Regulatory changes, liquidity coming alive, market subsectors getting their time in the sun and inflation not considered as problematic as believed earlier. There points are setting the investment strategy into crypto for 2023. Recently regulators are pressuring banks not to deal with crypto and Binance US just halted US dollar transfers. These are important on-ramps to the space. This is balanced by non-bank entities providing solutions in many market sectors and currencies is expected to create a mix of opportunities for global citizens.
Correlation: Crypto was once considered uncorrelated with traditional markets but now we are seeing more correlation. Observation — it is all about the time frame. Over a few months it may be correlated but over 5 years it has not proven to have a high level of correlation.
Correlated or not, both funds look at what drives blockchain solutions that generate value. Looking at NFT projects the need to store value, provide statistics and transfer digital assets is seen as important for the future of NFT’s.
Crypto assets have a lot of subsectors within the broader crypto umbrella. The first use case of smart contracts was DeFi and Apollo considers the next major use cases to be NFT’s so the Apollo team thinks there is going to be an intersection between NFT’s and Defi such as NFT derivatives.
Much of this knowledge is not understood by the professional or sophisticated traditional investor which is where the value add comes from specialist fund manages such as Apollo Crypto Fund and Portal.
These types of funds attract UHNW and Family offices investors not superannuation and institutions in the Australian market at least.
Surprise — institutional investors are still driven by FUD and FOMO despite their size and sophistication, they are humans and reacting accordingly.
Despite the volatility both Apollo and Portal have had very few redemptions so those that have invested have a much better understanding and therefore tolerance to the volatility of the crypto asset class.
We continue to believe that “Fortune Favours the Informed”.