Under The Hood - July 2021 - Crypto Autopilot
Chief Development Officer
This has been an interesting month! Flat, down, then up and up and up!
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So, let’s take a closer look at what happened in Crypto and the Crypto Autopilot this month and see how that might shape what happens in August.
As usual, we’ve taken some time to craft this and it’s pretty long, so if you want just the highlights, here is the “too long; didn’t read”.
- The Autopilot € performance for the month was 5.15%, and the ₿ performance -was 11.87%. That’s in a situation where the top 200 projects (excluding stablecoins) grew by about 13.12%, or 5.89% if we look at the top 200 without Bitcoin.
- As we started the month, we held: BTC: 26.6%; SOL: 22.6%; ADA: 10.5%; TFUEL: 9.3%; MKR: 8.%; DCR: 6.9%; WAVES: 5.1%; HBAR: 3.9%; MATIC: 3.1%; MANA: 1.8%; FIL: 1.1%; from 65 that the AI can choose from.
- You didn’t ask us any new questions so we took the time to compile all the old ones in one place.
- The news we highlight talks about Uniswap removing tokens from its web interface, the EU’s plans to forbid anonymous wallets, and why it’s less of a revolution than some made it out to be, and Bitcoin SV being attacked. We also shamelessly plug our own blog articles from an economist and an economic anthropologist. Because they are good!
- For August we are looking forward to EIP 1559 for Ethereum, where the overall price action will go (currently, we’re betting on “up”, but DYOR), and you giving OSOM DeFi Earn a try.
- In the “things before we part”, we talk about the DCA Army and how you can take part, companies getting OSOM Business accounts, and our 📲 phone apps you keep asking about.
🔬Markets: the last 10 days save it all!
The Global Market Capitalisation of Crypto was hovering around € 1.18T until 12 July when it took a dive of about 15% and settled at around €1T for about a day around July 20. The last 9 days of the month saw growth to €1.35T as the month ended. That's a 14.81% gain from July 1. The top 200 Crypto excluding stablecoins (INDEXNASDAQ: CMC200) grew by 13.12%
And if we look since the DeFi Summer, the gains are interesting too, despite the volatility.
Bitcoin did better than the Total Market Capitalization of Crypto, and almost everything else, gaining 19.14%; which led to his share of the Total Market Capitalization of Crypto increasing by 3 percentage points.
What should this newfound overall optimism be attributed to? As is often the case, it seems to be a conjunction of factors: Amazon said it was looking into crypto very seriously (even if some of the rumors that they would accept Bitcoin were denied), Dorsey announced DeFi on Bitcoin with Square, Wood, Musk & Dorsey spoke at the "B-word" conference where Musk says he owns ETH and that was good for ETH. Also, what some refer to as "the Largest Bitcoin Short Squeeze in History" definitely helped: those that gambled on the price going down had to buy Bitcoin to pay for their loss, which further drove the price up. As we will see shortly, the popularity of "play-to-earn" (and some high-profile NFT sales) seems to have also drummed up quite a bit of enthusiasm.
The Total Market Cap of Crypto Excluding Bitcoin grew by 9.67%, or 5.89% if we look at the Top 200 excluding Stablecoins and Bitcoin. (INDEXNASDAQ: CMC200EX)
The top gainers amongst projects of a good size, this month, were in the areas of gaming (Axie Infinity, Alice, REVV ), Decentralized Finance (Harvest Finance, Lido DAO, Terra), and Non-Fungible Tokens (NFTX).
The ₿ performance for July was -11.87%, as is often the case when Bitcoin makes a run for it all by itself and its dominance increases. The € performance, however, was 5.15%.
Since we started, on 26 September 2019, that's a 671.10% performance in Euros, 64.96% in BTC. This means that historically, the Crypto Autopilot beats holding Bitcoin or Euros over the long term.
You can check out "Time in the Autopilot And Returns" if you need a reminder of why time in the market is better than timing the market if your day job isn't at a Hedge Fund.
Compared to Bitcoin, we even offer better risk-adjusted returns. And for more benchmarking, you can still find our benchmarking exercise from September 2019 to June 2021 here.
