Blockforce Master Fund February Performance
as of 02/28/2021)*: MTD*:60.10% 2021: 108.7%
February Fund update:
The fund performed well compared to bitcoin in February. Once again our overweight allocation to Binance drove our fund well beyond our benchmarks. Binance dropped the whitepaper for their own smart contract chain in April of 2020 in order to compete with Ethereum’s smart contract platform. By January of 2021, many users switched over from Ethereum due to high gas prices and the low switching costs. This in turn drove the price up nearly 500% YTD.
The fund captured 165% of the upside of bitcoin in February and 211% in January. We always preach about diversification and months like this remind us why. We continue to add DeFi tokens to our portfolio as we firmly believe they still have tremendous potential. However, true to our risk management mandate, even with our enthusiasm, our investment committee decided to allocate between 2%-3% of our portfolio to the novel category.
We continuously receive internal and external inquiries regarding the fund, NFTs, DeFi, and price predictions. Instead of answering these individually, we will be holding webinars on a regular basis to cover the fund performance and these topics. We plan to present for 15–20 minutes and then open up at least 10 minutes for Q&A.
As some of our readers and investors might already know, we launched Onramp Invest — a financial technology platform that will enable financial advisors to allocate to cryptocurrencies and other alternative investments directly without waiting for an ETF or other product to be approved. The Blockforce team, in conjunction with the Onramp team, produces institutional-grade research on a regular basis for all of our subscribers on the waitlist for Onramp. For those looking to learn more about the blockchain and cryptocurrency space, click here to access the educational primer. For an example of some of the research, we are putting out, here is a link to “The financial advisor’s guide to markets”, “Digital Gold”, and “NFTs and how do they work.”
Bitcoin hit a market cap of $1T (yes, trillion!) in mid-February as the cryptocurrency gained acceptance among mainstream institutions and investors.
Bitcoin ETF Purpose Investment’s Bitcoin ETF (BTCC) was given the green light to trade on the Toronto Stock Exchange in late February, making it the first crypto ETF in North America. In two days, the ETF gained $422M in AUM. It should be noted that no Bitcoin or crypto ETFs have gained approval in the U.S. yet.
Tesla In early February, Tesla added $1.5B in Bitcoin to its treasury to diversify its cash holdings and stated the company would accept bitcoin as payment for its products.
NFTs Non-Fungible Tokens are the craze right now. These unique digital assets live on the blockchain and can represent anything from algorithmically generated art to virtual property. For example, a Lebron James highlight sold for $200K, and a piece of land in the game Axie Infinity sold for $1.5M.
DeFi DeFI continues to outperform in early 2021. Tokens such as COMP, AAVE, and LINK hit new all-time highs, and in some cases performed better than bitcoin. Certainly, the Multi-Strat fund has benefited from strategic allocation to these tokens.
BNY Mellon The oldest bank in America joined the cryptocurrency fray stating that it will hold, transfer, and issue bitcoin and other cryptocurrencies on behalf of its asset-management clients. Furthermore, the bank partnered with Fireblocks to bring state-of-the-art security to its custody solutions.
SEC Updated Guidance Last Friday, the SEC put out a “risk alert” updating the key items they will look for when they do audits on IA’s who engage with ‘digital asset securities’ and digital assets.
Gas Fees on Ethereum High gas fees (transaction costs) on Ethereum have persisted, incentivizing more activity in alternative DeFi environments. Gas fees are up due to increased demand on the Ethereum protocol with simple transactions executed for a $10 fee and swaps on decentralized exchanges commanding $100+ in some cases. Ethereum is exploring solutions to lower transaction costs. Although these fees frustrate some market participants, they also indicate a healthy supply and demand-driven ecosystem.
Binance Coin Binance Coin surged in January and February and is now the fourth-largest cryptocurrency by market cap. Although mainly a centralized exchange, the Binance Smart Chain is a semi-decentralized smart contract blockchain with much lower network congestion and transaction fees. The switching costs were low for developers to move popular DeFi concepts and protocols over to BSC. Binance Smart Chain is powered by Binance Coin.
Crypto Companies Looking to Go Public Coinbase filed its Form S1 with the SEC, indicating the company’s intention to list its Class A shares directly on the Nasdaq Exchange. The eye-popping valuation sits at about $100 billion for Coinbase and the CEO of Binance, CZ, called it “too low”. In addition, Bakkt, a cryptocurrency futures exchange, will go public through a merger with VPC Impact Acquisition Holdings, a special-purpose acquisition company (SPAC) valued at $2.1 Billion. The era of fintech unicorns is here so please make sure to check out our very own product, Onramp Invest.
A Reminder about our fund objectives:
We continue to steer our fund towards our core objectives.
Our mission remains:
80% of the upside of the crypto markets with 40% of the downside.
Half of the volatility of a long-only cryptocurrency portfolio, and
Little to no correlation to other asset classes.
These objectives are audacious but we continue to assert that risk management will lead to better outcomes for our fund as well as our investors.
As a reminder subscriptions are only available once a month. The deadline is fast approaching and if you have been on the fence, now is the time to reach out to get the process started.
Eric Ervin, CEO
Co-Founder Onramp Invest, LLC
*Blockforce Capital Management, LLC and its affiliates are furnishing this publication (this “Article”) to sophisticated current and prospective investors for informational purposes only in relation to existing or potential subscription in the Blockforce Multi-Strategy Fund. This is neither an offer to sell nor a solicitation to buy units or shares in any fund. Any such offer or solicitation will be made solely through definitive offering documents, identified as such, which will contain information about each fund’s investment objectives and terms and conditions of an investment and may also describe risks and tax information related to an investment therein and which qualifies in its entirety the information set forth in this Email. Interests in the Fund are exempt from registration under the Securities Act of 1933, as amended, and Regulation D promulgated thereunder, in accordance with the definitive offering materials. Investors should conduct their own assessment prior to making any investment and consult their own investment, legal, accounting and tax advisors in order to make an independent determination of the suitability of an investment. An investment in the Blockforce Multi-Strategy Fund involves significant risks, including entire loss of investment, and is suitable only for sophisticated accredited investors. Past performance does not guarantee future results.