Astronaut Capital Quarterly Report Q2 2020
By: Lennard Neo
Tags: ICO, Blockchain, Cryptocurrency, Ethereum, Bitcoin

Macro Outlook

Markets exhibited a V-shaped recovery in Q2 after a lacklustre Q1 2020

The strength and resilience we expected on the crypto markets came in sharply during Q2 2020, despite a pandemic struck economy. Investors’ sentiments were positive as they adopt a risk-on approach. Total crypto market capitalization exhibited a V-shaped recovery, gaining 79% as it trades to a high of $290b from $162b.

Q2 was also the expected period where the highly anticipated Bitcoin halving event come to pass. What was unexpected, on the other hand, was the scale of the global pandemic, which has indirectly created synergies for Bitcoin’s upward price rally. Major secondary tokens displayed strong performance as both BTC and ETH recovered to a high of $10,300 and $254, representing an upside of 65% and 94% from last quarter figures respectively. Bitcoin still represents more than 50% of the market as its dominance continues to trade sideways within the 60% — 70% range.

Most trading is still executed via derivatives with open interest (OI) doubling from $2b to $4b this quarter. In particular, we are observing an increase in Institutional inflows as CME Bitcoin OI surge 5x from $100m to $500m over the same period. A tell-tale sign that institutional investors, such as Paul Tudor Jones, who have been sidelined the past couple of years, have begun deploying capital into digital assets.

News and Developments

Despite the economic turmoil, this was one of the best quarters for cryptocurrencies. News has been mostly positive as traditional investors turn to digital assets seeking hedging attributes for their traditional portfolios. These positive sentiments overflowed into favourable investor sentiments, generating that momentum we have seen in the market.

Positive news includes:

Bitcoin halving triggered an induce price rally with increased trading volumes

Paul Tudor Jones, a fund manager with $40b AUM, invests in Bitcoin

Fidelity new survey claims 36% institutional investors currently invest in digital assets

South Korea set up a legal panel to enact cryptocurrency regulations

JP Morgan opened accounts for crypto custody Coinbase and crypto exchange Gemini

Saudi Arabia central bank injects liquidity via blockchain

Square’s cash to automate bitcoin purchases, shattering its Bitcoin sales volume in Q1 2020

Negative news includes:

BlockFi suffered a data breach

Telegram to refund investors as their token (TON) continues with delays

Youtube algorithm deletes crypto-related content on its platform

Astronaut Holdings

Changes to Portfolio Holdings in this Quarter

Total Portfolio

Illiquid Assets

Assets that have been entered into at early-stages are still to be considered illiquid or not viable to factor into performance measures.

Dividends

Distributions to token holders

Astronaut Capital declares a dividend payment of $0.0577 per ASTRO token, which represents 75% profits (50% + 25%) distributed to ASTRO holders and a dividend yield of ~20% versus current ASTRO price. This payout is a one-off special dividend in lieu of the fund’s outstanding performance in Q2. The dividend is payable proportionally to all eligible token holders based on the number of tokens (ASTRO) held as of the snapshot date, 26 Jun 2020 14:00 hrs (GMT +8). A breakdown of dividend calculation can be found below.

*For more clarity and dividend criteria, please refer to our Dividend Distribution Policy

Net Fund Figures

Dividend Distribution Figures

High Water Mark

Performance Fees (10%)

Astronaut Capital will not take any performance fees this quarter, as the FUM value did not exceed the prior high-water mark. Therefore, this portion will be reinvested back into the fund.

Performance

Post Mortem

Q2 2020 In Review

Astronaut Capital had an impressive Q2 this year, generating extensive value for our token holders. Encompassing the investment decisions to strategically allocate into major secondary tokens and undervalued projects have yielded positive returns for the fund. This includes leveraged directional trades on Bitcoin (+4%), and investment in Elrond in Q1 reaped +220% upside return as per report date.

The fund also continued to take profit on our SNX holdings, liquidating another 16% of our original holdings.

We discuss some of the metrics relating to the fund’s performance below.

Comparative Benchmarking

Fund Performance Since Inception

The fund has paid a cumulative dividend amount of $2.4m since inception. The audit indicates that Astronaut Capital’s overall fund performance with paid dividends is $3.95m, which is 80% higher as compared to the value when the fund was launched in October 2017.

Liquidation of Holdings

During this quarter, the fund liquidated another portion of SNX into USDT. The fund also took up a couple of small leveraged trades to set forth the precedent of our risk-on approach going forward.

Outlook for Q3 2020

Q3 2020 is where the economy will pick up again. The fund will continue to be invested in major cryptocurrencies, particularly Bitcoin and Ethereum. The rationale comes on the back of the post-halving price appreciation narrative for Bitcoin and Ethereum 2.0 staking narrative.

Having taken leveraged directional trades in Q2 2020, this foundation has enabled the team and the investment committee (IC) in developing a framework for risk-on approaches. Astro will continue to build upon this momentum going into the next quarter should the relevant opportunities unfold.

In addition to major tokens, the fund will also focus on two key sectors in the coming quarter; 1) Defi and 2) pre-mainnet launch projects. Defi has been the theme over the past few quarters; however, it is only recently that projects are realizing real value as these staking models come to fruition. Given that ASTRO has reasonable portfolio exposure to Defi, we aim to continue taking profit on our more substantial exposure and further diversify into similar smaller projects to minimize downside risks. As for pre-mainnet launches, the team will identify undervalued projects similar to Elrond to determine suitability for the portfolio.

The IC is also anticipating more details on 2 of our illiquid core holdings, Current and Trust Token. From the constant conversations and developments made by those teams, we believe substantial value could be derived once these projects get listed. More clarity to be provided in 2H 2020.