Why we're bullish on Bitcoin

Titan Crypto: Spotlights

This week, we officially launched Titan Crypto, our actively managed portfolio of cryptoassets that we believe are positioned for outstanding long-term returns with minimal correlation to U.S. equities and with attractive hedging qualities.

Over the coming days, we'll continue to send Crypto Spotlights outlining our investment theses on current portfolio holdings. The goal is to give you a better sense for the types of cryptoassets that make it into this new portfolio.

To check out Titan Crypto, be sure to update your Titan mobile app in the Apple or Google Play store now.

Spotlight #1: Bitcoin (BTC)

Thesis: Bitcoin is the world's first and de facto decentralized digital currency. With significant first mover advantage among "store-of-value" digital currencies, the institutional adoption and fixed supply makes it our second most bullish crypto investment at a 27.5% weight.

Decentralized money was out reach, until Bitcoin came along. With its revolutionary network consensus and incentive mechanisms, Bitcoin became the world's first widely adopted cryptocurrency that allows for secure peer-to-peer transactions on the internet. It has the strongest brand name, and its technology is extremely robust: the network has never been successfully hacked over its 12-year existence, while holding more than $800B worth of assets. Over the past decade, its significant first-mover advantage has propelled it to grow with a considerable lead and network effect over other cryptocurrencies that offer similar value propositions.

Bitcoin is the prominent digital store of value and inflation hedge.

Bitcoin's total supply is limited by code to a total of 21 million, making bitcoin inherently scarce. It is immutable, cannot be counterfeited or censored, and has low correlations to other traditional assets. It is now gaining mainstream recognition as a necessary constituent of modern portfolios. Macro factors such as record low interest rates and unprecedented levels of global monetary and fiscal stimulus also add fuel to the fire of awareness and adoption.

Institutional players’ involvement with crypto markets is still very much focused on bitcoin.

There are only a handful of major coins that have sufficient market depth and maturity to accommodate substantial allocations of capital from large institutions. Products and services such as custody services, brokerages, derivatives, and asset management still mainly only support bitcoin. Bitcoin serves as the starting point for most allocators and institutional investors; firms will buy and hold BTC on their balance sheets before any other cryptos. Its price could appreciate naturally as more participation enters the ecosystem.

Whats the data saying: On chain analysis reveals healthy long-term signal for bitcoin throughout this period of volatility

• Miners have now begun to re-accumulate after a period of selloffs due to China's crackdown. In addition, ~30% of the affected power has come back online
• Long-term investors and whales are also accumulating, buying from short-term investors who have suffered massive losses from the May-June sell-off
• Amount of inflow of BTC to know exchange wallets as their BTC reserves are experiencing decline over the last several weeks, indicating diminishing sell-side pressure
• Capital in the form of stablecoins is slowly rotating back into the market from the sideline

Where are we heading: Bitcoin's current discounted valuation provides an attractive risk/reward setup

Bitcoin's price has significantly dropped from its peak in mid-April through the end of July 2021, and was trading at near 3-year lows on a market cap / daily on-chain transaction volume basis. Although prices have somewhat rebounded in August, we believe its a great opportunity to accumulate alongside other long-term investors and whales.

For long-term price targets, numerous valuation frameworks such as Stock-to-Flow model and comparison-to-gold approach, and perspectives from investors including ARK Invest and Winklevoss suggest that bitcoin's price has the potential to reach ~$500K.

We believe bitcoin offers one of the most compelling long term, risk reward profiles among assets, crypto and non crypto. The institutional demand is clearly strong as therecognize bitcoin’s significance as a critical monetary asset and a portfolio diversifier.

For the rest of our memo on BTC and more, see our launch materials.

Reminder: Why invest in Crypto?

Growth Runway

• We believe the next big tech paradigm shift will be driven by crypto and blockchain technologies. The crypto space is experiencing an extraordinary level of software development and innovation, and has immense growth potential over the coming decade.

It's Still Early

• There are many signs suggesting that those who invest in crypto today are still “getting in” near the beginning. There is still a great deal of skepticism and disillusionment from the public at large: typical of any technology that is very early in its life cycle . Existing infrastructure is still too complicated and confusing for mainstream adoption. Even regulators are still debating on how to regulate the space.

Diversification

• Crypto is generally uncorrelated to the behavior of other asset classes, and could serve as a strategic allocation in portfolios. Extensive research has shown that a small allocation of cryptos would have consistently and significantly increased both the cumulative and risk-adjusted returns of a portfolio.

Crypto launch call, Monday 8/16 at 4PM ET

Tune in to listen to Clay Gardner (Our Co-CEO & CIO) and Gritt Trakulhoon (lead crypto analyst) discuss the construction of our crypto portfolio and take client questions. Reserve your spot below!

Reserve your spot

Arianna Simpson of a16z, Tuesday 8/17 at 4PM ET

Join us for our next live podcast recording with Andreessen Horowitz's Arianna Simpson this upcoming Tuesday at 4PM ET. Reserve your spot below!

Reserve your spot

Update your app!

To check out Titan Crypto, be sure to update your Titan mobile app in the Apple or Google Play store now.

Onwards, The Titan investment team