Under The Hood - February 2022 - Crypto Autopilot

DateMarch 01, 2022
Reading Time13 min
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Mathieu Hardy
Chief Development Officer
Europe is at war. Cryptos get involved.
Introduction

A note for those who don't follow closely: OSOM is the Crypto Wealth Manager with all you need: wallets, an exchange, a Crypto Robo-Advisor, DeFi Earn to lend stablecoins in Decentralized Finance, and Crypto Strategies. It is all you possibly need in a Crypto Asset Manager to manage your investments without thinking twice about it.

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Whether you are an individual, a company, or a professional asset manager, we've got you covered.

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It is with a heavy heart in light of aggression and suffering that we wrote today's look at the past month. In contrast to much horror and to what is happening in the traditional markets, crypto has actually been enjoying some positive momentum. And proving some of the advantages of truly neutral and decentralized modern technologies. So let's start with the numbers and look at the geopolitical aspects in a second time.

TL;DR
TL;DR

💨 TL;DR

  • The OSOM Crypto Autopilot € performance was +15.83% while the ₿ performance was +3.10%. That's in a market where the index of the Top 200 excluding stablecoins did +9.44% and Bitcoin +11.63%. Terra (LUNA), Gala (GALA), Klaytn (KLAY), and Cosmos (ATOM) are most to thank for the outperformance.

  • The Autopilot holds: BTC: 35.4%; KLAY: 32.2%; ATOM: 10.6%; LUNA: 8.2%; AVAX: 5.2%; NEAR: 3.2%; TRX: 1.9%; SAND: 1.4%; GALA: 1.1%; IOTX: 0.9%

  • This month we want to help 🇺🇦 Ukraine and are waiving all fees on deposits, withdrawals, OSOM DeFi Earn, and exchange fees for Ukrainian users (existing and new) until March 31 2022 so they can use us to stash value away & easily make crypto payments if it's needed. We also give you pointers on what you can do, should you want to do something. Details here.

  • We look at the role of crypto in this new war so far, blockchain bridges being hacked, corporate giants getting into crypto, focus a bit on Terra's amazing month, and highlight two pieces of research to help you think about crypto.

And for the details, read below ⬇️ If you don't want to read it 👀, we can deliver it to your ears in a couple of days! 🎶 Just sign up for the podcast. We also have it on Youtube if you don't have a podcast app. And if you lose it in your mailbox, it's on our blog.

Markets

🔬Markets: The Focus is on the unexpected European land war and sanctions in Russia

And it looks like crypto assets have the opportunity of showing whether the decentralization and censorship resistance claims really hold up.

1️⃣ The Global Market Capitalisation of Crypto has picked up this month and regained about € 100 Billion. An appreciation of 6.86%. It's even a 9.44% climb if we focus on the Top 200 and exclude stablecoins (INDEXNASDAQ: CMC200).

Bitcoin closed the month at €38,516.01, which is 11.63% higher than where it started it.

2️⃣In relative terms, Bitcoin had a pretty good month overall since the top 200 cryptos excluding Bitcoin and stablecoins only moved by +3.62% (INDEXNASDAQ: CMC200EX)

For a quick glance at how the top 100 assets did this month relative to Bitcoin, take a look at this visualization from Cryptobubbles.net

 top 100 assets

3️⃣The OSOM Crypto Autopilot left everything in its wake this month and outperformed the market like a real champ. This month the € performance was +15.83% while the Bitcoin performance was +3.10%.

The coins that most contributed to the positive Bitcoin performance this month were Terra (LUNA), Gala (GALA), Klaytn (KLAY), and Cosmos (ATOM).

The Sandbox (SAND), Binance Coin (BNB), and Near (NEAR) pulled the portfolio in the other direction but not nearly enough to counterbalance the performance of even Terra (LUNA) alone.

If you want to know more about some of those assets, we recently published an article with deep dives into KLAY and ATOM on our blog.

Performance graph

Source: Since 26 September 2019, that's a 960.04% performance in € and 107.72% in BTC.  That's 164.48% and 35.14% annualized, respectively.

Autopilot Deep-Dive

🤿 Autopilot Deep-Dive

💰 What are the holdings in the Autopilot Exactly?

