DAA Strategy Insights: CARUS-AR
With Menno Peter Pietersen
Why did you decide to rebalance your DAA? Do you think we’ve seen the bottom?
I removed my hedge for several reasons:
- Even though we had a lot of potentially negative news, rejected ETFs, and more bans in China, crypto did not move further down.
- Bitcoin has shown quite a solid floor at 6400 USD, and we seem to have reached a (very slight) “higher low” on the 1W chart.
- The Bitcoin hash rate (the total computing power behind BTC) did not drop but rose sharply during the correction/crash of the crypto markets. This makes me think the fundamentals of BTC are still growing and long-term trust has not fallen away.
- The BTC Lightning Network and many other Bitcoin-related projects (wallets, exchanges, media, and second-layer concepts) are growing and getting better very quickly.
- Bitcoin Cash (BCash), the main competition to the real Bitcoin (BTC), is having big problems and has under-performed severely compared to BTC. This is very positive for crypto as a whole, with BTC clearly remaining the main coin in crypto.
- Many altcoins have crashed over 90% and are now showing some bounces. Many solid projects like WAVES, ZRX, ARDOR, and others have continued development and are growing despite low coin values.
- Sentiment seems to have changed a bit. Twitter and other media are becoming more positive and reasonable (less doom and gloom, but also less unrealistic bounce talk).
What changes have you made to your structure, and what was the thinking behind your decisions?
I removed our 6% TUSD hedge, raised our Bitcoin holdings a little, and removed SALT and LOOM. I lost confidence in the SALT project after they stopped lending and overall confidence in the project (not just in the price) dropped. LOOM is a project we still like. Gaming and blockchain could be an interesting combination, but with the current market trend we prefer to focus on other projects.
Apart from that, I balanced slightly more heavily toward platform-based competitors to Ethereum (ETH) like WAVES, Wanchain (WAN), and NEO. I think Ethereum has a lot of problems to deal with and the competition could take a bigger piece of the crypto pie soon.
Has the altcoin season finally begun, or will BTC continue to outperform altcoins?
A hard crash and bear market like we have now forces any investor to become more humble and re-evaluate. It is clear that during bear markets, having too much in alts is not the best move. Bitcoin is clearly still king, and we think it will stay that way.
Once/if the crypto markets recover and a new bull market begins, we expect it to start with a large move up for bitcoin. Once I see a clear long-term uptrend for bitcoin, we will consider moving a little more into alts.
If we get another true crypto bull market, I plan to take out a small percentage of high-performing altcoins to TUSD or BTC on every big move up. This will assure that CARUS-AR will have taken some value off the table should another bear market come.
But let’s first see what happens, hope the bear market has ended, and calmly wait for another uptrend. The fundamentals of crypto and blockhain have not crashed, and we remain positive long term: there are more developers and exchanges, regulation is coming, mainstream media is taking crypto more seriously, and many platforms for institutional and large investors are launching everywhere.
The future for crypto could be very very bright indeed, but there are no guarantees. This is a very high risk space. Never risk more then you can afford to lose.