
Distributions to token holders
Astronaut Capital declares a dividend payment of $0.027 per ASTRO token, which represents 50% profits distributed to ASTRO holders, translating into a dividend yield of ~22% versus the current ASTRO price.
The dividend is payable proportionally to all eligible token holders based on the number of tokens (ASTRO) held as of the snapshot date, 3 Apr 2023, 14:00 hrs (GMT +8). A breakdown of dividend calculation can be found below.
*For more clarity and dividend criteria, 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.
Astronaut Performance
Post Mortem
Q1 2023 In Review
Astro’s decision to tactically deploy ~100% assets last quarter turned out to be a favourable decision. The fund manages to ride the market’s beta during Q1, with most of assets in large caps (namely BTC, ETH, BNB) outperforming most altcoins in general. The team’s strategic trade into MATIC since Nov and Dec last year also paid off with a ~23% gain, where we took some profits off the table.
Conversely, a number of our early-stage investments have failed to meet our performance standards. The team was cognizant of this possibility and has subsequently decreased our exposure to such investments considerably over the past few quarters, while placing greater emphasis on liquid tokens. In light of this, we have decided to rotate out or write off these investments in order to provide an accurate representation of our portfolio.
Overall, Astro delivered a performance of 32% over the quarter. We discuss some of the metrics relating to the fund’s performance below.
Comparative Benchmarking
Fund Performance Since Inception
The fund has paid a cumulative dividend amount of $6.58m since inception. The audit indicates that Astronaut Capital’s overall fund performance with paid dividends is $7.78m, which is 253% higher as compared to the value when the fund was launched in October 2017.
Liquidation of Holdings
In Q1 2023, ASTRO continued to trim our positions namely in MATIC, TRU, DOT, GS, and have written off DuelistKing and Epic Meta, as the firm has been struggling since the FTX saga and unfortunately did not have funds to sustain further.
Outlook for Q2 2023
Macro conditions remains key in dictating the trajectory for crypto markets. We expect further repercussions from the banking crisis, as financial conditions continue to get tighter. This, in turn, leads us to believe the short-term outlook for the crypto market is more likely to be characterized by headwinds rather than tailwinds.
During the Q1, BTC and ETH have displayed notable growth, with the former exhibiting greater momentum. Prices are also trading above their 2nd and 3rd base support levels and have formed an upward trendline, leading to us believing that the bottom is likely in. Presently, the markets are trading on the top side of the range, and it is anticipated that they will remain sensitive to significant price fluctuations going into Q2 2023.
Liquid Mid to Large cap tokens remain our priority as we focus on the infrastructure, AI, DeFi and cross chain sectors. However, while these sectors are highly promising, we are mindful of macro conditions and additional regulatory scrutiny by the SEC. Therefore, it is prudent for us to balance these factors and adapt our portfolio positioning, as necessary.
Astronaut Capital: https://www.astronaut.capital/
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Stack Funds: https://www.stackfunds.com/
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Disclaimer
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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.
