Astronaut Capital Quarterly Report Q2 2023
From the CEO
Q2 2023 feels a lot like the late stages of 2019 where were could finally feel some light at the end of the tunnel. No doubt, crypto still has some major hurdles over the coming years, but the fact BTC is trading above $30k after what feels like a dozen black swan events in the last year is something truly special.
BTC dominance is beating most crypto assets for the quarter while ETH continues to gain momentum. Altcoins continue to feel the brunt of the bear, in particular Layer 1’s such as BNB, SOL, ADA, and ALGO that have posted substantial losses vs majors.
All eyes are on the regulatory sphere with pending approvals (rumored) of ETF’s and hopefully a few settlements from Coinbase and Binance. It’s likely these will continue to be a major theme of the market for the remainder of the year.
From the perspective of Astronaut, our assets had a mixed quarter. Altcoins underperformed whilst BTC and ETH gained momentum.
We did not participate in any major new narratives with meaningful capital. Other than some short-term liquidity pumps in LSDs, the market has been quite stagnant.
Distributions will not occur for this quarter. Despite consolidation, performance has been largely mixed.
Our expectation is for a stronger end to the year for the overall market and liquidity to return in select alts should BTC and ETH remain at current levels or higher.
We will continue to update the community with any major changes in allocations, investment and performance in the coming months.
Matthew Dibb
CEO of Astronaut Capital
Macro Outlook
Navigating the Crucial Inflection Point for Crypto
The commencement of the Q2 2023 was largely marked by encouraging developments in the early phases of the quarter, with the markets demonstrating relative stability after ETH’s Shanghai upgrade, despite the expectance outflows of ETH being unstaked.
Markets began wading into weakness when SEC released a filing suing Binance and Coinbase, and classifying several tokens as securities (SOL, ADA, MATIC, ALGO, etc) alongside. Total crypto market cap nosedived 10% in a span of a few days, but quickly regain its ground when the Fed left rates unchanged after the FOMC meeting as inflation cools. Additionally, further momentum kicked in when Blackrock, the world’s largest asset manager, announced it has filed for a Bitcoin ETF. This reverberated positive sentiments that demand for digital assets are still strong amongst Tradfi investors.
BTC led the race as it rallied 25% after dipping below $25,000 and currently trades around the $30,000 handle. ETH, on the other hand, has been a laggard as it underperformed BTC over the same period to trade around the $1,900 handle. Total crypto market cap is trading at $1.12T, as price action trades similar to that at the start of the quarter.
News and Developments
Q2 2023 was largely marked by encouraging developments with Blackrock’s Bitcoin ETF injecting the greatest momentum as markets demonstrated relative strength. On the flip side, SEC’s crackdown on crypto, filing 13 charges against Binance and labelling more than 10 tokens as securities has caused regulatory turbulence and market unease. Overall, News has been relatively mixed with positive developments overshadowed by regulatory challenges.
Positive News
- Blackrock files for Bitcoin spot ETF
- Ethereum liquid staking hits $40b after Shanghai upgrade
- Tether collaborate with El Salvador to invest in their billion-dollar renewable energy project
- Hong Kong’s First Digital to launch FDUSD stablecoin
- Republican presidential nominee DeSantis backed Bitcoin during his Twitter Spaces with Elon Musk
- FTX 2.0 reboot plans in the works
Negative News
- Crypto losses hit $670m in Q2
- Paxos announced withdrawal from Canadian markets
- Binance commingling billions worth of users’ funds
- SEC sues Binance and Coinbase
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
There will be no dividend distributions for Q2 2023.
*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
Q2 2023 In Review
The crypto markets saw a whipsaw quarter after rallying and then dipping at the start and at the end of the quarter respectively before reverting back to where prices are at the beginning of Q2 — with the exception of BTC.
Throughout the quarter, Astro increased our exposure in the satellite portfolio into the area of DeFi and more specifically LSDfi. In addition to accumulating LDO and RPL, the fund stepped up efforts to be on the forefront, taking exposure in LBR and PENDLE.
BTC, nevertheless, outshone its altcoin counterparts during the second quarter, propelled by Blackrock’s filing for a Bitcoin Exchange-Traded Fund (ETF). This came as a surprise considering SEC historic stance against crypto. Another outperformer in our portfolio was PENDLE, which posted gains exceeding 35% since mid-June.
However, since the SEC crackdown on Binance, the lackluster returns of other altcoins (MATIC, BNB) in our portfolio counterbalanced these gains, exerting a drag on our overall performance. Nevertheless, our decision to reduce our BNB position proved judicious in light of the subsequent price decline following the SEC news.
Overall, given the mix performance of Astro holdings, the fund performed -6.97% over the quarter, underperforming BTC and ETH but outperforming total crypto market cap (excl. BTC). 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 $7.7m, which is 250% higher as compared to the value when the fund was launched in October 2017.
Liquidation of Holdings
In Q2 2023, ASTRO trimmed our positions in our legacy tokens BNB, POLS, TRU, SYN and rotated the assets into LSDfi.
Outlook for Q3 2023
A general positive outlook as we head into Q3, however, we remain cautious of macro and recessionary conditions that many Tradfi managers remain weary about. Despite that, our focus will be to continue rotating into opportunistic sectors.
Given our foray into LSDfi this quarter, ASTRO will continue to keep a close eye on this narrative. Currently, there are limited tokens available, but we expect more projects to go live in the 2H 2023 and more opportunities should arise.
On the flip side, negative developments have cast a broad net of repercussions. The regulatory environment has injected heightened ambiguity into the crypto space, and sentiment levels currently seem to be at their weakest since the beginning of the year.
Yet, it is crucial to maintain perspective in the face of these adverse events and stick to a longer-term outlook in the coming quarters.
Astronaut Capital: https://www.astronaut.capital/
Picolo Research: https://picoloresearch.com/
Stack Funds: https://www.stackfunds.com/
Medium: https://medium.com/astronaut-capital
Twitter: https://twitter.com/astronautcap
Telegram: https://t.me/astronautofficial
Disclaimer
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.
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.
