BlockBay Capital portfolio update March 2023

BlockBay Capital portfolio update March 2023

The BlockWealth portfolios achieved a positive return of 10% in March.

The positive return of the portfolio is largely due to the further rise of Bitcoin ($23,000 to $28,000) and Ethereum ($1,600 to $1,800). Other cryptocurrencies mainly achieved a negative return. Bitcoin’s return over the first quarter of 2022 has reached +70%, making the past quarter the best quarter in the past two years.

March was dominated by banking unrest with the collapse of Silicon Valley Bank. Silicon Valley Bank is an American bank that was focused on tech companies. the bank ended up in trouble due to a bank run and subsequent financial turmoil. Account holders at the Silicon Valley Bank were initially covered up to an amount of $ 250,000 in the event of a bankruptcy, at a later date all assets were covered by the US central bank, which had somewhat restored calm. Later, Credit Suisse ran into trouble and the Swiss bank was bailed out by its biggest competitor (UBS). This turmoil has increased expectations that central banks will loosen their tightening policy and further interest rate hikes. Interest rate expectations have been adjusted downwards with the peak in sight, which is good news for riskier investments such as cryptocurrencies. Bitcoin benefited even more from the turmoil at banks because it is again a lot clearer that bank balances are in fact uninsured loans to institutions that take risks with account holders’ money. The increasing digitization ensures that the chance of a bank run increases, partly due to digitization in real time it is possible to transfer money from one bank to another bank.

As it currently stands, April is about the Shanghai upgrade of Ethereum. This update is scheduled around April 12 and is the last step in the transition from the energy-intensive proof-of-work mechanism to an efficient proof-of-stake mechanism. In addition, the eyes remain focused on interest rate developments, the sharp increase in interest rates contributed to the fact that 2022 was a bad year for cryptocurrencies. Expectations are now that interest rates will be cut for the first time at the end of this year, although the March banking crisis has shown that expectations can quickly turn around. Cryptobank Silvergate had run into problems at the end of 2022, the available liquidity in the crypto market has still not been fully recovered. In general, lower liquidity means higher volatility, making any large price increases or decreases more likely. The increasing regulation and pressure from regulators are already leading to the further emergence of DeFi platforms, which will make cryptocurrencies even more interesting in the coming years.