Monthly Manager Commentary: December 2024

Multi-Strategy Fund Performance

December was a volatile end to an otherwise strong year for crypto markets. Bitcoin surged to new all-time highs early in the month, pushing the broader market’s capitalization to record levels. However, mid-month profit-taking and uncertainty surrounding future interest rate cuts triggered a sharp sell-off, with BTC falling 15% from its peak. Broader altcoin markets were hit harder, with ETH dropping 22% and SOL declining 26%. As bitcoin typically leads in recovery, it managed to close the month down only 3%, while the broader market lagged significantly. This dynamic contributed to the Fund’s underperformance in December. Despite the pullback, the Fund closed the year up 71% gross and is well-positioned to capitalize on the favorable macro and market tailwinds heading into 2025.

Market Commentary

The crypto markets carried strong momentum into December, with bitcoin reaching a new all-time high of $108,000 on December 17th. However, the rally was short-lived as BTC retraced 15% to $91,000 within two weeks—the lowest price since breaching the six-figure milestone. While bitcoin managed a modest recovery by month-end, December marked bitcoin’s first negative monthly performance since August. As is often the case during market corrections, altcoins experienced even sharper pullbacks. Ethereum (ETH) fell 22% mid-month before partially recovering to close the month down 8%, while Solana (SOL) dipped 26% and ended December with a 15% loss.

The market correction was driven by a combination of profit-taking, macroeconomic pressures, and year-end portfolio rebalancing. After bitcoin surged over 120% in 2024, many investors opted to lock in profits heading into the year’s end. Profit-taking activity exceeded $1.2 billion on a seven-day moving average, significantly above historical norms. Additionally, data from Bloomberg revealed that bitcoin ETFs experienced net outflows of $1.8 billion since December 19th, highlighting investor efforts to realize gains and optimize portfolio allocations before the calendar turned. Macroeconomic factors further compounded selling pressure. A strengthening U.S. Dollar Index (DXY) diminished the attractiveness of dollar-denominated assets, including cryptoassets, while ongoing uncertainty around the Fed’s interest-rate policy for 2025 weighed on broader market sentiment.

Looking ahead, the short-term outlook remains uncertain, with macroeconomic headwinds likely to persist and few clear catalysts expected until later in the year. The transition to a new U.S. administration could introduce additional volatility as markets adjust to potential shifts in regulatory and fiscal policy. However, despite near-term challenges, our long-term outlook for 2025 remains firmly bullish. Institutional adoption continues to grow, supply-demand dynamics continue to be favorable, and the increasing likelihood of a global arms race among nation states to accumulate bitcoin supports a strong foundation for growth in the new year.

The Blockforce Team

Disclaimer:  This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity.