FiCAS considers the recent oscillations and daily movements in the USD price of bitcoin as part of historical, normal, short-term volatility. The current cycle and trend characterizing cryptocurrencies remain positive. FiCAS has materially adjusted its portfolio during the month of March, to capture significant potential upside price developments in selected altcoins. At the time of issuing this statement, BTCA has scored an absolute performance of +16.85% since 1 April (bitcoin -13.25%).Over the last month, the USD price of bitcoin has oscillated between a maximum of 64’863 on 14 April and a minimum of 47’159 on 25 April, featuring significant 24h volatility particularly on 18, 22 and 23 April (Source: http://www.coinmarketcap.com). The oscillations and daily movements of other top cryptocurrencies such as ether, ripple, polkadot and tron and, more broadly, the top 15 cryptocurrencies in scope of FiCAS trading and investment activities – have even been a multiple of what experienced by the most popular cryptocurrency (bitcoin).
These price movements have fueled numerous public commentaries and triggered many questions from investors and interested parties regarding their relevance and meaning. This level of interest has been unprecedented and in line with the unprecedented level of popularity achieved by cryptocurrencies investments in the recent past. The questions and worries are very legitimate, particularly from counterparties invested or interested in getting invested in crypocurrencies. FiCAS takes these concerns and questions very seriously and offers the following commentary.
FiCAS’ outsourced Research Department has a 7-year long experience in observing, analysing and forecasting cryptocurrencies markets. It operates with analytical tools comprising technical analysis, quantitative analysis and fundamental analysis. It looks at single coin, categories of coins, aggregation of coins. It considers macro-factors such as overall financial & economic developments, regulatory and political events. It looks at cryptocurrencies markets at different time windows – long term / trends; medium term / cycles; short term / volatility.
From the vantage point of its experience, FiCAS Research Department believes that the oscillations experienced over the last month or so are normal in the context of cryptocurrencies and in line with what experienced historically. These oscillations do not affect the current cycle and trend characterizing cryptocurrencies, which remain positive. The volatility has not been caused by negative news about single coins, which continue to expand their use cases. The variations reflect to a great extent the natural interaction between the dominant coin (bitcoin) and the altcoins (coins other than bitcoin). The volatility has rather been driven by market sentiments following statements of a political and regulatory nature.
Specifically, FiCAS Research Department identified the recent volatility in the interplay of several factors, including skyrocketing open interest and funding rates during the second week of April and recent regulatory statements related to capital gain tax in the USA. Bitcoin is now resisting at its daily Moving Average, which was untouched since the start of the run in October 2020. From a longer-term perspective, previous bitcoin bull run cycles show that the middle of the trend was always characterized by a significant correction and significant volatility before the next leg up in the trend occurred.
FiCAS Investment Office considers the input of its Research Department when deciding how to trade the top 15 cryptocurrencies by market cap. The target investment time horizon is 3-5 years. The focus is on allocating the portfolio based on actual and expected relative prices between the dominant coin (bitcoin) and the altcoins. The aim is to maximise the expected increase in the portfolio Net Asset Value. Cash (CHF, USD, EUR) allocations are possible and may exceptionally be significant. FiCAS does not use leverage or take short positions. FiCAS does not trade short term volatility, unless the significance is sizable enough and the conditions (including fees and spreads at multiple exchanges) such to allow profitable trading. FiCAS would however trade single coins based on important and specific fundamental news.
In conclusion, FiCAS considers the recent oscillations and daily movements as part of historical short-term volatility and will not materially alter its portfolio allocation, also because it does not believe that trading volatility could be done profitably in the circumstances.
FiCAS has materially adjusted its portfolio during the month of March, in order to capture significant upside price developments in selected altcoins in the following months. At the time of issuing this statement, BTCA has scored an absolute performance of +16.85% since 1 April (bitcoin -13.25%).
As additional resources, our investors and interested parties are invited to consult FiCAS House Market View – updated quarterly. This is included as an Appendix to FiCAS Investment Policy (available under https://ficas.com/product/index-guide/). FiCAS comments further on its trading activity in the monthly performance reports (same URL).
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This statement is not an investment advice and does not serve as a basis for investments decision-making. Any interested investor should study the prospectus before investing in the FiCAS product (https://ficas.com/wp-content/uploads/2020/10/BTCA-Base-Prospectus-FMA.pdf). The past performance mentioned is not necessarily an indication of future performance.