Tuesday, Jan 25th 2022

Trade Update: Moving weight in Titan Crypto

Investor Update

Adding Bitcoin and cash over a volatile weekend

Over the weekend, our team shifted positions in our Crypto strategy. Clients are now overweight Bitcoin, Ethereum, and Cash, while portfolios still maintain exposure to the altcoins we have the most conviction in long-term. While making these updates, we were also able to harvest losses for clients in some positions, which may help offset taxable gains elsewhere in client portfolios.

The table below recaps these moves:

Crypto trades

With these moves, we believe we’ve accomplished the following for clients:

  • Increase exposure to Bitcoin as a “safe haven” Crypto asset;
  • Build a strategic cash reserve to deploy in the future;
  • Remove exposure to lower-conviction holdings;
  • Trim exposure to higher-risk, yet high-conviction, holdings; and
  • Harvest losses in some holdings which could help offset taxes elsewhere.

Bitcoin with a side of Fiat

Two weeks ago, we wrote that we believed risks in the crypto market were skewed to the upside. In that note, however, we noted that we were monitoring Bitcoin’s price, flagging $40-$42K as a key support level. Over the weekend, that support level was broken, and in our view, it became time to act.

Almost as soon as Bitcoin fell below $40,000 we saw prices fall to $36,000. At the time, we elected not to sell given the number of massive liquidations we were seeing on-chain and how oversold Bitcoin appeared according to our momentum indicators.

Amid a brief, but smaller than hoped for, relief rally on Saturday, we began making changes in our Crypto strategy. In this rebalance, we elected to overweight Bitcoin, Ethereum and Cash in the strategy for two main reasons:

  • The Bitcoin dominance indicator — or Bitcoin’s market cap as a percentage of the total crypto market — remained above the historically significant level of 40%, indicating that investors are treating BTC as a safe haven; and
  • Recent volatility has led to many altcoins’ market structure becoming temporarily impaired.

These short term moves are very painful but not overly surprising with a nascent asset class. We remain bullish on crypto over the long-run, but there is a time and place to manage risk, and we believe time is now.

Taking our alts off main

Alongside these increased weights, we elected to exit Cardano (ADA) and significantly reduce our position in Solana (SOL).

In our view, Cardano investors and developers are realizing the structural challenges in creating a fully decentralized solution for batch processing transactions. We believe we are at least 9 months away from a substantial DApp ecosystem being built on Cardano to drive more interest.

With regard to Solana, although we’re seeing a thriving NFT ecosystem come alive, the network has been struggling with incoming traffic, which has led to multiple outages. We believe in the team, but would like to see them develop solutions to deal with network stability before increasing our SOL position.

We’ll continue to remain vigilant and keep you updated on our findings. We always appreciate your trust in our team, but particularly during challenging periods.

Best, Gritt

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