Astronaut Capital Quarterly Report Q3 2023
From the CEO
It’s been a bumpy 18 months in crypto but we can feel some optimism in the air. Attending conferences, meetups and hackathons, crypto is alive and well contrary to popular belief.
Putting macro and the economy aside, we feel we are at a point where most tourists have already left and the remaining people are the builders and long-term investors that aren’t going anywhere.
We believe this is the time to buckle down, be selective about allocation and prepare for the inevitable leg up.
Over the coming months, you will likely see more activity from us, either in a research or execution capacity.
We observe that the primary market is still licking its wounds, however, the secondary (liquid) market is now getting some love. This will be our focus.
In keeping it brief, we don’t have a lot to reflect on this quarter. Some increased exposure was made in old DeFi coins and some minor portfolio re-weightings.
You will find more details in the latter pages of this report.
Hoping we have some more activity between now and the New Year.
Back to work it is,
Matthew Dibb
CEO of Astronaut Capital
Macro Outlook
A Shift from Shadows to Progress in Cryptocurrencies
As Q3 of 2023 draws to a close, there is an undeniable sense of optimism pervading the cryptocurrency realm. The quarter was marked not merely by the passage of time but by substantive milestones, including the launch of BASE L2, the dismissal of the SEC lawsuit by Coinbase, and burgeoning institutional activity.
Yet, this progress is shadowed by subdued price action and low liquidity as markets lack new inflows. The cryptocurrency market navigated another quarter of sideways trading, albeit in the lower range of the quarter. This phase comes after mid August when crypto assets slump amid macro weakness after interest rates hit multi year high. However, on a brighter note, the market’s trading between the upper and lower bounds of Q2 indicates a semblance of stability as the bulls and bears come to a standstill.
Currently, the cumulative crypto market capitalization stands at approximately $1.051 trillion. Leading the pack, Bitcoin and Ethereum are priced at $26,900 and $1,660 respectively, marking a decline of -12.3% and -11.8% for the quarter.
News and Developments
A largely positive quarter as more developments in the cryptocurrency space take shape. One of the more salient news of the quarter has been the resurgence of interest from TradFi. Banks and institutions once again display an invigorated enthusiasm for the crypto sector. The significance of infrastructure and adoption rails, particularly with the launch of BASE and encouraging advancements in the ETF domain, also suggests a robust framework is being put in place. This could potentially catalyse the seamless integration of real world assets (RWAs) into the cryptocurrency sphere.
Positive News
- BTC diverge with traditional markets as correlation with DXY hits zero
- Grayscale won its appeal against SEC to convert bitcoin trust into ETF
- Paypal launches stablecoin PYUSD and launching on Venmo soon
- Citigroup is launching “Citi Token Services.”, allowing customers to convert deposits into digital tokens
- Google updated its advertising policy to allow promotion of blockchain video games that incorporate NFTs
- Coinbase launched its L2 Mainnet, BASE
Negative News
- Binance US facing more departures of high-level executives
- FTX to liquidate billions worth of crypto assets
- Mastercard ending crypto card programs in South America
- SpaceX reduces its value of Bitcoin holdings
- 8 year Dormant ETH address transferred its entire balance into Kraken
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 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
Q3 2023 In Review
It was another quarter of sideways action, where markets traded within a more confined range than in preceding quarters. With liquidity thinning out and overarching macroeconomic fragilities, the quarter posed intricate challenges for those seeking clear directional trades.
Interest rate spike in mid August sent ripples through the market. The concurrent decisions of GSR and Binance to dial back on their operations further exacerbated this instability, eventually resulting in a 10% drop in Crypto, paring the gains made earlier.
Yet, as with every cloud’s silver lining, September presented a window of opportunity. ASTRO secured positions in LINK — anticipating its cross-chain adoption — and in SNX, buoyed by the momentum of its V3 rollout. The foresight in LINK indeed bore fruit, as we witnessed a 25% rally thereafter.
The team also continued paring down legacy holdings within the GameFi realm, including assets like APE and MARS4. The portfolio took on a clear direction, heavily tilting towards infrastructure (65%) and DeFi (30%) tokens, positioning us robustly for the upcoming months.
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 $7.59m, which is 244% higher as compared to the value when the fund was launched in October 2017.
Liquidation of Holdings
In Q3 2023, ASTRO continued consolidating the portfolio and trimmed down positions mainly in the GameFi segment such as APE, MARS4, ZODI, GCOIN and PTF.
Outlook for Q4 2023
The sentiment embedded in our previous discussion rings clear — we believe crypto is emerging from the shadows, positioning it for progress in the coming months.
Central to this unfolding narrative will be DeFi and Infrastructure, with other sub-narratives like LSDfi Restaking, on-chain derivatives, and RWAs poised to offer timely opportunities should a thematic sentiment arise.
Nevertheless, our conviction remains steadfast that BTC and ETH will likely spearhead this anticipated bull run, which is bolstered by the recent surge in BTC’s dominance. Thus, we’ve strategically oriented a significant tranche of ASTRO portfolio towards these frontrunners, at least in the short term. Historical trends also suggest that a bull run typically invigorates large-cap cryptos before cascading into a full-blown Alt season.
Further enriching our view is the divergence between cryptocurrencies and traditional equities. This uncorrelation fortifies the notion that, despite macroeconomic headwinds, cryptocurrencies might deliver an unexpected bullish jolt. However, it is crucial to remain cautious: should the equities market falter, investors could revert to a risk-averse stance, impacting the crypto sector.
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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.
