BlockBay Capital portfolio update June 2022

BlockBay Capital portfolio update June 2022
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The BlockWealth portfolios achieved a negative return of between the -29% and -37% in June.

The market went into a further downward spiral over the past month that really kicked off in May due to the implosion of the Luna ecosystem.

In the aftermath of this, other crypto service providers also came under pressure. Cryptobank Celsius announced that it was no longer possible for customers to withdraw their crypto assets from the platform. Crypto prices fell further on this news as users had $16 billion worth of cryptocurrencies with Celsius at the time. Users received high interest rates from the crypto bank in exchange for the custody of crypto. It is now likely that Celsius customers will lose a large portion of their belongings. In addition to the Celsius situation, other parties such as crypto hedge fund Three Arrows Capital and Voyager are also close to bankruptcy. All these parties are hit hard because they have adopted an too aggressive investment strategy in order to generate above market returns. At the beginning of July, it seems that the worst of liquidations in the crypto world is over. Many other crypto companies have announced reorganizations due to poor market conditions and limited liquidity, with only a few companies starting to recruit additional staff just now.

Cryptocurrencies are being hit hard and have been sold out amid disappointing economic developments. Bitcoin is currently not living up to its potential as an inflation hedge for the time being. Inflation is at a high level, but the expected capital flight didn’t happen. Bitcoin (-70%) and Ethereum (-76%) have both fallen sharply from the peak in 2021 and that leads to a current market capitalization of below the $1,000 billion. Looking back, in terms of return cryptocurrencies are comparable to loss duration technology companies. In the coming months, developments in the interest rate markets will continue to influence prices. Many investment categories have a direct or indirect link with the interest rate. A further rise in interest rates would be disadvantageous for investors. In theory, high inflation still means that investments that are uncorrelated with interest rates and that are scarce (such as commodities, gold and Bitcoin) will do relatively well. This idea has not yet taken off, but if it will, it looks like it will happen in the coming months rather than years.