(1/2) Some updates on the market and the strategy’s overweight in Lido (splitting the post into 2 because of length limit)On the overweight in Lido:- The thesis is actually pretty simple. After the ETH merge, anyone holding ETH is missing out on ~5% yield per year because they are not staking the ETH they hold.- Lido has a dominant market position in the ETH liquid staking space. Check this Dune dashboard out to learn more about Lido’s market position: https://dune.com/LidoAnalytical/Lido-Finance-Extended- Generally, I expect ETH to outperform BTC in the upcoming cycle, and then expect Lido to outperform ETH.- LDO is not another shitcoin that doesn’t do anything. It is one of the few coins that actually (1) has a dominant market position, and (2) accrues value back to token holders by sending 5% of the yield generated from TVL to the treasury.- It is difficult to time the market but personally I am a top 50 LDO holder myself with no plan to sell anytime soon. I would only become bearish on the project if they start losing the dominant position in the liquid staking space.- Some behind the scenes: I requested Iconomi to add LDO back in May 2022 but they only added it in August after I complained multiple times. If they added it sooner, CCC’s position in LDO would still be in the money (which significantly outperformed BTC/ETH during the same time horizon).
(2/2) On the crypto market in general:- After the 3AC liquidation in June, I have a neutral view towards the market. - I believe we have now entered the “boring” phase of the bear market after the ETH merge completed successfully. During this phase, prices would not necessarily drop too much, but there is a lack of narrative to drive sectors of the market up. - There is currently little to do in the crypto market and more people will leave the industry because they are just not making money and don’t see the situation improving anytime soon. - It is hard to estimate how long this phase will last but I would guess it's somewhere between 6-9 months.- During this period, it is better to just not focus on the market too much and instead do something else. Hence I have not rebalanced the portfolio in a while and have no plans to do so unless things change.- On the macro side, the Fed has raised rates aggressively and although I am not a macro expert myself, I believe most of the damage has been done already. If the Fed keeps on raising rates, the bond/mortgage/FX market will break and there will be huge pressure for them to slow down.- We already saw the UN calling on central banks not to increase interest rates on October 3. More countries/organizations would do the same if rates keep going up rapidly.
Ok the market panicked because UST lost peg. Think we have a temporary bottom here. Going risk on for now, if things look bad again, we will go back to some stable coins.The lesson from this market turmoil is don't get overly attached to a coin. Often a cult is formed around a coin (most of the time its because it has a charismatic leader, performed well and made a lot of people money) and people don't behave rationally about their investments. I made this mistake during the 2018-2020 bear market and hopefully won't be repeating the same mistake again.
CCC has been staying defensive since 2 weeks ago with 50% in stable coins. Think BTC/ETH will do alright but the market is still too heavily in alts for now.
It's the end of 2021 and CCC had a great year - 11.6x return vs 1.6x for BTC and 5x for ETH (all displayed CCC returns are net of fees).As the market gets bigger and bigger, it also becomes more complicated. It won’t just be BTC / alt / USD season like it used to be anymore. I expect next year to be more challenging in outperforming BTC/ETH so individual coin selection is going to be paramount.Even if BTC or ETH are trading sideways, I believe there will be pockets of altcoins that will do well because there are so many different sectors now (NFT, GameFi, metaverse, DeFi, meme coins, L1/L2s, privacy just to name a bunch). Even within DeFi, there are DeFi 1.0 and 2.0 coins which performed very differently in the last few months.We already see this happening - BTC is down 33% from peak but CCC is only 15% away from ATH. Like I mentioned in a previous post - narrative is very important and will continue to be a main alpha driver for CCC going forward.With crypto taking the main stage and more attention/money focusing on this industry than ever, I remain constructive to the industry outlook. That’s why I haven’t really allocated to USD the entire year.Here’s to another strong year for CCC and the crypto market as a whole!