Blockforce Master Fund August Mid-Month Performance
(as of 8/14/2020) MTD: 9.49% YTD: 53.85%
Market/Economic Conditions:
August took many of us by surprise as it continued the bull market with relatively few pullbacks in the past two weeks. Not only did the market remain bullish, but the Fed announced plans for the development of its own experimental digital currency. It is important to note, however, that “FedCoin” as it is affectionately known will not offer any of the anti-inflationary protections that we see from digital assets such as Bitcoin. The news does, however, continue to strengthen the story around digital currencies and assets in the minds of many who otherwise ignored cryptocurrencies.
In other news, publicly-traded MicroStrategy, a $1.4 billion market-cap business intelligence company announced that they were allocating $250M to bitcoin to fight the upcoming inflation. The CEO, Michael J. Saylor, stated, “MicroStrategy has recognized Bitcoin as a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash…and accordingly has made Bitcoin the principal holding in its treasury reserve strategy.” A day after the announcement, the company stock rose over 10% — which indicates that many traditional investors recognize the value of diversification which we always preach to potential investors.
Every day it becomes more challenging for us to watch people sit on the sidelines in fear and ignorance of this asset class. We see it as our mission to help educate those who are curious and be a voice of reason for those who want to “go all-in” on this asset class.
Multi-Strategy Fund Update:
The fund exceeded all of our goals by capturing nearly 150% of the upside of a buy-and-hold investment in bitcoin MTD (As of 08/14/2020). Ethereum makes up a little over a quarter of our portfolio at the moment so, once again, ETH helped us outperform bitcoin. Recall that our average exposure to crypto “BETA” assets is approximately 73%, we do this to achieve the lower volatility targets. As I write, Bitcoin is up a little over 4% for the month of August, while ETH is up over 26% during the same period. YTD the upside capture of 83.69% is perfectly in line with our target of 80%.
In previous letters, we mentioned our bullish call on the DeFi movement and our belief that the excitement over decentralized finance applications would ultimately pass through Ethereum as the gateway. We felt our overweight position in ETH offered a unique risk-reward tradeoff that direct investments in DeFi protocols couldn’t quite offer. If you haven’t already heard about YAMS, we encourage you to read about the fascinating rise and fall of a new DeFi project. It should serve as a reminder that when it comes to investing, there is “no free lunch”, the risks are there, you just might not be looking hard enough.
If you understand the potential returns for this asset class, there is no need to be a hero. Times like this remind us why we need to trust the process and not lose our faith during a string of red months. We are more than pleased with funds performance, not only MTD but YTD as well. The Fund continues to achieve the goals that we set out to accomplish for our investors.
As a reminder, we continue to steer our fund towards our core objectives. Our mission remains:
- 80% of the upside of the crypto markets with 40% of the downside.
- Half of the volatility of a long-only cryptocurrency portfolio, and
- Little to no correlation to other asset classes.
These objectives are bold, but we continue to believe that with hard work, discipline, and patience, we will deliver on what we set out to accomplish.
Please contact us today if you have any questions regarding the minimum qualifications to get started.
Closing Thoughts:
The world finally turns its attention to digital currencies and blockchain. It is still very early, but Bitcoin and many other digital currencies are proving their worth and their utility. Please consider the diversification benefits of a modest allocation to the asset class. If you are looking for an intellectual argument. We would be happy to speak further with you. Please reach out to learn more. In the meantime, if you haven’t already done so, you can read my thoughts on the asset class in the following Forbes article. On behalf of the entire Blockforce Capital Team, we hope that you and your family are safe and healthy during these trying times.
Sincerely,
Eric Ervin, CEO
*Blockforce Capital Management, LLC and its affiliates are furnishing this publication (this “Article”) to sophisticated current and prospective investors for informational purposes only in relation to existing or potential subscription in the Blockforce Multi-Strategy Fund. This is neither an offer to sell nor a solicitation to buy units or shares in any fund. Any such offer or solicitation will be made solely through definitive offering documents, identified as such, which will contain information about each fund’s investment objectives and terms and conditions of an investment and may also describe risks and tax information related to an investment therein and which qualifies in its entirety the information set forth in this Email. Interests in the Fund are exempt from registration under the Securities Act of 1933, as amended, and Regulation D promulgated thereunder, in accordance with the definitive offering materials. Investors should conduct their own assessment prior to making any investment and consult their own investment, legal, accounting and tax advisors in order to make an independent determination of the suitability of an investment. An investment in the Blockforce Multi-Strategy Fund involves significant risks, including entire loss of investment, and is suitable only for sophisticated accredited investors. Past performance does not guarantee future results.
