This month Blockforce Capital officially went live with our new market neutral trading strategy in our recently launched second fund. For some time we have been receiving persistent interest from large institutional allocators for a market neutral only fund. In an effort to capitalize on that demand, we are currently developing a machine learning based trading strategy that we hope will deliver positive returns every month regardless if the market is up, down, or sideways.
In August, we initially funded the strategy with our own capital. Now we are now looking to raise $5mm of “seed” capital for this new Market Neutral Fund. This $5mm will allow us to validate the strategy in a live environment and establish a track record which we believe we could use to raise significantly more capital from larger institutions over the next 12-24 months. This seed capital will also allow us to invest more into R&D in order to continue developing the strategy further. In exchange for being the first in this new fund, investors in this first $5mm will receive preferential terms. If interested in learning more or participating in this new fund, please contact us ASAP as we hope to have this first tranche of capital in by the end of September.
August proved to be a microcosm of 2022 thus far. Uncertainty in the macroeconomic market prevented the crypto industry from continuing any momentum it had started to gain. Once again, our risk mitigation strategy continues to perform as designed as we significantly minimized the drawdown to only -5.8% compared to bitcoin’s -14.1% during this same time period. Our risk mitigation strategy continues to pay off this year as the fund is beating a passive bitcoin strategy by nearly 20% YTD. We continue to be proud of the way our strategy has performed throughout these challenging times and believe the fund is well positioned not only to handle the rest of the year but also take advantage of the next bull run.
|August Daily Volatility||1.4%||2.7%|
A sell off of roughly $500mm in forced liquidations mid month and reactions to the Fed’s comments towards the end of August to keep raising interest rates wiped out most of the gains the market had made in July. As a result, bitcoin was down -14.1%, Layer 1 networks were down -5.4% and DeFi was also down -16.4% in August.
However, it was Ethereum that was the biggest story of August. With the Ethereum developers successfully completing their third and final test run this past month, the transition to Proof-of-Stake is now set for mid September. These developments caused an increase in the volatility of ETH as there are numerous different viewpoints about the risks and potential outcomes of the Merge. Some are making the case that the Merge will result in a big upward movement in the price of ETH, others argue its already priced in and still others are concerned about the risks of the Merge itself or the long term implications of moving to a Proof-of-Stake model. If you are interested in learning more, we did a deep dive into all of this in our latest research piece.
Looking at on-chain metrics, we have seen a sharp increase in the amount of bitcoin long term holders are holding over the past several weeks. This coincides with further coins coming off exchanges in aggregate indicating that we are in the midst of an accumulation phase which tends to lead to bull runs. Despite not seeing any widespread loss of conviction amongst the HODLers, the market has been unable to establish a meaningful uptrend. Continued uncertainty around the macroeconomic environment, hawkish comments from the Fed, the Merge scheduled to take place in less than a month, and the midterms elections in November will probably delay any sustained rally until after 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.
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. Opinions expressed are solely my own and do not express the views or opinions of Blockforce Capital or Onramp Invest.
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