For the start of the last month of the first quarter, the hodlings are as follows:

BTC: 35.4%; KLAY: 32.2%; ATOM: 10.6%; LUNA: 8.2%; AVAX: 5.2%; NEAR: 3.2%; TRX: 1.9%; SAND: 1.4%; GALA: 1.1%; IOTX: 0.9%

BTC: 35.4%; KLAY: 32.2%; ATOM: 10.6%; LUNA: 8.2%; AVAX: 5.2%; NEAR: 3.2%; TRX: 1.9%; SAND: 1.4%; GALA: 1.1%; IOTX: 0.9%

Just as it was at the end of January, it is therefore holding a relatively concentrated portfolio of 10 assets, which have stayed remarkably consistent across the month. That’s out of the 73 currently whitelisted.

Interesting Crypto Autopilot Moves

✍️ Interesting Crypto Autopilot Moves in February

As we move into March of 2022 and look back at February, the most meaningful change that happened to the portfolio is a change in the largest allowed position. Watching the markets we feared that Bitcoin might make a solo run for the top and so decided early February to give the algorithm the possibility to allocate up to 40% of the portfolio to one asset (up from the "customary" 30% when the markets show more diversity).

The A.I. immediately took advantage of the newfound freedom and, by Feb 10, was holding a relatively concentrated portfolio of 9 assets with 40% BTC. It then scaled back a little on its appetite for BTC and between Feb 10 and the end of the month the BTC position oscillated between 32% and 36%.

The investable universe is staying stable. Some new assets have recently satisfied the technical thresholds for requirements but we want to further assess their distribution and potential before they are whitelisted based on the qualitative criteria.

Crypto News in February

📅 Crypto News & Happenings in February - Month in Review

🇺🇦 We didn't see it coming, but there is now a war in Europe. We are planning on helping in any way we can. Since access to decentralized payments and storing value is important in times of unrest, as a first step we are waiving all fees on deposits, withdrawals, OSOM DeFi Earn, and exchange fees for Ukrainian users (existing and new) until March 31 2022. We understand they must have access to ways to store value until such time that they need it and that it might be reasonable that they fear that the hryvnia may lose value because of the war.

This means that if they can send us money through cards or swift payments, we will charge nothing. If they buy BTC, ETH, or Tokenised USD in DeFi earn, we will charge nothing above the market rate. If they send us crypto and convert it to €, we will also charge nothing. Details here.

We have seen crypto play a big role in the past 5 days and showing quite a lot of resilience in the face of disruption of all other infrastructure. 

Maybe it is a good time to reflect on what @Naval shared recently: Decentralization isn't important, until it suddenly is.

Some say crypto might help the rich Russians evade sanctions. But it will also help Ukrainians survive and it arrived to them much faster than traditional bank transfers would have taken. That's the hallmark of a truly neutral (and modern) technology.

If you wish to help the Ukrainian people with crypto or otherwise we know that, amongst others, the International Red Cross is raising funds to help the refugees. The official Twitter account of Ukraine also publishes addresses to which crypto donations can be sent.
For those who have never tried sending crypto before, it's remarkably simple. Just make sure that the address you are sending to is the right one. A couple scammers are trying to get rich off of your generosity.

Sending BTC

If you need to purchase crypto before you can send anything, it's also fairly simple and takes 3 clicks after you added € to your account. We stand ready to help you at support@osom.finance if you have any questions on Blockchain transfers.

In light of the above, everything else that happened might feel inconsequential, but let us walk you through some of the highlights anyways so you can better understand your portfolio. If you come back to reading this only after a solution is found to the conflict, no one will blame you.

1️⃣ Bridges between blockchains are currently indispensable to connecting them. But they are a bit new and everyone still has a lot to learn about making them really safe. This fact was demonstrated in a pretty devastating manner early in February when the Wormhole Bridge got hacked and about $320M worth of Ether were stolen. Luckily, Crypto is full of rich people who are willing to pay to learn, and within 24h Jump Trading had made the bridge whole so they are the only ones who "lost" money. It's in quotes because I'm pretty sure they don't see it as a loss. Maybe just a very expensive lesson.

2️⃣ When it comes to corporate giants looking at getting closer to crypto, this month was again pretty interesting. In no particular order, we saw: Google getting into blockchain infrastructure, Apple teased plans for entry into the "metaverse" game. Blackrock is reportedly looking at offering crypto trading. And Warren Buffet, who had famously called Bitcoin "rat poison" is getting exposed anyways through some Fintech Investments. Finally, JP Morgan - the bank - opened a Business Lounge in Decentraland.

