Blockforce Manager Commentary: November 2023

Multi-Strategy Fund Performance

Coming off the best month this year in October, November proved to be an even better month for performance in the crypto industry. Bitcoin was up nearly 9% but it was the alt coin market that really shined this past month. Solana, Blockforce’s second largest position in the fund behind only Bitcoin, continued its rapid growth rising another 54% in November and is now up over 500% on the year. Other notable altcoins in the Blockforce portfolio that had significant price moves in November include Chainlink (27%), the Graph (37%), Uniswap (44%) and Thorchain (120%). The growth of the altcoin market propelled the Fund to more than double bitcoin’s performance for the month.

Market Commentary

Bitcoin is up ~2.5x from the cycle low of $16,000. Mapping this current market cycle with the price performance during previous cycles, we can see that historically speaking, BTC is still early in its bull market phase. What is remarkable is that despite bitcoin’s rise in price this year, long term holders are still accumulating indicating an unwillingness to sell at current price levels. It’s likely a significant portion of the market understands we are still early in the cycle which is keeping bitcoin’s illiquidity intact.

With regards to demand, it appears the growing confidence around the ETF approval in January and the Fed’s apparent easing has increased investors appetite for cryptoassets. Stablecoins are generating positive net capital inflows to crypto markets for the first time in more than a year. This is the first time the industry has seen a positive uptick in inflows since the collapse of the Terra-Luna stablecoin in spring 2022. This is important because converting dollars to stablecoins is often the first step for many investors in preparing to deploy capital into the cryptoasset ecosystem. 

If history is any indication, it’s likely that these new inflows have mostly gone to bitcoin as institutional capital tends to start with the most established cryptoasset. In contrast, the appreciation in altcoins has likely been driven more by capital rotation from BTC and ETH into more riskier assets by established investors. The crypto native folks have seen this story play out before. Bitcoin leads the recovery, then ETH historically begins to outperform bitcoin midway through the cycle and then we get massive movements in altcoins towards the end of the bull market. Many crypto native people, having seen bitcoin up 150% this year, might be getting out in front of the alt coin wave and rotating capital into more long tail assets. 

As we head into 2024, we are seeing supply continue to get squeezed while demand appears to be growing. The data suggests that although bitcoin and the crypto markets have grown tremendously over the course of the year, this rally is still in its early stages and has lots of room to run.

The Blockforce Team

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