Under The Hood - April 2021 - Crypto Autopilot
Chief Development Officer
April saw Bitcoin losing its dominance and trading sideways while the Altcoins roared. The Autopilot showed positive performance on all fronts.
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This April we kept outgrowing both Bitcoin and Euros. The ₿ - denominated performance was 9.51%; the €-denominated performance was 5.01%. Since we started, on 26 September 2019, that’s a 1066.05% performance in Euros, 83.29% in BTC.
❓ You asked us questions so we explain why we weren’t holding ETH in April and give you fodder for your research as to why - even if you don’t hold any crypto yet - you might not be late to the party.
As April came to an end, the Crypto Autopilot held: BTC: 33.3%; SOL: 15.3%; THETA: 10.4%; LUNA: 6.2%; WAVES: 5.3%; MKR: 4.9%; NEO: 4.8%; FTM: 3.9%; EGLD: 3.8%; MANA: 3.%; DCR: 2.9%; FIL: 2.7%; DGB: 1.7%; ENJ: 1.5%; HBAR: 0.3%
In April, we gave our opinions to entrepreneur.com, FXEmpire, and currency.com. Also, Coinbase got listed, the top-performing DeFi coins were NOT on Ethereum, more institutions kept looking at Crypto, US homeowners got a mortgage with MakerDAO 🤯, Terra had a busy month and a former CIA director 🛡️ called for an end to Crypto fear-mongering.
💌 Spread the Word
🤑 Is anyone you know not on the Crypto Autopilot yet? Help them get on board with our referral campaigns, we’ve got perks for everybody! If a friend signs up through your link, you’ll receive 20€ from us after they make their first minimum deposit of 0.0082 BTC - or its Euro equivalent - into the Crypto Autopilot. Your friend will also receive 10€. That’s a free performance boost.
🎁 Are you looking for a gift that keeps on giving? Any birthdays coming up this month? Remember that you can gift Bitcoin or an Autopilot balance to your loved ones very easily. They will thank you all year long!
✔️ April is AltcoinSeason this Year, and the Autopilot Kept Outperforming both € & ₿
1. With Bitcoin trading sideways, the growth of the Total Market Cap of Crypto has slowed and was only 9.70% this month to arrive at 1.724 Trillion Euros. That still represents a growth of a smidge over 152.5 Billion Euros
2. Altcoins (meaning, everything except Bitcoin) were the sole contributors to this growth as the Total Market Capitalization of Crypto Excluding Bitcoin grew by 37.16% in April while Bitcoin lost 2%!
This means that Bitcoin’s dominance (its share in the total market capitalization) is falling. In fact, it is historically low and has dropped below 50% for the first time since July 2018.
3. Autopilot 🚀
The ₿ - denominated performance for the month was 9.51%; meaning that our diversification strategy beat holding Bitcoin alone for the month. By quite a bit. When it comes to the €-denominated performance, it was 5.01%.
Source: Since we started, on 26 September 2019, that’s a 1066.05% performance in Euros, 83.29% in BTC. This means that historically, the Autopilot beats holding Bitcoin or Euros over the long term.
🙋 Your Questions on the Autopilot, Answered!
We love getting your questions, so keep them coming!
For those who recently joined us, in the past months we covered those questions: “How does the Autopilot Work?”, “How long should I stay in the Autopilot?”, “Why own crypto and when should I buy it?”, “Can we get better reporting for tax purposes?”, “How diversified is the Autopilot?”, “Why do I never see Ethereum in the list?”, “When is the best time to deposit?”, “Have you tweaked the algorithm recently?”, “What if you go Bankrupt?”. If you missed them, those answers are now all on our blog, just follow the links.
Here are this month's questions:
1. Ethereum is on a tear, and I still don’t see Ethereum in the Autopilot?
Ethereum is indeed on a tear. It started in 2021 around 600€ and it is worth €2,629.56 at the time of writing.
As we explained in January, ETH is in the addressable universe, and it has been chosen a few times, but the correlation between the larger assets is much larger than the ones between smaller assets (and the ones between large and small assets). From a portfolio construction perspective, it does not make sense to include 2 instruments that exhibit highly correlated return characteristics, which comes down to buying more of the same (albeit with a different name). In other words, risk cannot be reduced by combining ETH and BTC.
In 2020, ETH and BTC have moved concurrently showing similar performances, with a correlation in returns of more than 64%, while the average correlation of altcoins with BTC is approximately 35%.
We expect that if the price of ETH keeps moving away from BTC’s, the Crypto Autopilot might in the future take a position in ETH. Right now, the ETH 30-day price correlation with BTC reached its lowest number in over two years.
The aim of portfolio construction is to achieve better risk-adjusted performance by combining assets rather than concentrating on the best-performing assets. Thus, it follows that there is nothing to be exploited in the joint behavior of the two largest assets from a portfolio construction perspective. For now.
2. Prices have been going up so much recently, I’m probably too late to crypto, am I not?
It’s for you to appreciate, but you might want to take a look at the long-term perspective to understand whether it is indeed too late.
Since 2013, the Total Market Capitalization of Crypto has gone from roughly €830M to €830B.
Source: This is a logarithmic scale. Source: Coinmarketcap
And if you trust the CEO of Paypal, we should see more changes in the financial industry over the next 10 years than we have seen over the past 20. Since Blockchain and Crypto are projected to be a big contributor to the reworking of the financial industry, one could reasonably assume that what has doubled in the past 10 years will quadruple in the next 10 years. There is between 1% and 10% of the world’s population that has a crypto address or account. That leaves 90% of the world to conquer.
