Crypto winter gets colder

Thursday, Nov 10th 2022

Investor Update

Crypto winter gets colder

In the update to clients we published late Tuesday night, we noted that the acquisition of flailing FTX by Binance was conditional on due diligence and that the situation was evolving quickly. Since publishing, Binance completed due diligence and decided against acquiring FTX due to distressed assets. Crypto markets have been under pressure as a result and we have been active in an effort to control risk.

The fallout from the collapse of FTX and Alameda Research has shocked the crypto ecosystem once again. We've seen it several times this year – without the proper guardrails in place, over-leverage and the interconnectedness of the world of crypto can quickly lead to contagion. To be clear, we were never comfortable with the risks of owning FTX’s native token (FTT), nor have we done business with FTX.

Early Wednesday morning, we elected to sell our stake in Solana ($SOL) and trim our positions in Polygon ($MATIC) and Avalanche ($AVAX). 

Let’s dive in.

So long Solana

Our research indicates that roughly 29M $SOL (~$415M), as of the time of writing, will be deactivated from staking at roughly 4:30 AM ET on Thursday morning (11/10/22). Furthermore, Alameda Research’s second-largest holding is Solana. To the extent that it hasn’t already, this position will likely need to be fully liquidated over the coming days – putting intense downward pressure on the crypto asset. Other investors who have staked Solana are recognizing this dynamic are following suit further exacerbating market dynamics.

While we may be involved again at a future date, we believe there is a non-zero chance Solana will collapse in the near term. Fundamentals had softened in recent months, with total value locked (TVL), daily active addresses and transactions, and NFT volumes all declining.

Growing the Solana ecosystem with investment and support has been a top priority for FTX and Alameda Research. Without FTX and Alameda in the picture, we anticipate slower growth for Solana in the medium term, assuming it makes it out of this mess alive.

While making this exit Wednesday morning, we also elected to trim our positions in Polygon ($MATIC) and Avalanche ($AVAX) due to soft technicals. These trims are purely a risk management move, and our thesis continues to track for these tokens. 

We’re all hands on deck and will continue to stay nimble in the crypto strategy as needed. As always, we’re here for you. Let us know if you have any questions about this evolving situation.


Titan team

As of this writing, MATIC and AVAX are portfolio holdings of Titan. This security may cease to be portfolio holdings at some point in the future. 

Titan Global Capital Management USA LLC ("Titan") is an SEC registered investment adviser. Trade communications are meant for informational purposes only. All investments involve risk and the past performance of a security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not ensure a profit or protect against loss. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The price of a given security may increase or decrease based on market conditions and clients may lose money, including their original investment and principal. The information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person. This is not an offer, solicitation of an offer, or advice to buy or sell securities, or any other product offered by Titan or any third party. Please for important disclosures.

As of this writing, SOL, MATIC, ATOM were a portfolio holding of Titan. This security may cease to be a portfolio holding at some point in the future.

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