Astronaut Capital Quarterly Report Q3 2022
From the CEO
It’s been another quarter of ‘down only’ for 2022 as liquidity and credit shocks have rocked the market for the past few months.
Sentiment appears to be very mixed with several signs of large-scale capitulation, however sporadic bursts of optimism.
It would be remiss of me to mention the macro situation, which has all markets in a frenzy. Fiat currencies worldwide are undergoing a drastic shift, and equities/bond markets show no sign of stabilizing just yet.
From a fundamental perspective, we can agree that, at least for the short term, a range-bound market is likely the best case scenario for Crypto, whilst the downside is also looking more and more likely.
Conversely, in attending some of the recent crypto conferences, we also can’t deny the heightened level of activity and optimism in the space, which is refreshing to see.
As for our portfolio, the performance was largely flat over the quarter, fluctuating weekly between positive and negative. The ETH price post-merge has suffered substantially which has affected our PNL, given it is our largest holding.
Little private investment activity has taken place as we are noticing a lot of new projects are struggling to raise or revising down their rounds. For the time being, we believe that liquid-only is the best way forward.
We are keeping an eye out for new narratives. There’s some exciting outperformance in the market, including BNB, GMX and ATOM. Portfolio rebalancing is likely on any pullback.
There will be no distributions this quarter.
As always, stay safe, and we will continue to update you on progress throughout Q4.
Matthew Dibb
CEO of Astronaut Capital
Macro Outlook
Risk assets continue to decline as global uncertainties intensify
The fear of higher inflation and stronger recessions this quarter has piled pressure on investors. Adding fuel to the fire comes the Fed’s hawkish stance at the end of Q2, where risk assets continue to decline in these gloomy markets.
Weak macro sentiments meant that crypto assets were not spared either. Despite ETH rallying 75% from last quarter on the “Merge” speculation, it was immediately met with a huge sell-off; -35%, dropping from just shy of $2k to $1.3k. Bitcoin, on the other hand, fell by 8% QoQ and continues to trade below $20k handle.
The resistance to deploying capital was more pronounced as the total crypto market cap remained relatively flat over the quarter. On a brighter note, the sideways market does provide some relief, as relative support can be observed. Going forward, we believe the bottoming of markets have begun but expect more volatility, with a bulk of reactionary price action in Crypto to spill over from equities.
News and Developments
Similar to previous quarters, news continued to thread negativity into the markets. Despite ETH completing a successful “Merge”, news of hacks, exploits, and regulatory clampdowns have greatly muted any positive developments in the space.
Positive News
- Ethereum completes “Merge”, reducing energy consumption by 99.99%
- Binance secures license in Dubai to offer more crypto service
- Alphabet, Samsung among 40 big companies to invest in Blockchain
- European exchange to list Bitcoin carbon neutral ETP
Negative News
- Fed hawkish stance to further dampen markets
- Wintermute $160m hack in their DeFi operations
- Interpol issues red notice for Terra co-founder Do Kwon
- VC firm hashed lose more than $3b in Luna crash
- New York court orders Tether to provide documents on USDT reserve
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 Q3 2022.
*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
Q3 2022 In Review
Astro’s portfolio continues to remain close to 100% deployed, aligning our interests toward a long-term mandate within the blockchain space. We are 6 months into this bear market now, and global uncertainties in the broader markets have restricted any high conviction opportunities that may have arisen.
Despite the challenging environment, the sideways trading during in Q3 does form some basis of price support. In lieu of this, we continue to consolidate our portfolio while anticipating more projects we invested in the primary markets to functionalize their platforms.
Overall, market returns were mixed so was our portfolio, resulting in a relatively flat performance 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 $6.44m since inception. The audit indicates that Astronaut Capital’s overall fund performance with paid dividends is $7.63m, which is 246% higher as compared to the value when the fund was launched in October 2017.
Liquidation of Holdings
In Q3 2022, Astro sold several of our holdings, including PRARE, ALGO and NEAR, and rotated them into BNB and APE.
Outlook for Q4 2022
Navigating the coming quarter is going to be tricky. We expect more pain in the next 6 months, as the narrative of a soft-landing appears more difficult. Central banks around the world are becoming more hawkish as the fight against inflation intensifies.
Bearish macro sentiments will spill over into Crypto stronger than before, writing off any fundamental or technical bets in this sector. Nevertheless, a few narratives we are watching closely include GameFi & SocialFi, DeFi (particularly in decentralized derivatives and yield platforms), and consumer facing SAAS ramps bridging TradFi into Crypto.
In the meantime, similar to 2018 / 2019, we are looking to ride out this bear market by having a longer-term horizon. The supported price action in Q3 has painted a more positive outlook than that in Q2, prompting that the bottoming of the markets could be nearer than envisaged.
The key here is to be patient, sitting tight on our holdings as we brace for more fears in risk assets. Instead of selling short and getting caught on the short-end squeeze, we prefer to ride and take some smart-beta in the markets through strategic re-allocation of our capital.
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.
