Blockforce Master Fund March Performance
(as of 03/31/2021)*: MTD: 24.20% YTD: 159.00%
March Fund Commentary:
The fund lagged BTC for the month (+24.2% BFC vs +30.5% BTC,) capturing 79.3% of the upside, whereas year to date we continue to outperform by 54.1%. (+159% BFC vs +103.2% BTC.) Given the defensive posture built into the fund, we are extremely pleased with the results. March was a challenging month as the market saw volatility compressed in short segments as well as extended periods of range-bound trading. BTC finished the month up 30% but it was anything but a straight line, more on that below, as it is a good month to examine.
A quick price recap for context: in the first 13 days of March BTC rose nearly 33%, experienced an 18% drawdown in the next 12 days, then price quickly reversed and closed March with a 19% increase in just six days. Perfectly normal for bitcoin in general but one of the wilder months in recent history, statistically speaking. We monitored the trend-following portion of the book and were gratified to see it hold to our core objective in such a period. Fortunately, our lending program continues to yield 10% annually and critically serves as a damper to volatility. It was a wild month but rewarding to see our strategies work in concert to achieve our stated objectives.
The beta portion of the portfolio saw strong outperformance due to our overweight positions in BNB up over 44% and ETH up nearly 34%. These positions continue to drive returns as demand for DeFi brings interest and new users to ETH. The 2nd order effects of network congestion push investment and developers onto other chains like Binance Smart Chain. This is likely a short-term pain point for gas fees but is great for the space as it forces innovation and competition. We see it spilling over into protocols such as Solana, Polkadot, Polygon/Matic, Algorand, and many others.
The majority of the fund is devoted to somewhat mature offerings as they have meaningful statistical history but we always keep our eye out for emerging opportunities. We will continue to devote resources to analyzing this sector as it breaks out. We will not, however, allow diversification to become “diWORSification”
Our beta portfolio in the Multi-Strat Fund will maintain a primary allocation to the largest digital assets: BTC, ETH, and now BNB.
Speaking of emerging opportunities, we are preparing to launch a fund specifically devoted to DeFi, more details to follow!
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 bold, but we continue to believe that with hard work, discipline, and patience, we will deliver on what we set out to accomplish.
As we stated in our previous letters, we are no longer waiving the minimum qualifications to invest in the fund as the demand is growing on a daily basis and we have to be selective due to a limited number of spots.
Please contact us if you have any questions regarding the minimum qualifications to get started, and we expect significant interest in the DeFi Fund, so please reach out if you would like more information!
Morgan Stanley & Goldman Sachs Jump into the Crypto Craze → Two of the titans of the financial industry, Morgan Stanley and Goldman Sachs, announced plans to allow their wealth management teams to offer cryptocurrency closed funds to their clients. Institutional interest in cryptocurrencies and decentralized finance continues to accelerate, and the narrative of bitcoin as “digital gold” is spreading among capital allocators and the media.
NFTs Picking Up (Even More) Steam → The NFT craze has not abated with a lot of exciting moves happening in the space over the last month: (1) Dapper Labs (creators of CryptoKitties and NBA Top Shot) raised $305M at a valuation of $2.6B from a group of investors led by Michael Jordan and Kevin Durant; (2) SuperRare (NFT art platform) raised $9M from Velvet Sea Ventures, Mark Cuban, and others; and (3) an NFT from digital artist Beeple sold for $69M at the famous auction house Christie’s.
Visa and USDC → Visa recently announced that transactions on its branded cards could be settled with the stablecoin, USD Coin (USDC). USDC was founded by Circle and Coinbase and is pegged to the US dollar. This announcement is just another step towards the adoption of cryptocurrencies by major US corporations. Not to be outdone, PayPal announced that it would allow payment directly in bitcoin.
Ember Fund raises $5.3M → Ember Fund, a mobile app that allows users to buy into managed cryptocurrency funds, raised $5.3M led by BAM.VC. Blockforce Capital has been working with the Ember Fund for a number of years now and we have a simpler Multi-Strategy Fund listed on their app.
Two Big Crypto Exchanges announced IPO plans in Q1→ Coinbase, one of the largest crypto exchanges in the US, announced that it’s planning to go public on April 14. Meanwhile, eToro said it is expected to IPO via a special purpose acquisition company (SPAC) deal in Q3 2021 through FinTech Acquisition Corp V (FTSV).
More Firms File for Bitcoin ETFs in the US → Fidelity announced plans in March to launch a bitcoin ETF. If approved by the SEC, which has rejected to date all applications from US firms, the ETF will be called the Wise Origin Bitcoin Trust and be tracked in the Fidelity Bitcoin Index. Furthermore, WisdomTree, NYDIG, Valkyrie, and VanEck have all applied as well, with VanEck being the only firm that is currently going through the SEC’s regulatory review process.
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.