May Market Commentary

Welcome to this month’s edition of Portal Asset Management’s Market Commentary. This two-part series presents a dual analysis covering the broader economic spectrum and a focused evaluation of the digital token arena.

Initiating the discourse, Mark Witten, our CIO, offers a Macro Economic overview, articulating the forces and trends influencing the financial world. Transitioning from the global view, Greg Galton, Portal’s Analyst Adviser, provides an in-depth analysis of the token market, underscoring the performance of critical digital assets.

Mark Witten, CIO

INSIGHTS AT THE FOREFRONT:
MARKET INTELLIGENCE FROM OUR CIO

• Market Recovery: Cryptocurrency markets experienced a robust recovery in May, catalyzed by positive regulatory developments and renewed investor confidence.
• Ethereum ETF Approval: On May 23rd, the SEC approved eight spot Ethereum ETFs, triggering a 26% price surge in Ethereum and a market-wide rally. This approval marks a significant milestone for easier institutional and retail access to Ethereum without the complexities of direct custody.
• Investment Flows: Digital asset investment products saw $2 billion in net inflows during May, pushing the year-to-date inflows above $15 billion, indicating strong continued interest in the crypto markets.
• Market Expansion: The total cryptocurrency market capitalization reached $2.75 trillion by the end of May, driven by significant growth in Bitcoin’s value and sustained ETF inflows.
• Hedge Fund Growth: The total crypto-dedicated hedge fund market expanded from $16.3 billion at the end of 2023 to $21.0 billion, reflecting growth across various investment strategies including fundamental, market neutral, and quant directional strategies.
• Venture Capital Activity: Venture firms raised $1.19 billion across 22 funds in Q1 2024, maintaining a robust pace of investment with $2.62 billion deployed across 631 deals.
• Innovation in DeFi Integration: BlackRock launched BUIDL, the first on-chain fund backed by U.S. Treasuries, highlighting the integration of decentralized finance (DeFi) with traditional financial assets. This fund allows for innovative features like daily dividends paid directly to investors’ wallets and flexible custody options.
• Future of Tokenization: Larry Fink of BlackRock discussed the future potential for tokenizing all financial assets, emphasizing the benefits such as customized investment strategies, enhanced security, and operational efficiencies.

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Greg Galton, Analyst Adviser

MAYS INSIGHTS: MARKET RECOVERY

May Market Recovery:

• Overall Recovery: Crypto markets showed strong recovery in May, bouncing back from April’s downturn, reinforcing the belief in a long-term bullish trend.
• Altcoin Rally: Altcoins led the rebound, particularly energized by the SEC’s unexpected approval of spot Ethereum ETFs, which catalyzed significant rallies in ETH-based protocols.
• Strategic Short Positions: The fund capitalized on the rally by initiating short positions on some overvalued ETH-based protocols, taking a strategic stance to leverage market overextensions.

Performance of Key Holdings:

• Ethereum and Solana Gains: Ethereum and Solana, two of the fund’s largest holdings, saw significant gains, increasing by 24.7% and 30.5% respectively, outperforming Bitcoin’s 11.1% rise.
• Expanding Crypto Portfolio: In response to the April pullback, which was viewed as a buying opportunity, the fund increased its positions in Stacks (STX), Immutable (IMX), Arbitrum (ARB), and Metis (METIS).

New Investments:

• Jupiter Exchange (JUP): The fund initiated a position in Jupiter, a DEX Aggregator and Perpetual Exchange on the Solana network. Jupiter is noted for being a key liquidity aggregator, offering extensive token range and superior route discovery for trades. It aims to enhance user experience with friendly UX and effective dollar cost averaging tools.
• Arweave (AR): Investment in Arweave, a blockchain-based storage solution that leverages Proof of Access protocol to offer a scalable and permanent data warehouse. It matches users with spare storage space with those needing to securely store or host data and applications permanently.

Technological and Strategic Advancements:

• Utility of New Investments: Both Jupiter and Arweave represent strategic additions to the fund’s portfolio, offering unique technological advantages and fulfilling specific market needs in liquidity aggregation and data storage, respectively.

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Download Greg’s Commentary