Crypto Market Update – March 2023

April 14, 2023

We are pleased to report that Altfund’s Liquid Strategy had a successful March 2023, generating another positive return. March and April were eventful months for both traditional finance and the crypto markets, with significant developments taking place. We would like to highlight a few key updates:

Ethereum’s Shapella Upgrade Sparks Positive Price Movement:

April witnessed a major milestone for the Ethereum network with the launch of the Shasper upgrade. This update enabled validators to de-stake their funds, contrary to expectations of a sell-off, the upgrade led to an increase in the price of ETH. In fact, ETH climbed above $2,000 for the first time in eight months. Additionally, the entire ecosystem experienced a rally, with liquid staking services like Lido and Rocket Pool seeing substantial gains. Positive on-chain indicators, such as deposits exceeding withdrawals and significant growth in staked ETH, further support a promising outlook for Ethereum.

Bitcoin’s Network Usage Indicates Growing Adoption:

Since the start of the year, Bitcoin has witnessed a healthy increase in network usage. The number of transactions on the Bitcoin network serves as a reliable leading indicator for increased adoption and use of the cryptocurrency. Notably, 2022 remained relatively flat, but 2023 has shown significant growth in the number of Bitcoin transactions. This growth signifies the expanding Bitcoin economy, with more people engaging in transactions and contributing to the network effects and investor activity. These positive trends highlight the continued maturation of Bitcoin as a digital asset.

Reference: Rapid Rise in Population of Long-Term Bitcoin Holders

Challenges Faced by the Banking Sector:

March brought both strong performance for crypto prices and a coordinated attack on the crypto banking sector by the US federal government. Several banks, including First Republic Bank, Credit Suisse, Silicon Valley Bank, Signature Bank, and Silvergate, faced significant challenges, ultimately landing on the “failed banks” list. The magnitude of these failures in relation to GDP raises concerns about the wider implications for the financial system. It emphasizes the need for vigilance in assessing risks to the stability of the banking sector.

Looking Ahead:

The upcoming Bitcoin halving in April 2024 is expected to be a significant event. Historical patterns suggest that Bitcoin’s price bottoms out before the halving and peaks afterward, making the current prices an attractive investment opportunity. We believe that we are early in a new cycle and recommend considering allocations to digital assets.

These insights indicate the growing maturity of the crypto market and the strengthening narrative of digital assets as stores of value.

Excerpts from Pantera Capital Update:

  • “The crypto market is maturing and becoming more institutional-grade.” 
  • “The number of institutional investors investing in crypto is growing rapidly.” 
  • “The crypto market is becoming more diversified, with a wider range of assets available to investors.”

As always, we strive to stay informed and monitor the developments within the crypto space. While challenges persist, the growth in Ethereum, Bitcoin’s network usage, and the increasing adoption of digital assets present opportunities for investors and enthusiasts alike.

We will do our best to continue providing you with insights and analysis in the evolving world of cryptocurrencies.

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Disclaimer: This commentary is provided as general information only and is in no way intended as investment advice, investment research, legal advice, tax advice, a research report, or a recommendation. Any decision to invest or take any other action with respect to any investments discussed in this commentary may involve risks not discussed, and therefore, such decisions should not be based solely on the information contained in this document. Please consult your own financial/legal/tax professional.

Statements in this communication may include forward-looking information and/or may be based on various assumptions. The forward-looking statements and other views or opinions expressed are those of the author, and are made as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated and there is no guarantee that any particular outcome will come to pass. The statements made herein are subject to change at any time. Altfund Management, disclaims any obligation to update or revise any statements or views expressed herein. Past performance is not a guarantee of future results and there can be no assurance that any future results will be realized. Some or all of the information provided herein may be or be based on statements of opinion. In addition, certain information provided herein may be based on third-party sources, which is believed to be accurate, but has not been independently verified. Altfund Management and/or certain of its affiliates and/or clients may now, or in the future, hold a financial interest in investments that are the same as or substantially similar to the investments discussed in this commentary. No claims are made as to the profitability of such financial interests, now, in the past or in the future and Altfund Management and/or its clients may sell such financial interests at any time. The information provided herein is not intended to be, nor should it be construed as an offer to sell or a solicitation of any offer to buy any securities, or a solicitation to provide investment advisory services.

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