Recently, the cryptosphere has garnered plenty of media attention with bulls, bears, advocates, and cynics all indiscreetly butting heads. Many are quick to callously point fingers at crypto’s adolescence and lack of historical track record, quoting rigid institutions’ partisan observations as truth. But, some are cognizant of the inevitability and necessity for the industry’s development, citing crypto’s recent slump as a buying opportunity worthy of being capitalized upon.
It is of little surprise to see more multinational financial institutions and prominent investors showing an intrigue in, and an acceptance of cryptocurrencies and the distributed ledger technology that power them. For decades, the traditional financial sector has been characterized by its opaqueness. Invictus Capital’s utilization and dependence on blockchain technology to execute and complete irreversible, decentralized transactions, overcomes many of traditional finance’s shortcomings by improving efficiency and enabling the democratization of access to a financial ecosystem formerly dominated by the ultra-rich. This is just one example of astute usage of this emergent technology potentiating a sector-wide revolution that is currently unfolding. As these revolutions start to take hold, savvy investors will be able to continue to capitalise on potentially formidable cryptoasset investment returns.
By looking at Bitcoin (BTC) as a bellwether for the entire crypto market, we’ve already seen the cycle of boom and bust repeat many times — with the experience of the December 2017 and March 2020 crashes likely ingrained in the minds of any seasoned crypto investor. Time and time again, however, Bitcoin has rebounded to keep its long-term upwards trajectory intact. As such, it is pretty clear that crypto, to many traditionalist’s horror, is going to be kicking around for a lot longer than they’ve anticipated — even if volatility is here to stay for some time yet. And if anything, crypto’s boom is just getting started!
If we cast our memories back to mid-December 2017, BTC had its arguably most memorable crash, losing close to half of its value in the week following the peak of the multi-year bull cycle that saw Bitcoin approach $20,000 (with ±2,400% annual returns registered at the peak). Many were quick to point fingers and reiterate the immortal words of ‘I told you so’, believing once again that the traditional financial sector’s unerring forecasts were correct. The most recent bull-run has put those forecasts to bed.
Not many of us were far-sighted enough to be early investors in BTC, but if you did purchase 1 BTC in December 2016, a year before the December 2017 crash, you’d still have run a cool ±870% profit in June 2018 (around the time BTC began to restabilize). Traditional finance often chooses to ignore these profits and incessantly nitpicks at crypto’s price shocks, fueling the narrative that crypto is a pseudo asset class, or bubble. Not only do we see this as incorrect, but we believe that their assessment is not only clouded by bias and oversight, but does little to address and understand the inevitability of crypto market volatility during its early development (we’re still in these early stages!).
In our article about the Invictus Margin Lending Fund (IML), we highlighted crypto’s inherent volatility in detail. Crypto’s volatility is far more prominent than in traditional financial markets (equities, bonds, real estate, etc.). Part of this is driven by the highly speculative nature of crypto investments — in which the investment thesis is typically that an individual crypto will become a key player in some facet of the ecosystem in which it serves; for Bitcoin this typically revolves around its use as a store of value (cannibalising gold demand) or as a means of payment (threatening the dominance of payment providers like Visa or PayPal). However there are a myriad of cryptos, many of which aim to revolutionise niche industries.
The ebb and flow of market participants’ expectations for the highly uncertain future drive major volatility on the demand side. A similar dynamic was observable during the Dot-com bubble, but despite the 2001 crash, some of the hot stocks of the era have come to dominate their respective sectors. However, compounding this effect on the demand side are most crypto’s inelastic supply schedules — meaning supply does not adjust to changes in demand, as you would typically see in commodity markets. But despite the volatility inherent in crypto markets, the long-term trend is very clearly up, and investors would do well to zoom out on the charts during brief market downturns. Many investors have, however, been burnt by market corrections in the past, panic selling and locking in losses at the worst possible time. If you have conviction over the future path for the industry’s long term, but cannot stomach the volatility, a set-and-forget index fund investment that leverages the power of diversification may be the answer. Even better, a smart index fund — like Invictus Capital’s C10 — can help rein in volatility on the way to the proverbial moon!
C10 is an open-ended smart index fund that provides investors with exposure to and diversification across the top 10 cryptocurrencies (based on market capitalization), whilst limiting a loss of capital through a dynamic cash hedging mechanism. To limit any human oversight, an algorithm provides a ruleset to dynamically allocate or deallocate a portion of the fund’s capital to cash as a market risk hedge. For example, during BTC’s March 2020 crash, where it lost nearly 60% of its value, the algorithm adopted a position holding close to 95% cash. This cash hedge enabled investors to experience superior downside protection, whilst also preserving upside participation.
Whilst retaining an objective stance on your investment, and keeping faith in crypto and blockchain technology’s exponential rise, Invictus Capital’s C10 fund can provide you a trusted medium to capitalise upon crypto’s dip.
With the C10 token currently valued around $6.28, after rising to $8.50 before crypto’s most recent dip, shouldn’t you consider buying the dip with Invictus Capital’s C10 fund? To invest in C10 today, please visit Invictus Capital’s website.