From The Fund Manager
This week unfolded itself with some very unusual movements in the crypto markets. Some of these moves proved to be profitable, some were losses, and some were just missed opportunities. In the end, we still registered a good result.
Considering the moves we saw in the market, it could have been a stronger week for us. This gives us more data to sharpen our algorithms.
Before we move away from the topic of the markets movements, dare I indulge in a little bit of speculation? It’s not often that I do this, but there was a lot of talk about the quick whip down and up we saw late this week.
Well, I have been looking at the charts, and I noticed something interesting -- at the same moment when there was a surge in sell volume in ETH, there was also a surge in buy volume in BTC. Dare we conclude that this is possibly the cause of the whip? That a very large ETH holder decided to sell their ETH for BTC? I hope so, because it would mean that the capital would have stayed in the crypto economy, not because someone lost faith in crypto and sold to fiat. I have included both graphs of ETH/USD and BTC/USD for your consideration of my speculation.
ETH/USD Chart showing Net Sell Volume (Source: TradingView)
BTC/USD Chart showing Net Buy Volume (Source: TradingView)
Moving on to the issue of audit -- Last week, we prepared our confidentiality agreement, and have now contacted a number of accounting firms here in Australia that are comfortable dealing with a crypto fund. After weighing up service to cost, we settled on a firm that had an office in Adelaide (where we are based). However, upon furnishing them with documentation showing that the fund was registered in the Seychelles, they had to turn down the job stating that their licence and insurance were not the right type for auditing a fund based in the Seychelles.
We are now following up with the other two firms to see if they would undertake our audit exercise. Meanwhile, we are now also considering options outside of Australia. We are keen to progress this matter further as quickly as possible, and would keep our investors up-to-date as we get more information and make further progress.
Now, let’s talk about exchanges. ForkDelta has informed us that they have received our request to have CHT listed, and that the request is being processed. It is a bit of a challenge to try to get more info, but we are looking forward to this happening sooner rather than later.
ForkDelta is still proving to be the more popular exchange after some teething issues with LATOKEN as some investors are subject to restrictions, due to citizenship and/or location. LATOKEN is working hard to through the legalities of each jurisdiction to allow more investors to trade CHT. There is also good news with LATOKEN -- They have confirmed that we will soon be able to look at pairing CHT with USDT. More updates will follow as we make progress.
Still on the topic of exchanges, we have taken an overall assessment of our needs, and have asked ourselves, 'What if there was a fully decentralised, peer-to-peer trading platform, with decent liquidity, good TradingView style charts and potentially a stable coin pairing?'. These features would be perfect as it would make it easier for our current professional investors to trade CHT. We might have found such a beast of an exchange, but have been sworn to secrecy until everything is confirmed! Hopefully, this will allow all of our investors to trade CHT just like on ForkDelta but with the added benefits of good UI, quality charting, and order matching.
A quick note on buy backs -- The make-shift buy back queue has actually proven to be quite popular despite (or perhaps because of) its simplicity and lack of structure. We are splitting up larger liquidations to allow room for smaller liquidations to be cleared. For now and probably until we have the stable coin paring, we will continue with this method.
Another popular aspect that has come about by happenstance is the weekly guessing of the fund's performance on our Telegram channel. Believe me this week’s prize is amazing! You will have to watch out for a video announcing who has won.
That’s all from me for now, thank you for once again taking the time to read the report and I wish you and your loved ones a safe and happy weekend.
Correction applied: Week 12 growth percentage adjusted. We have corrected week 12 growth from 7.92% to 7.26%. Reported USD & ETH values for week 12 remain correct.
Market Activity Snapshot
Weighted Average: 0.004282832 ETH or USD$0.96 per CHT
Non-Weighted Average: 0.003750000 ETH or USD$0.84 per CHT
Valuation – Jae Jun Method
Fundamental value (sometimes referred to as intrinsic value) is a calculation to determine the actual value of a share, unit or in this case a token when looked at as an investment.
We have chosen the Jae Jun Intrinsic Value Formula. The main reason we like the Jae Jun is because it is one of the most conservative calculations there is.
Now we have kept to how this is traditionally used and that is to base it on a 10 year return, factoring in the yield reducing over time. We have also taken an extra step to be even more conservative on this calculation; Jae Jun reduced the ‘no growth PE ratio’ from 8.5 to 7 but due to the increased volatility in the crypto market we think it is more prudent to reduce this value all the way to 1 (this value operates as a multiplier in the calculation so reducing it to one is very significant in the results the formula we return).
Credit: Photo by Andre Francois on Unsplash