Highlights

  • Solana ecosystem outperforms everything by a large margin (Bonk pumps, meme coins drive retail interest)
  • Bitcoin ecosystem growth (we believe usage of Bitcoin L2s and atomic swap exchanges will increase)
  • The Bitcoin ETF will likely be approved in early January (a sell-the-news event?)

Positions

  • 50% Cash, 45% Crypto, 5% BTC Options

Topic 1: Quantum Resistant Ledger

  • An ideal EV bet (current market cap is ~10m)
  • We believe this could be the next big narrative in 2024/2025
  • It could easily reach 250m if quantum computing becomes a new narrative
  • Appointed a new operational manager in December 2023 and are planning to release the Zond beta testnet in January 2024
  • It is one of the few blockchains with a solid team and a dedicated focus on quantum computing

Topic 2: Bull Market without Demand

  • We believe this is a short-lived Bitcoin bull market (to fill shorts into ETF/halving narrative buyers)
  • The market seems to be in the final distribution phase (50-60k is still on the table, on approval day perhaps), but we believe the approval is mostly priced in
  • There is no innovation happening (outside copy-paste meme coins; this is unfortunately what crypto has become)
  • Bitcoin ETF speculators are in an echo bubble - institutional demand is very likely just wishful thinking
  • How are we playing this bull move?
    • Cashing out illiquid positions
    • Buying put options with late 2024 expiry to have some insurance against black swan events (cyber attacks, quantum attacks)
    • Not buying much at the moment (we don’t see any innovation happening in crypto)

Topic 3: No Major Innovation

  • There is no innovation in crypto, unlike in the 2020/2021 cycle. What will drive the next cycle? Is it just speculation?
  • There is no innovation in Ethereum (it has become too much of a monolithic legacy system), but at least some (although slow) innovation in Bitcoin (Ordinals, L2s, atomic swaps), it is also not enough for now to cause a new bull market
  • DAGs look promising with Kaspa leading the way - still, there is no smart-contract logic on DAGs
  • VC funding declined from $33.3B in 2022 to $10.7B in 2023, which is a horrible sign for the space
  • It doesn’t mean there won’t be innovation again; we are still very bullish for the next 5-10 years (many Africans are getting access to the Internet, and digital payments powered by blockchain is the logical next step)
  • We don’t believe the innovation from 2022/2023 has the velocity to cause a bull run in 2024/2025 (add to that all the regulatory pressures)
  • We speculate that the next bull run will be caused by actual usage of blockchains, such as payments and gaming