As an illustration, the week of April 26, the European Investment Bank registered a 100M euro of bonds on the Ethereum network. Also, Visa announced that they’re going to move into crypto “in a very big way” and the PayPal CEO said “crypto is the real deal”, in “Time”, no less.
If Bitcoin is accepted as Digital Gold, its total addressable market (roughly that of gold) is around US$ 10 Trillion; so it could still go roughly 10x. That’s at least what the CEO of Goldman Sachs thinks. Ethereum and the other smart-contract Blockchains can easily reimagine entire parts of our current digital infrastructure: Domain names, Collectibles, Cloud Storage, Banking & Fintech, … which are worth several trillion together.
So Crypto’s Total Market Capitalization is 2.293 Trillion today, but its addressable market is several times larger than that.
One could have thought that the Nasdaq 100 was at an all-time high in 2003 after the .com boom and that there was very little more that could be done in the way of tech and that, with the internet, everything had been invented. One would have been mistaken. Not only did everything have to be re-built for the Digital Transformation but many new businesses previously un-realistic became doable. So not only did old businesses get digitized but new businesses emerged, thereby growing the pie.
When investing with a long-term outlook, it makes sense to look at long trends. For diversified portfolios, the long trend appears to be up, so we see no reason to stop offering our services because it’s “too late”.
The old adage says “time in the market is more important than timing the market”. Read this from 2017, it’s funny.
**3. What are the Holdings in the Autopilot Exactly? **
As of the start of the month, the Crypto Autopilot was holding 15 coins, in an addressable universe of 56.
Source: BTC: 33.3%; SOL: 15.3%; THETA: 10.4%; LUNA: 6.2%; WAVES: 5.3%; MKR: 4.9%; NEO: 4.8%; FTM: 3.9%; EGLD: 3.8%; MANA: 3.%; DCR: 2.9%; FIL: 2.7%; DGB: 1.7%; ENJ: 1.5%; HBAR: 0.3%
📅 Crypto News & Happenings in April
1. Let’s start with some news about us in April:
We joined “blockchain for Europe”, and here is the official announcement! Through joining forces with others we hope to help make the promises and achievement of the blockchain industry more widely known on the “old” continent. We’re very excited to be joining forces with the other members to help make a disruption an evolution.
Anton, our CEO, wrote a couple of articles:
- DeFi for passive income
- Using Alternative Assets to Build a Balanced Portfolio
- He also gave an opinion about the price of Ethereum to Currency.com.
2. Looking at the wider market, here are some things worth highlighting:
Coinbase got listed on the stock exchange, signaling a real maturing of the Crypto industry.
The number of interesting Layer-1 blockchains is expanding, and so you need to look across several blockchains to find the most interesting decentralized apps. It also means that if you are looking at investing in decentralized apps, you have to do ever-more due diligence! Or to leave it to us ;)
- For example in Q1 2021, the top-performing DeFi coins were NOT on Ethereum: Decentralized exchange Pancakeswap, which is a fork of Uniswap deployed on BSC, currently has more than $8 billion in total value locked and its trading volumes rival those of Uniswap. Its governance token, CAKE, shows a year-to-date return of more than 5’000%.
- Since the beginning of the year, Solana (SOL, which was 15.3% of our portfolio at the end of April) and Binance’s BNB have outperformed other base layer protocols and are up about 25x and 14x respectively.
- Binance Smart Chain (BSC, with BNB as the native token) has benefited greatly from the high transaction fees. As an Ethereum-compatible chain, the transition from Ethereum to BSC is simple for both developers and users. As transaction fees spiked on Ethereum and interacting with DeFi protocols became very costly, a large uptick in the number of unique addresses on BSC was observed. The number of unique addresses on BSC grew rapidly from around 2 million to 60 million distinct addresses.
3. More institutional investors got Crypto exposure or are helping others to do so.
4. If you live in the US, you can get a loan to renovate your house on MakerDAO (MKR) by putting your house as collateral. You read me right, your house is going on the blockchain.
5. Terra had a busy month. Read why you should be happy to be holding 6.2% of LUNA.
6. A former CIA director stepped in to call 🐂💩 on Bitcoin and Crypto fear-mongering. A welcome change.
🌼 What Does May Have in Store for us?
1. We expect more of you to have access to OSOM DeFi Earn in the coming weeks so you can get exposure to the Decentralised Finance yields too!
💰 Bonus! On top of the regular APY, Aave has a “liquidity mining” program where they’ll offer governance tokens to protocol participants until July 15. We will sell the Aave token when we can and add the proceeds to your OSOM DeFi Earn stablecoin balance.
2. Uniswap V3 is launching what appears to be a much more sophisticated Automated Market Maker. If you want to partake, you may want to read up.
3. Polkadot is holding a conference.
That’s all, folks! But remember, if May has you looking for a unique gift to celebrate someone you love, 🎁 you can gift Bitcoin or an Autopilot balance very easily.
Feel free to let us know if you have any questions, ideas for how we can improve - or anything else - by contacting us at support at OSOM dot finance!
This is not investment advice, nor a solicitation. Crypto markets possess a high level of risk, including volatility and regulatory uncertainty. Past performance does not constitute a guarantee of future results in any way. You are solely responsible for doing your own financial, legal, tax, or investment research before taking any actions.
Chief Development Officer
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