The BlockWealth portfolios achieved a positive return of between the -2% and -5% in September.
Bitcoin outperformed Ethereum (-12%) with a return of -0.5%, in the month where the Ethereum protocol upgrade was successfully completed. The main benefit of the new Ethereum protocol is that Ethereum is now a lot more energy-friendly than before and there is less new Ether coming into circulation.
Cryptocurrencies performed relatively well against stocks and bonds in September. Global equities fell -9% in September. Bonds suffered from a further increase in interest rates, with 2022 being the worst investment year for bond investors since World War II. The sharp rise in interest rates has made it difficult for institutional investors such as British pension funds to operate normally. A gradual rise in interest rates is handled accordingly however, with an explosive rise it is necessary for pension funds to deposit additional collateral, forcing pension funds to quickly dispose investments. The Bank of England has intervened to guarantee financial stability. This intervention was done by temporarily buying government bonds in order to prevent interest rates from rising further. This creates an unique situation, on the one hand the interest rate is raised to suppress inflation and on the other hand there is a buying program that aims to save the bond market.
It seems that we have now reached a tipping point and that a new market phase is approaching in which interest rates will still play a major role. The Australian Central Bank has already raised interest rates by less than expected and there is criticism that central banks are taking too much action against inflation. Inflation expectations are also declining again and energy prices are falling, as gas has halved from the peak despite leakage at the Nord Stream. As an investor, it is important to recognize movements early. Staying invested ensures that you don’t miss the tipping point and join the recovery rally. As a speculative investment, cryptocurrencies are favorably placed due to the current poor macroeconomic situation, which most likely can only improve. Relative to the top, cryptocurrencies are still 70% lower on average. In the meantime, sentiment is at an extremely low point but access for new investors in the crypto market has further improved, providing favorable conditions for a possible year-end rally.