🤿 Autopilot Deep-Dive
As we are done with the global and Crypto Autopilot performance numbers, let’s dive into the Crypto Autopilot’s behavior this month.
💰 What are the holdings in the Autopilot Exactly?
As August rolled around, the Autopilot was holding those 11 cryptos, exactly the same amount as last month, in the addressable universe of 65.
✍️ Interesting Crypto Autopilot Moves in July
Things are relatively quiet, so not much changed this month. MDEX and Klaytn were added to the addressable universe around the middle of the month, but the Autopilot has not elected to take any positions in either of them. At that time the Autopilot was holding: BTC: 28.7%; SOL: 20.5%; TFUEL: 10.6%; ADA: 9.5%; MKR: 8.2%; DCR: 6.6%; WAVES: 5.2%; HBAR: 3.5%; MATIC: 3.2%; MANA: 2.3%; FIL: 1.1%. So as you can see, the portfolio hasn't changed much since then.
🏎️ What are the coins driving the performance?
For this month, the performance in Bitcoin terms was mostly driven by MANA, which was the only one that grew in Bitcoin terms, and MATIC and HBAR which did their best to keep track. SOL, ADA, and TFUEL couldn't really keep up with Bitcoin's pace. This is in line with the overall market this month where gaming / virtual worlds and Layer 2 solutions were generally more popular than competing layer 1 (SOL and ADA).
We don’t run an industry-wide benchmark every month but we wanted to mention that we ran a comprehensive one recently and, if you missed it last month, you can find it on our blog.
If you just want the conclusion, it was this: from what we can tell, the Crypto Autopilot is the smartest way to invest in Crypto 🎯.
🙋 Your Questions on the Autopilot, Answered!
We don’t get tired of repeating it: we love it when you send us questions, as that lets us know exactly what we should explain better. But this month you must all be enjoying some well-deserved time off while trying to ignore your portfolio because we didn’t get any new ones.
But that gave us some time to put some stuff in order! And you can now find, on our blog, all the “Not so Frequently Asked Questions”, which covers everything you've always wanted to know and weren't afraid to ask. It covers questions on the Autopilot, DeFi Earn, and the OSOM Team. Take a look!
And if you have any more questions, please send them our way by reaching out to support (the address in the footer or the blue chat bubble to your right).
📅 Crypto News & Happenings in July - Month in Review
This summer is a lot calmer than “the summer of DeFi” was in 2020. Most of the news around Crypto was good news and it’s been fun seeing Crypto games take off again. It feels like everyone needed a break.
For the news that did happen, here is what we thought was worth highlighting:
🦄 Uniswap de-listed some tokens from its web interface over the fear that they might be considered "securities" or "derivatives" in the US. And since the team maintaining the website is in the US, they didn't want to go to prison, which is fair. To be clear, the tokens are still all available on Uniswap if you can talk directly to the smart-contract because that is entirely permissionless and so no one can keep you from creating a new pair or accessing the liquidity in those web-interface-de-listed tokens. And someone can create a new web interface by forking the Uniswap open-source web portal to make them easily available again. But that will undoubtedly create some friction that will harm the products from Synthetix and Mirrora that were targeted. And Uniswap being a DeFi household name, that came as a bit of a shock to the community. A good reminder that while the blockchain is censorship-resistant, we need other bits and pieces to work with it that might be a little more vulnerable to censorship.
🖋️ On the regulatory front, much noise was made about the EU's plans to ban anonymous crypto wallets in 2024. We have been engaged with the EU on that front, arguing that GDPR should not systematically lose out to Anti-Money-Laundering efforts; and we'll have a long post explaining the good, the bad, and the ugly of the European effort up on our blog soon. All in all, while it might become a privacy head-scratcher for EU citizens, for companies like us there is relatively little change as we are already compliant with the 5th Anti-Money Laundering Directive of the E.U.
Whether talking about the Uniswap interface or the EU's plans for wallet, it's interesting to put it into historical context. In 1993, John Gilmore, of the Electronic Frontier Foundation, was quoted as saying: "The Net interprets censorship as damage and routes around it." And in today's day and age, you could probably replace "The Net" with Crypto, as is developed in this Coindesk article.
🔥 Bitcoin SV has had a bit of a tough time in July, getting attacked and delisted. We just felt like highlighting it to reassure you if you saw it before: BSV is not in the Autopilot addressable universe. It's automatically excluded from consideration based on our "quality" criteria because, while it has a loyal following, some talented engineers, and does stand for something, we don't think the fundamentals are strong enough to warrant the risk of holding it.
📘 We also wrote some stuff! We started a new blog section: "Money Matters". We wanted to expand from pure crypto content and product updates and have a space where we can think about what money and crypto are, and some larger developments of the space. Following the European Central Bank's move towards a Digital Euro, we started this month with a piece from an economist, Etienne Goffin, who wrote about "How a Digital Euro Could Benefit Bitcoin". And, to understand what social science can bring to the thinking around "money", we have a piece from an economic anthropologist, Camilla Carabini: "Crypto is the New Exotic".
And if you have a business, you'll want to check out our CEO's article on using DeFi to manage your treasury.
🍉 What Does August Have in Store for us?
🆕 News #1 is undoubtedly EIP 1559. What's that you ask? Well, as part of the next upgrade of Ethereum sometime between Aug 4 and Aug 5, Ethereum will start burning the fees you pay for transacting on the network. This is amazing because, now, a large number of transactions will mean that Ether gets destroyed, and if it gets destroyed faster than it gets emitted (because new ETH is emitted to miners to reward them for working) then we could see the total supply of ETH go down. This means that if you own some, it will be worth more 🤑.
This isn't just about greed, it's about stakeholder capitalism: whereas now miners (and stakers) get rewarded handsomely for their work after the upgrade the other "stakeholders" - the ETH holders - will too, for believing in the platform.
And by the way: those upgrades usually happen without problems, but if you don't absolutely have to transact on the Ethereum blockchain between Aug 4 and 6, it's probably best to wait until the upgrade dust has settled.
Cointelegraph even thinks that we could see Ethereum surpass Bitcoin in Market Capitalization and possibly break the 3-year-old correlation in their prices. Since that correlation is the main reason we don't have ETH in the Autopilot very often if it breaks meaningfully we could start seeing ETH in the Autopilot a lot more often.
🏁 Apart from that major redesign of the Ethereum tokenomics, everyone will be on the edge of their seats to see where the price action goes. There are some strong supports for growth: the "play-to-earn" and NFT trend is strong, Polkadot is set to start its parachains auctions anytime now that Kusama held its, the Terra ecosystem is about to release new platforms for uncensorable money, and the derivatives market is taking a bit of a breather after the epic short-squeeze we just witnessed. But regulators keep scaring the weakest holders into selling every time they propose a little more oversight; which is hard to understand because a little more oversight would be welcome in some areas and might very well encourage innovation and institutional investors.
💰 If you haven't yet, it's the perfect time to take a look at OSOM DeFi Earn. Stablecoin lending is a great addition to most portfolios. We are planning on adding more stablecoins & more protocols because, for example, Anchor on Terra is amazing 🌕.
We really can't predict where the markets will go, or what the Autopilot will pick next, but we are entering the second half of the European summer with a well-diversified portfolio that's holding a good portion of BTC, which seems to be regaining quite some colors. And our historical performance and recent benchmarking exercise, while being no guarantee, leaves us pretty confident about the future.
🤝 A couple of things before we part
Have you heard of the "DCA Army?" As far as we can tell the term appeared on Nasdaq around July 21, then picked up some steam on Twitter around July 25. It posits that some people are regularly buying Bitcoin regardless of the price because they think it's a good long-term play. If you want to join the DCA Army and DCA into the Autopilot or DeFi Earn, you can do so simply by making your bank transfer recurrent in your banking app.
If you have a business ⚖️ and would you like your business to invest in Crypto and/or make or receive Crypto Payments, we now accept companies as customers, so just go to app.osom.finance, click "create account" and make sure to tick the box ☑️ Business account under the "password" field.
🎁 If you have a birthday coming up, gift the future: Bitcoin or an Autopilot balance can be given very easily.
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 letting us know at the support email address in the footer or in the chat bubble on your right.
d 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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