Crypto Hedge Fund Report: Why You NEED To Pay Attention!!

It’s been a rough past few months for Everyone in crypto and this includes Many institutional investors who have Been rapidly dumping their bags However there are some who are holding Tight and in some cases even buying the Dip When it comes to og funds in the space One of the most well-known and respected Is pantera capital and earlier this Month they released their blockchain Letter a rundown of their thinking about The current market and how they are Positioning so in this video i’m going To tell you exactly what it says and add Some of my own thoughts along the way This you don’t want to miss [Music] For those of you who don’t know who Pantera is they’re one of the oldest Crypto funds in the space and actually Started buying bitcoin back in 2013. Their bitcoin fund is the best Performing one on the market and since Inception it has seen an roi of over 26 000 Now while its bitcoin fund is what Pantera is most well known for since 2017 they have been diversifying into Altcoins and seed or strategic Investments It’s all led by an ex-trad phi trader Called dan moorhead who is himself quite The crypto og okay that’s enough of an

Overview if you want more information on The fund then i’ve linked to their team Page below The report we’re here to look at is Entitled defy worked great and i can Already tell that i’m going to enjoy it That’s because the report starts off by Referencing an article titled defy’s Existential problem it only lends money To itself that was in the wall street Journal a few weeks ago now i remember Seeing this article doing the rounds on Crypto twitter and it’s every bit as Asinine as its title suggests i’ve Linked to it below for your Entertainment The whole article is trying to draw a False equivalency between the ills of The centralized lenders celsius block v Voyager etc And d5 It’s trying to equate centralized Finance with decentralized finance In dan’s words quote they are not defy Or on the blockchain at all just some Startup banking entities that got over Leveraged He also notes that he tries to avoid all Articles that compare crypto with tulips And i have to agree with him here If an author is willing to trot out that Hackneyed cliche for something as Revolutionary as crypto or defy is there Peace actually worth reading

Anywho the main point that dan is trying To make in this report is the fact that During this current crypto market Meltdown defy has functioned just as it Should Protocols like ave compound finance Maker dao and uniswap have run smoothly All loans were over collateralized and There was no scope for renegotiating any Deals If loans were not paid down they were Liquidated and it was all fully Transparent Now this is the opposite of how bailouts And restructured debt deals work in Treadfly behind closed doors and opaque Choosing winners and screwing the losers Now this quote from the wall street Journal article is particularly galling To the glee of its critics defy has Ended up committing all the same sins as Wall street essentially becoming a Vehicle for a new generation to engage In the rampant speculation typical of Pre-2008 investment Bankers uh wait a second defy open and Transparent code has committed the same Sins as bankers Dan makes an interesting point here and That is that the author says quote Pre-2008 investment bankers so does that Mean bankers of today are all upstanding Moral citizens hmm Commodity market manipulation predatory

Lending drug dealer money laundering the Banks are not only easily corruptable But openly corrupt However you cannot physically corrupt a Protocol there is no one person pulling The strings Anyhoo it’s all a really silly article And dan breaks it down nicely he also Notes that he tried to reach out to the Author in order to help him understand Why the article was so off-base There was of course no response and as You can see to this day the title stands In the article and there have been no Changes made Moving on from the article in this Section here the report explains why Defy is superior It comes down to the fact that no matter Who has borrowed money from a protocol They are all viewed as identical 100 Borrower or 100 million dollar borrower The protocol keeps you honest and it Will liquidate you if you fall below Collateral levels In d5 if you were a lender on rv for Example and celsius was a borrower the Protocol makes sure that the lenders Will always get their money back Given that they are over collateralized There will always be enough funds to pay You back should the borrower fail to do So For example there’s a reason why celsius

Was paying down the debts that it had on Ave and make a dao Had it not done so then it would have Been automatically liquidated as the Report says quote all centralized Finance companies are forced by smart Contracts to pay back the d5 protocols To give you an idea of how this compares To the shadiness of tradfy they bring up The voyager fdic question now for those Who haven’t been following up until a Few weeks ago voyager was advertising That it was somehow fdic insured That would imply that users who had Balances in fiat on voyager would have Up to 250k Covered by the federal deposit insurance Scheme should voyager go bankrupt This appeared on an earlier version of The website that can only really be seen If you use the wayback machine However the latest version appears to Tell the whole truth That the bank that voyager used is fdic Insured and your funds are protected There So the obvious ruse with the original Wording is that customers were led to Believe that their funds were safe on Voyager because should it go bankrupt The fdic would step into the breach That of course is a lie Voyageus bank was fdic insured and Balances that voyager held with the bank

Were only insured should the bank itself Go bankrupt another example is then Given and this is from another Centralized lender blockfi They reference the sec’s complaint Against the firm related to its bia Investment opportunities The sec claimed that blockfy’s users did Not know the full extent of the risks With these accounts And that is indeed true When you invested money with the likes Of celsius blockfi or voyager you had no Idea what they were doing with your Funds You thought that they were being Prudently lent out with risk well Managed well it turned out that some of Them were engaged in risky defy yield Farming with others lending under Collateralized to a hedge fund that Turned out to be a house of cards more About that hedge fund in the description The point is that with these c5 firms You couldn’t really prove otherwise you Had no way of knowing that voyager lent 650 million dollars uncollateralized to A counterparty it was all a hidden risk You couldn’t really verify that there Was a one billion dollar hole in Celsius’s balance sheet With d5 however there is no scope for White lies and shady statements you can Crack open a smart contract explorer and