Inversely, Aave wants to get into social network game and take on the Web2 giants, and engineers keep leaving tech giants for fun Web3 stuff

3️⃣ Let us also take a second to focus on Terra (LUNA) who had quite a month. Apart from absolutely phenomenal price action (as it went from 39€ at the end of January to €84.28 (a 116.10% jump) as we are writing this), it announced two major news:

(a) The first is a Major League Baseball partnership. Close to no one cares about Baseball outside of the USA but it's worth noting for two reasons. One, it is the first deal between a sports team and a DAO. Second, it will expose many more people to their ecosystem and how useful it is since the ambition is to make the TerraUST an accepted currency in the stadium. Once people realise that the UST they have left after the game can be put on Anchor to earn 20% APY, they are likely to think it smart to direct more of their savings over to Terra.

(b) The second is the creation of a new pool of capital - with non-Terra assets - that can be used as a "release valve" if there is a big temporary selloff of UST in the crypto markets. And it's no small fund: they sold for $1B worth of Luna to acquire BTC. The market cap of UST is currently at around $11B so with the normal redemption mechanism and an extra $1B in uncorrelated reserves, it should offer quite a bit of comfort to those contemplating getting involved.

4️⃣ Two interesting pieces of research were also released this past month which might help you understand the opportunities that crypto presents for your portfolio and how to go about building (if you are not in an exclusive relationship with us it's fine, we're not the jealous type).

(a) Ark - the famed active ETF manager of Cathie Wood - takes a look at the upside potential in Web3. The TL;DR is: they expect Bitcoin to do about 25x from here, and Ethereum to do about 60x. We agree on the Bitcoin analysis but think the Ethereum estimate is a little conservative as it is really a general-purpose computer and it's really hard to estimate how much new cool things you can build on such a versatile platform.

Mind you, none of that is for tomorrow morning and it's definitely not investment advice.

It's a long slide deck but you can start at slide 38.

(b) Fais Khan wrote an interesting article about the "Coinbase Curse and How VCs Sell Crypto to Retail". It basically says that you are probably better off staying away from projects that are heavily VC-backed in their early stages as they tend to underperform more "grass-root" and "decentralized" projects. He doesn't intend to make an argument for why crowdfunded ICO-projects are better bets than VC-backed ones, but it's a little how we read it. Who thought, in 2018, that one day we'd say that ;).

5️⃣Last but not least, we were listed as one of the best 8 podcasts about Web3. So don't miss out.

Predictions

🌱 What Does March Have in Store for us?

1️⃣ We are hoping for the end of the war. That's definitely #1.

2️⃣ And maybe we can expect the crypto price action to resume in line with the fundamentals: crypto is only growing and people aren't really selling. The short-term price action is made up of a relatively small number of speculators that play with a relatively small part of the available assets. In 2020 Chainalysis had estimated that only 3.5M Bitcoin were actually traded versus 11.4M BTC that were being held as long term Digital Gold.

This past month, a Deutsche Bank survey kind of confirmed those same ideas

Deutsche Bank ran an online survey answered by over 3000 people in the US. It finds that most people plan on keeping their crypto through a potential market crash. So it looks like most people have learned from the 2017-2019 crypto winter that this is a long-term play. And it looks like hodlers are much like developers and don't leave in tough times.

It's kind of like with Icebergs. Don't mistake what you see for what's happening.

Closing words

🤝 A couple things before we part

If you want to know more about OSOM and what goes on behind the scenes, read our CEO's letter or listen to the podcast episode where he goes through it all.

Behavioural economists have found that the start of the year is a great time for new financial resolutions. Q1 is almost over so better get to it if you haven't already done so. Think about putting some time aside to see what you want to be doing for your money in 2022. It's likely that your future self will thank you. And if you find that you want to dollar-cost average your way into a portfolio with some crypto - #DCA 🐜 - remember that you can start from about 100€/month in the Autopilot and 30€/month in DeFi Earn. You can easily make monthly deposits into Crypto Autopilot and DeFi Earn directly from your bank account.

That's all for this month! 👋As always, thank you for your trust. Feel free to let us know if you have any questions, ideas for how we can improve - or anything else - by replying to this email!

Take care of yourself and, if you can, someone else, too.

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Mathieu Hardy
Chief Development Officer

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