Astronaut Capital Quarterly Report Q2 2024
From the CEO
A very challenging quarter across the board as altcoins drop on average 37% for the period whilst ETH and BTC hold the line with much lesser depreciation.
High FDV coins ranging from L1’s to L2’s and Dapps have been slammed as participants blame VC unlocks for down only price action. We’ve seen small moments of relief, but sentiment seems to still be very low.
As such the ‘bull market’ is now a selective term fit for only major coins and some memes. Approval and listing of the ETH ETF may give the alt market some tailwinds but ultimately the best Beta trade to ETH is likely to be ETH itself.
We are optimistic on the coming quarter and expect bullish price action into the election.
The portfolio performed mix for the quarter though on aggregate was down. We had minimal rotation of assets during the period and only took small and selective bets on new coins.
There will be no distributions for this quarter.
Here’s to a great remainder of 2024. Stay safe out there
Until next time,
Matthew Dibb
CEO of Astronaut Capital
Macro Outlook
Estrange from rationality, crypto hits a liquidity road block
Price action for cryptocurrencies has been rather atypical in Q2, where irrationality overrides sanity. The loss of momentum from Q1 has dampened morale, as prices flushed through key support levels into the red.
After breaking an all-time high, BTC is down -12%, while ETH has declined -4% and has yet to break its ATH. Similarly, total crypto market cap has decreased -14.5% and remained range-bound for most of the quarter.
Overall sentiments in the sector was weary. Despite the S&P 500 constantly creating new highs, crypto traders have shown greater apprehension. This led us to believe that the drawdown is crypto centric, triggered by sell-offs from Germany and miners liquidating their BTC holdings, driving prices further downward. This cascade effect created panic selling, particularly impacting altcoins, with DeFi tokens bearing the bulk of the downturn.
This quarter has been characterized by a liquidity mismatch (or a liquidity blackhole) where aggressive supply of tokens are driven into the market and are not met with the corresponding demand. While some analysts believe this reversal was a correction, it is clear that we are likely in a consolidation phase.
News and Developments
Top line news continues to revolve around Bitcoin and Ethereum, with considerable attention drawn to ETFs and traditional finance inflows. The spotlight for Q2 was primarily on ETH, as investors’ excitement for its ETF came next, carrying over from the hype of BTC’s ETF. The period also saw numerous developments within the sector with more projects going live (Atheir, ZK, etc), and financial institutions increasingly seeking to establish a stronger foothold in the crypto space.
Unlike previous quarters, the past few months saw less negativity stemming from regulatory uncertainties or security breaches. Instead, most concerns were related to short-term price action, which should not diverge from the long-term outlook.
Positive News
- SEC closed its case on Ethereum regarding the sale of ETH as securities
- SEC approved ETH ETFs, 4 months after Bitcoin’s approval
- Microstrategy increased their Bitcoin holdings, adding 11,931 BTC worth $786m
- VanEck Bitcoin ETF launches in Australia
- FTX paying beyond 118% of claims to most of its creditors
- Blackrock BUIDL fund hits $375m in AUM, making it the largest tokenised treasury fund
Negative News
•Exchanges withdrawing from Hong Kong as the country continues its crackdown on Crypto
•Coinbase experiences system wide outages
•Renzo saw a massive de-peg of ezETH by 15.1%
•Bitcoin miners sold 30k BTC, fastest pace in a year ever
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 2024.
*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 2024 In Review
Given strong outflows and profit-taking from large caps this quarter, overall market sentiments have remained weak. Our portfolio, given our holdings in Alts, namely infrastructure and DeFi, has significantly underperformed BTC and ETH.
This outcome was anticipated given the risk profile that Astro was positioned in a higher beta play relative to ETH, aimed at riding this bull run.
Having said that, 90% of portfolios that are not holding BTC or ETH would have struggled to beat the market. Notably, our only outperformance was PENDLE, gaining ~30% from Q1
This quarter also marks our foray into narrative driven memecoins, where we bought TREMP in anticipation of the hype surrounding Trump’s candidacy for the upcoming election. Having said that, the team has limited the risk through small position sizing. We expect memecoins to exhibit a stronger beta and potentially outperform significantly as we approach the peak of the bull market.
Overall, Astro underperformed by -33% 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 $6.95m since inception. The audit indicates that Astronaut Capital’s overall fund performance with paid dividends is $7.66m, which is 248% higher as compared to the value when the fund was launched in October 2017.
Liquidation of Holdings
The team has trimmed our holdings in LITH and LBR. We maintain our position in full market allocation with a more optimistic view heading into 2H 2024.
Outlook for Q3 2024
Since Q1 2024, Astro’s portfolio has been strategically positioned to capitalize on the current bull cycle, albeit we may have entered our positions slightly earlier than preferred.
We maintain our strong conviction that 2024 is ‘set to be the year of the bull market rally’. Despite the sluggish growth this quarter, several indicators continue to suggest a greater potential for a break towards the upside than a downturn.
ETH has yet to break ATH and we believe this milestone is inevitable. This could trigger a rally in ETH related tokens such as DeFi, Infra and LSTs. In addition, the fact that DeFi and infra tokens have been on the flip side of this bull cycle so far, suggests a good counter trade narrative. Most of these tokens are unlocked, platforms generating sustainable revenue streams, and teams improving their token utility — all of which could drive resurgence in this area.
Aside from these sectors, we are prepared to participate in memecoins to generate further alpha, should opportunities arise.
Overall, the team is confident that we are still in the early phases of the bull market and that the long-term trend remains intact. Historical patterns indicate that momentum tends to revive in the second half of the year, typically 6–12 months after a halving event.
Therefore, we anticipate seeing a resurgence in market activity and prices towards 2H of 2024. We prefer to sit tight, not let emotions take over, and to see out this range-bound period.
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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.
