Under the Hood - June 2021 - Crypto Autopilot

This month has been relatively calm compared to the emotional rollercoaster that May had turned out to be.

The forward-looking activity was all quite positive this month, but it did not keep the markets from closing June generally lower than they were at the beginning, with the 7 days between June 15 and 22 being particularly painful to watch as the global value of all Crypto took quite a dive before rebounding, but not quite to its previous high.

So let’s dive into what happened in Crypto and the Crypto Autopilot this month, and see what some of the developments of June might indicate for the future.

💨 TL;DR

  • No positive performance to be found: The ₿ - denominated performance for the month was -2.28% while the €-denominated performance was -5.18%. That’s in a situation where the Top200 Crypto surrendered 11% over the month and Bitcoin lost 3.89%. So the Crypto Autopilot is indeed better at preserving its gains than the overall market.
  • As we entered July, the Crypto Autopilot was holding BTC: 26.4%; SOL: 20.8%; TFUEL: 10.9%; ADA: 8.5%; MKR: 8.2%; DCR: 6.9%; WAVES: 5.3%; MATIC: 4.3%; HBAR: 2.9%; FIL: 2.6%; MANA: 2.1%. Only ICP became investable this month. The AI now has 64 cryptos to choose from.
  • We take a long hard look at the Autopilot’s performance and benchmark it. Long story short, we do amazing.
  • During our last survey, you asked many questions, and we tackled some of them: What are the fees? How do you select crypto? What do you do with our money? Can you add even more assets? Why does the Autopilot only work with Bitcoin? All of that should be clearer after you’re done reading this month’s update, and we’ll tackle the rest next month.
  • Much like in May, despite some losses across the board this month from a “builder and long term investor” point of view, the month was pretty good. We explain the Chinese mining ban, look at institutional movements, explore lobbying activities, talk of DeFi resilience, and about A16Z looking at deploying US$ 2.2B of capital across crypto, the largest crypto fund yet, so it shows no signs of slowing down.
  • For July we are excited about OSOM DeFi Earn & OSOM Insights and being recognized as the best.
  • We conclude with the announcement that we can now onboard businesses as customers and that you can find our mobile apps here for Android and here for Apple devices.

🔬 Markets: June saw the global value of crypto hover around €1.18T

The Global Crypto Market Capitalization ended the month about 10% lower than where it started it.

That’s about €133B wiped off of the markets, or about half as much as what was lost in May. The top 200 Crypto excluding stablecoins (INDEXNASDAQ: CMC200), was down about 11%.

Bitcoin did better than the Total Market Capitalization of Crypto, only surrendering -3.89% over June.

From what we can tell, this appears to be the results of the post-traumatic happenings of May which led all good news to be received with somewhat of a cold shoulder from market participants. Additionally, the mining ban in China has led to miners having to relocate, which pushed them to sell some crypto to cover the relocation expenses. We think that might push Bitcoin’s price down a little more but not for very long since, with miners being pushed out of China, the average price of mining a Bitcoin is going up, offering a sort of “floor” for the BTC price.

The trend to watch out for in the coming months will be institutional adoption. And with Grayscale’s Bitcoin Trust set to release some of its holdings, we might see the price dip a little further in the short term if those Bitcoins don’t find many buyers.

Unlike recent months, the Total Market Cap of Crypto Excluding Bitcoin did not do better.

Much like last month, it fell by about 14%, or about 9.5% if we look at the Top 200 excluding Stablecoins. (INDEXNASDAQ: CMC200EX). Outside of WAVES and some very small coins, there were almost no gainers over the month. This has seen Bitcoin regain some of its “dominance” (share of the total value of all crypto, as it rebounded from the lows of mid-May to end the month at around 47%.

Autopilot

The ₿ - denominated performance for the month was -2.28%; meaning that our diversification strategy did not beat holding Bitcoin alone for the month. When it comes to the €-denominated performance, it was -5.18%. This shows the Crypto Autopilot A.I. is managing to fulfill its objective of limiting downwards volatility - thereby preserving gains - better than an indexing strategy could. Read on below as we have a lot more on the comparison of the Autopilot to other strategies.

