Make-It Capital Edition #8
January 2021 | Make-it Capital Fund
THE WORLD AS WE SAW IT IN JANUARY 2021
The world of cryptocurrencies
The month of January 2021 again saw rather big gains for Bitcoin and the general cryptocurrency market. The market capitalization of the entire cryptocurrency market (M/C) gained 28% or roughly US$ 215 billion. However, we are starting to see a shift in the market as Bitcoin dominance (BTC Dom.) fell by 8% to about 62% of the total market. The leading stablecoin Tether (USDT) surged another 27% in market capitalization to now US$26.5 billion.
Despite being very volatile in January, Bitcoin ended up tagging on another 14%. After having outperformed BTC in 2020, Ethereum (ETH) continued where it left off, blasting another 78% higher to close at $1.315, hitting a new All-Time-High (ATH) of US$ 1.459 on the way. Evidently, ETH is still riding the decentralized finance (DeFi) wave, added by the anticipation of ETH 2.0 which will increase speed and reduce cost.
In a move that could find much broader adoption, Michael J. Saylor of MicroStrategy fame, raised US$ 650 million at 75 basis points for 5 years, in order to deploy all of it buying yet more BTC. So, he is paying some US$ 4.875 million in interest per year and acquired 29,600 BTC. At the closing price as at January 31st, this position alone equates to a paper gain of US$ 331 million. That should suffice for the fixed interest payments due over the next 5 years …
Now, we would be very surprised indeed, if we didn’t witness some copycats of this strategy in the near future impacting BTC demand.
The world of commodities
The commodity markets as far as being followed by Make-It Capital has been pretty quiet. Silver is outperforming gold and the gold/silver ratio fell below 70. It is remarkable, however, that BTC seems to be decoupling from gold.
Our canary in the coalmine, the oil price, saw a rather steep increase of 9% for the Brent Crude futures. Output is being curtailed having an impact on price. Nevertheless, our canary is commencing to chirp. Let’s keep an eye on it.
The major stock indices were pretty flat for the month, with the exception of the Hang Seng.
According to the latest U.N. figures, China has overtaken the US as the leading destination for foreign investment. It will be interesting to see how this will pan out once the C-fear has dissipated. After all, new investments by overseas businesses in the US fell by 49% in 2020.
In purchasing-power terms China’s economy is now the world’s biggest, according to the IMF’s World Economic Outlook – it’s one-sixth larger than the US’s. The IMF values the Chinese economy at $14.5 trillion, but in purchasing-power terms, at $24.2 trillion; the US at $20.8 trillion by both measures.
Be that as it may, world market participants got more nervous as documented by the increase in the CBOE Volatility Index (VIX) to 45% in January.
According to a commentary by the Bank of America (BoA), the risk of a stock market correction is increasing as resistance levels come into play. Plus February historically being one of the weakest months of the year for the stock market.
As cryptocurrencies become less and less correlated to traditional markets, 2021 could become very interesting for the Fund indeed
Make-It Capital Fund
The Fund is a totally unique one-stop shop for a comprehensive blockchain / cryptocurrency portfolio, empowering investors to participate in the entire distributed ledger and crypto-asset spectrum with just one single investment. The Fund always trades at exactly NAV which is in stark contrast to many other offerings trading at huge premiums.
The main objective of the Fund is capital preservation by reducing risk and volatility. This is achieved by employing our proprietary 5-pillar strategy.
For more details please contact our CFO, Philipp von Gottberg.
As alluded to in Edition #7 we had accumulated a rather big cash position on the run-up to US$ 42,000 for BTC. We employed that to purchase more crypto assets during the pull-back to US$ 30.000. Buy low, sell high.
In pillar 3, we continued positioning our DeFi / Yield Farming exposure without taking unnecessary risks. Total assets in this sector have increased from US$ 700 million early 2020 to now roughly US$ 25 billion. This market is in the process of replacing many banking and insurance services. And it still is in its infancy. It is always best to catch the wave early and ride it all the way to the safe shore. That is what we intend to do for our clients.
In this sense, thank you very much for your time and consideration.
Until next month,
For more details on the Make-It Capital Fund, please contact: