BlockBay Capital portfolio update May 2023

BlockBay Capital portfolio update May 2023

The BlockWealth portfolios achieved a neutral return of 0% in May.

Bitcoin returned -4%, Ethereum outperformed +3%. Compared to Bitcoin, Ethereum performed more in line with the good month that technology index Nasdaq had. Chip companies benefited from the rise of artificial intelligence (AI), the index achieved a return of +6% in May, with major outliers upwards. 2023 has been a good year for riskier investments so far with good returns for Bitcoin (+65%), Ethereum (+57%) and now the Nasdaq Index (+24%).

As mentioned, the Nasdaq has companies in the index that have benefited from AI in the past month. The most notable riser is chip maker Nvidia, which benefited from the increased expected demand for chips in the future. The company reached a market cap of $1,000 billion, making it worth approximately 2x more than Bitcoin ($500 billion). It is striking that Bitcoin (for now) has not been able to benefit from the AI hype. Looking at the correlation between Bitcoin and the Nasdaq Index, it can be seen that the correlation has dropped from +0.85 to -0.6 in the past month. That means that the returns between Bitcoin and the Nasdaq Index used to move in tandem, now they move in opposite directions. This is visible in returns because Bitcoin (unlike the Nasdaq Index) had a negative return last month. Such situations have happened before, after which the correlation eventually turned positive again (which makes sense in the longer term). Bitcoin has been disappointing in recent times. Bitcoin is moving in the macroeconomic playing field and has suffered from expectations that interest rates need to remain high for an extended period of time to reduce inflation. There is also a real chance that interest rates will have to be raised even further because inflation appears to be stubborn.

In the United States, an agreement has been reached on a further increase in the debt ceiling. In combination with the expected interest rate cuts, this new liquidity injection may have a positive effect on risky investments. In recent months, returns (especially compared to the beginning of the year) have been disappointing for cryptocurrencies. The lack of real impulses, combined with a traditionally quieter summer period, means that Bitcoin’s liquidity and volatility are currently very low historically.


With the imminent liquidity injection, inflation rising again and imminent interest rate cuts, fireworks can be expected in the second half of 2023. Patience is a virtue.