Autopilot Performance since inception vs BTC

Since we started, on 26 September 2019, that’s a 633.37% performance in Euros, 87.19% 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

A word if you’ve only recently joined us: we understand the pains of watching a 40% slide but simply put, crypto is volatile. We sent an email in May reminding everyone to “carefully ponder your next steps” but had decided against doing the same in June, as we would rather not draw your attention back to your portfolio if you would rather try to let it be. We have always recommended a long-term strategy and a long-term view, which are key if you want to reduce risks. So do not be discouraged! While past performance is no guarantee of future results, we do very much expect to have a positive trend in Crypto in the future. The space is just getting started, as you will be able to read below. The Crypto Autopilot is meant for people looking at intelligently building portfolios for the long term, so look at the long term-trends


This monthly update is not meant to give you the jitters (and if it does, do let us know, and we’ll try to adapt the format) but to keep you informed, educated and aware of the developments and opportunities. 


Stick to your plan, or you risk going broke (advice from 2010, still valid 11 years later), is all we’re saying 🙂

🤿 Autopilot Deep-Dive

With the global and Autopilot performance numbers out of the way, let’s dive into the Crypto Autopilot’s behavior this month.

✍️ Interesting Crypto Autopilot Moves in June

We talked about ICP (from DFINITY) last month, saying it had been added to the universe but was not investable yet. On June 2, it became investable and brought the total number of investable crypto to 64. When it launched in May it initially lost about 90% of its value but it seems to have regained some colors recently.  


Solana, which had been the largest position from about mid-May to mid-June move made way for Bitcoin to come to the fore again, and on June 15 Bitcoin was 25.9% of the portfolio whereas Solana was 19.7%

🏎️ What are the coins driving the performance?

For this month, the Bitcoin-denominated performance was driven by  TFUELSOLWAVESKSM, and LUNA, while everything else that we held brought a bit more of a drag than a boost.

Performance Drivers for Autopilot in June

💰 What are the holdings in the Autopilot Exactly?

As July came around, the Autopilot was holding those 11 Crypto, down from 16 at the start of the month, in the addressable universe of 64.

holdings chart

BTC: 26.4%; SOL: 20.8%; TFUEL: 10.9%; ADA: 8.5%; MKR: 8.2%; DCR: 6.9%; WAVES: 5.3%; MATIC: 4.3%; HBAR: 2.9%; FIL: 2.6%; MANA: 2.1%

📈 Benchmarking!

This is not a recurring feature in this monthly update because there is no point in Benchmarking very often. But we thought that mid-way through the year would be a good time to take a pause and take a long-term view at how the Crypto Autopilot is performing against other strategies. So we looked at the 622 days between 26 September 2019 and 8 June 2021 to see how the Crypto Autopilot compared to 5 other popular Crypto investment strategies. And wow, did you choose wisely 😉


You can find all the charts here, and we help you interpret some of the results below.


If we take a look at the raw performance, in terms of Annualized compounded returns, we see that the Crypto Autopilot leaves everything in its dust. It’s also notable that ANY diversified strategy beats holding only Bitcoin over the long term. Bitcoin might be the king of the Crypto world, but there is a lot of performance to be found elsewhere.

If you know of a Crypto fund or an index you would like to see benchmarked against the Crypto Autopilot (and where to find good price data for it), please let us know by replying to this email. 

best performance for OSOM, and best pain ratio for OSOM

An interesting metric for evaluating your investment’s performance is the Pain Ratio. It tells you how rewarding your risk-taking is, or, in other words, how much performance you get for putting your capital at risk. And with the Crypto Autopilot, you get a handsome reward, which is not found anywhere else.  


And if you take a look at the chart below, you will see why we advise a somewhat active strategy for investing in Crypto as opposed to a passive one. Alpha (α) is used to describe an investment strategy's ability to beat the market or its "edge." Alpha is also referred to as “excess return” or “abnormal rate of return”. It refers to the idea that markets are efficient, and so there is no way to systematically earn returns that exceed the broad market as a whole. But as we can see, whether we are looking at Bitcoin or CCI30, there is always at least 18.9% of excess returns to be found, which is more than our performance fees! 🚀

Alpha all over

From what we can tell, the Crypto Autopilot is the smartest way to invest in Crypto 🎯.

