Newsletter Mai 2020

Bitcoin | Make-It Capital Fund | Halving | Actively Managed Certificate I. & II.


World-renowned investor, Paul Tudor Jones, is getting into Bitcoin. He is doing this to hedge against what he calls “The Great Monetary Inflation”[1]. Basically, unlimited quantitative easing lead to “an unprecedented expansion of every form of money unlike anything the developed world has ever seen”. Just since February, a global total of $3.9 trillion (6.6% of global GDP) has been thus magically created. All this shall usher into unchartered levels of inflation annihilating the purchasing power of fiat currencies.

Not to be outdone, fellow investment legend, Stanley Druckenmiller, stated that “the risk-reward calculation for equities is the worst he’s seen in his career, and that the government stimulus programs won’t be enough to overcome real world economic problems”. And “the consensus out there seems to be: ‘Don’t worry, the Fed has your back, ´” [2] – however, his research does not back this up. The “V-out is a fantasy”. Consequently, the prudent investor might want to diversify into other asset classes.

In this context, we came across an interesting concept explaining the evolution of asset values, the Stock-to-Flow Ratio.

The Stock-to-Flow Ratio (“SF”) indicates the level of scarcity of an asset and is calculated by dividing existing stock by new supply. The higher the result, the scarcer the asset. The scarcer the asset, the higher its value over time.

Now, imagine someone is inventing a new gadget such as the fidget spinner.




Remember this?

Upon hitting the market, such a spinner cost you $29.90. As there were no barriers to entry, other manufacturers quickly jumped on the bandwagon. New supply exceeded stock. The SF for fidget spinners swiftly fell to 0.1 crushing prices down to $1.99 in no time. This obviously happens again and again, over and over. Then again, it is beneficial to consumers, spurs continuous innovation and keeps our economy growing. Nevertheless, do we want to invest in such assets? If we are not a fidget spinner aficionado, we presume rather not.

Now then, are there any asset classes behaving differently?

Absolutely. Take real estate in a coveted location [3] or rare cars and unique pieces of art.



Beverly House, Beverly Hills, California


Fleur de Lys Mansion, Los Angeles


Kensington Palace Gardens, London


1963 Ferrari GTO fetching $70 million in 2018 gaining the title as the most expensive car ever.


Salvator Mundi by Leonardo da Vinci

The mansions, the Ferrari as well as the da Vinci – apart from being way out of reach for most – carry mathematically not calculable SF as there is basically zero “Flow” and you cannot divide anything by zero.

We can, however, draw our attention to other tangible asset classes such as precious metals. Let us start with the most obvious, Gold.

It is estimated that as of 2019 about 197,576 tons of Gold have been mined throughout history[4]. Annual production is estimated at 3,425 tons[5]. As such Gold has a SF of 57.7, i.e. it takes 57.7 years of output to reach current stock levels ceteris paribus. At $1,700 per ounce, Gold has a total market value of around $11 trillion. Now, let us look at the next metal down the line, silver.

The cumulative annual global production of silver is about 1,600,000 tons[6]. However, about 2/3 is lost to industrial use and has not been recycled yielding a total stock of approx. 550,000 tones. Annual production comes in at 27,000 tons[7] yielding a SF of 20.4. At $15 per ounce, the total silver market represents about $ 270 billion.

What does this have to do with Bitcoin you might ask. Well, quite a lot. After the Halving, Bitcoin boasts a SF of 55.9, i.e. equal to Gold. As of today, Bitcoin carries a market value of $181 billion. So, Bitcoin currently has the same SF as gold, however, it is more fungible, easily divisible, transportable, and is the ‘first digital scarce object the world has ever seen’[8]. And it trades at a mere 1.65% of the value of gold.

In addition, the Halving process mathematically ensures an ever-increasing SF for Bitcoin (the SF pre-Halving was closer to that of silver at 27.9) by reducing the new supply or “Flow” of new Bitcoin by 50% every 210,000 blocks or roughly every 4 years. As such, Bitcoin will become ever scarcer and thus more valuable. As usual, we refrain from making any wild price predictions. There are already sufficient guesses out there. All we feel certain of, is that we will be trading way higher in the not too distant future.

In view of this, it seems more than reasonable for Paul Tudor Jones to put as much as a low single-digit percentage of Tudor BVI fund’s assets into Bitcoin futures. And he is not alone. Consequently, we expect an enormous flood into Bitcoin over the coming years.

Sure, there will be noise, there will be volatility. However, you ought to ask yourself – are you prepared?

We are – and are here, to assist you to be too.






Make-It Capital Fund

The Halving to 6.25 BTC per block reward has triggered a sell-on-the-news reaction. This in itself was not surprising as similar moves occurred during previous Halvings. Nevertheless, all significant derivative exchanges were heavily skewed to the short side just ahead of the anticipated event. Usually, when everybody is on one side of a trade, the opposite happens. In this case that would have been a massive spike in price. However, not so this time. BTC fell roughly 15%. The shorts were right. The Make-It Capital Fund had some short positions participating in the slump thus increasing our outperformance to our main benchmark, Bitcoin, to 11%.

Actively Managed Certificate I. (the “AMC1”)

We anticipate the first dividend payout date for the AMC1 to be in about one month from now.

Actively Managed Certificate II. (the “AMC2”)

Our brand-new USD product on lending to derivative platforms, is about to be launched. We expect this product to generate between 6-12% p.a. on USD holdings with basically daily liquidity and zero cryptocurrency risk. We are excited about this and know that our investors are too. Please keep watching this space for further news.

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