🙋 Your Questions on the Autopilot, Answered!

We say it every month, we love getting your questions. So keep them coming, and find all the past answers in the “monthly update” section of our blog. 


This month is particularly rich in questions because we ran a survey and hundreds of you answered. So, THANK YOU🙏🏻 ! And here are the answers to most of the questions you left in that survey’s comment fields. Because you left many, we’ll keep some for next month too.

What are the fees?

We try to make them readable and understandable but many asked us to clarify again. So we made them very visual. Let us know if that doesn’t clear things up:

Fees when depositing to Autopilot
Fees to withdraw
Fees for buying

How do you select the coins and what do you do with our money, exactly?

There are long forms of all of those explanations on our blog, but we decided to also summarize them visually. Does it help?

This shows how, and with whom, we screen the universe of available Crypto and how we come to consider them “investible” and how we actually build the portfolio.

While this shows how your money travels from your wallet to a diversified portfolio (selected thanks to the process detailed above), and back to your wallet.

Can you add even more Crypto assets?

We do, all the time. We already have over 64 while we started in Sept 2019 with about 30. But we can only add them when they meet the quality, ownership distribution, liquidity, and market cap criteria. Allowing even more coins - which wouldn’t satisfy those conditions - would mean getting potentially very illiquid stuff, which, if we had to sell them, would be done at a great loss. So it wouldn’t be very wise.

Why does the Autopilot only work with Bitcoin?

Because we needed one reference Crypto asset with which we could buy and sell all other assets. And today, outside of stablecoins - which we didn’t want to use because all portfolio turnarounds would then involve more trades since we don’t keep any stablecoins in the portfolios - Bitcoin is the only “universal pair”. You can buy any crypto-asset with Bitcoin.

Crypto News & Happenings in June - Month in Review

As explained in the intro, there was quite a lot of good news this month, but it mostly was not received as it should have been. We think that’s an opportunity to buy some underpriced assets before those good news are priced in, but you should evaluate for yourself what this could mean for your portfolio.

First, let’s address the” China mining crackdown”. Yes, China has now pretty uniformly forbidden mining in the country. And that has led to a 40% decrease in the computing power used to secure the Bitcoin Blockchain. But those miners are looking for alternative places to mine, and it shouldn’t be long until they’re back online. They’ve had to sell some of their Bitcoin to pay for the move and that has not been very good for Bitcoin’s price, but it’s good for its future as a decentralized system. It’s also most likely going to raise the “floor price” of Bitcoin (the price at which miners are willing to sell) as China was one of the cheapest countries to mine in. So while it shook the markets a little, we think that it’s actually not all bad news.

After very strong months, institutional adoption has slowed a little. There was some profit-taking and some decisions to sit on the sidelines, apparently. But Citi is launching a Digital Assets Group, BBVA opened Bitcoin trading to private clients, and El Salvador is going all-in on Bitcoin and will get help from the Central American Development Bank in its effort to work on this new opportunity. “Spezialfonds” in Germany are also set to be allowed to make crypto allocations. Interactive Brokers (probably the world’s largest broker) said it would allow Crypto trading in the summer and a Bloomberg analyst came out saying that Bitcoin was no longer a speculative asset. Finally, Ethereum seems to be more and more understood by institutions - it is admittedly easier to understand its value than Bitcoin’s - so we are pretty positive that we will see more “big tickets” players move in on the scene in the coming months.

Decentralized Autonomous Organizations (DAOs) are a weird cross between multinational companies and your school’s PTA association. That isn’t keeping them from setting up lobbying organizations to make sure regulators understand them. We’re curious to see how successful lobbying with UNI Tokens will be. Speaking of lobbying, we are also part of Blockchain for Europe and participated in the summit in June to help raise awareness about the role Crypto could play in the European economy. Our Chief Legal Counsel, Jerome Dickinson, even joined the board this month. ✒️

Crypto FUD-master and Meme-Pumper-in-Chief, Elon Musk, said he would accept Bitcoins for Teslas again once the computing power used to secure the network would be 50% “green”. That’s probably good news, though we still don’t understand why you would want to exchange your rapidly appreciating asset for a rapidly depreciating one 🤷.

Banks have regulatorily mandated stress-tests, DeFi had May 2021. And DeFi held up remarkably well. Whereas Banks still seem to get shaken up by little hedge funds taking on too much risks.

Internet pioneers Andreesen and Horowitz have raised a new (it’s the third) fund to invest in Crypto companies. It’s US$ 2.2B. It’s the largest Crypto-related fund to date. Just tell those who say interest in the space is waning 😂

Finally, it was already given in a link above, but since you might have missed it, we’ll link it here again: we liked Michael J. Casey’s piece on “price swings versus long term”. Once you are done with this monthly update, it might make for a good weekend reading.

What Does July Have in Store for us?

OSOM DeFi Earn, in Beta, is now available to all! So make sure to take a look if you are looking to diversify into something a little less volatile than the Crypto Autopilot. You can also read all about it here. In a nutshell, we use the EUR you send us to buy US$-backed Cryptos (called “stablecoins”), deposit them to lending platforms and allow you to earn interest. Historically the rates have been around 6%, but with the slowing of on-chain activity recently, they’re hovering around 4.5%. That probably still beats most savings accounts.

Why do it with us? You could certainly invest in DeFi and CeFi by yourself. But we diversify - and so decrease the risk of something wrong happening - in a way that you probably wouldn’t do (because it takes time), or couldn’t afford to do (because the transaction fees would eat all your principal):

We take your euros and buy 2 stablecoins (USDC and BUSD) and deposit them across 2 suppliers: AAVE and Binance. You don’t have to pay any blockchain transaction fees - which can be costly. Over the past year, you could have paid as much as 40€ per transaction. So investing 100€ didn’t make sense. you can do it all from a bank transfer (from 30€, using the deposit ID with the format “DFE00000XXXXXX” ).

It’s a little like what “Compound Treasury” has started offering institutions, but with lower risks and more rewards.

Set Up a standing order and “boom”, you’re off to races with your high-yield USD savings account. Nowhere else can you find that convenience and diversification. And while we’re in Beta (it’s as secure as the rest of our infrastructure, but the front end is in Beta) it’s free 🤑.

More about us: have you noticed that all the links behind the names of the assets are taking you to a website you had never seen before? That’s OSOM Insights. We’ve been working on it for a while and it’s still a little rough around the edges, but we decided it was good enough that we could publish and work on polishing it in production. That’s the lean-startup way.

It came about because we realized that we had built a lot of knowledge about Crypto internally and that it might be useful for everyone to have access to some of it. You’ll find stats, analysis, Q&As, crowd sentiment, and AI price prediction (not the same AI as the Autopilot because that one doesn’t do price predictions, but something that does time-series forecasting. A bit like Monte-Carlo simulations, but smarter).

We’ll keep looking at where VCs invest over the summer. July and August do tend to be a bit slower as Europe and North America enjoy some sun and barbecue, but A16Z’s 2.2B have to start moving at some point.

There is a DeFi protocol that has chosen to be regulated by the German regulator, and we’re curious to see if that drives more institutional adoption and how the libertarian-minded DeFi crowd approached this new beast.

🤫 We got an award for being the best, but can’t tell you until July. Stay tuned.

We can’t predict where the markets will go, or what the Autopilot will choose, but we are entering the second part of the year with a well-diversified portfolio that’s holding a good portion of BTC. And our historical performance and recent benchmarking exercise, while being no guarantee, leaves us pretty confident about the future.

And two things before we part:

⚖️ Do you have a business? 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.

🤖 🍏 many in the survey we recently sent asked us if we had Android and iOS apps. Of course, we do! They’re here for Android and here for Apple

That’s all for this month. But remember, if July has you looking for a unique gift to celebrate someone you love, 🎁 you can gift Bitcoin or an Autopilot balance very easily. 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!

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.