You can observe the collateral backing Alone You can see the lending levels and you Can see who has exposure where Beyond this the d5 protocols also Conducted their business in exactly the Same manner before and after the crash Whereas some centralized exchanges went Down in the volatility around the crash Of terror dexes kept on operating 24 7 365. Not only that but their volume has been Expanding to the extent that some of Them like uni-swap have daily trading Volumes that surpass those of coinbase On occasion okay so that’s the d5 c5 Angle that they go into in the first Sections of the report this is really Important to understand as it helps you Appreciate just why this recent crypto Collapse has nothing to do with the Underlying tech And if anything it should make you even More bullish on some of those protocols Being built Moving on over here is a pretty helpful Chart it breaks down the relative Performance of cryptocurrencies by their Sector or category And speaking of which if you’re looking For a breakdown of the different types Of crypto categories then i have videos And podcasts on that and i’ll leave Links in the description for you

Anyhoo now something that would have Been great to see on this chart is at Least a breakdown of what coins are in These categories That aside we can see that those crypto Types that have had the biggest falls Were layer 2 projects so these could Include the likes of polygons matic Optimism looping etc etc My only assumption for this is that the Fact that the scaling considerations for These projects have been less pressing Given that fees on ethereum have come Down quite a bit at the other end of the Spectrum it seems as if those Cryptocurrencies that are used as Payments or stores of value have been Performing the best i’m pretty sure that Bitcoin was in this category and hence The reason that it’s held up relatively Well compared to the rest Moving on though this chart over here Shows that the period from december 2017 To the middle of 2022 is the longest Period of flat bitcoin performance That’s because at current levels we’re Around the same place as we were at the Previous bull market high It’s also quite unlike the previous bear Market as during that time we were still Up by over 5.2 times the level we were At four and a half years ago part of the Reason why bitcoin has been performing So poorly this year is of course its

Correlation with other assets like Stocks particularly tech stocks Here you can see the performance of Crypto compared with some of the most Popular tech stocks What’s interesting though is that Although bitcoin’s price has fallen There are some tech stocks that are Fared far worse and it’s not like they Are getting lambasted by the mainstream Press to the same degree as bitcoin is Ho hum This then raises the very important Question of when or indeed if crypto can Decouple from stocks i mean bitcoin was Developed to be a digital gold that was Anti-fragile and unexposed to these Typical risks Well according to the chart here that Reversal in correlation is already Starting to take shape as we’ve moved Down from almost 75 back in may to just Above 35 today ironically that peak in Correlation came at about the time of Terror’s collapse Therefore i think that the fall is more A result of bitcoin diving lower on Crypto specific factors celsius terra 3ac The decoupling has started although not As we would have hoped That aside dan still maintains the view He had in one of his earlier blockchain Letters that being that cryptocurrencies

Should be one of those assets that Shouldn’t naturally be driven by Interest rates Bond prices are driven by rates because Of bond maths stocks because of company Earnings real estate because of mortgage Rates Crypto should be viewed as a commodity That should be uncorrelated with Interest rates To quote dan in a cnbc interview quote Although it hasn’t happened yet i can Easily see a world in say a year when Stocks are down bonds are down real Estate is down but crypto is rallying And trading on its own very much like Gold or soft commodities like corn Soybeans I tend to agree with him while the Markets are being driven by fed action Right now on a fundamental level crypto Should not be driven by interest rates That decoupling will come It’s just a matter of time Moving on this section over here is Particularly interesting as it looks at U.s economic growth and biden’s Celebratory lapse earlier this year In january biden stated that in 2021 the U.s had the fastest economic growth in Nearly four decades He made the same remarks in early june When he said that experts were Predicting that the u.s economy would

Grow faster than china’s this year That’s something that quote hasn’t Happened since 1976 Well the only thing that he’s right About is that it hasn’t happened since 1976 and that’s because a few hours ago We saw a second quarter of negative gdp Growth in the u.s This would imply that the country is Technically in a recession it’s not Official and that’s because there is Actually a panel that decides these Things I talked about this in more detail in my Video on the recession which will be in The description for you So u.s economic growth was not all that Rosy Moreover china managed to eke out some Economic growth in both q1 and q2 Although i am skeptical on the accuracy Of its data that’s a topic for another Video linked to below This is something that dan talks about As well first of all earlier this year Biden should not have been bragging About the economic growth that came in 2021 That’s because it was quote borrowed Growth This is not untrue the fed flooded the System with money and the economic Stimulus from fiscal spending also drove Sky-high inflation

This inflation is now at record levels 40-year highs and the fed is desperately Trying to rein it in Now in this section of the report here Titled it’s going to take an elephant Gun dan talks about how hard it will be To get the inflation genie back into its Bottle for example take a look at this Chart of the median selling price of Homes it’s still breaking records which Means that one of the primary drivers of Inflation housing ain’t slowing down Anytime soon Another chart that he includes is this One over here which shows the share of New car buyers who are paying 1 000 or More per month this has tripled since The pandemic The point that dan is trying to make Here is the fact that people can afford To pay these ridiculous rates to get a New vehicle there’s still a lot of money Sloshing around in the economy and Spending is still at levels that drive Inflation As dan states quote unfortunately a few Basis points here and there will not Stop inflation fed funds will ultimately Go to something like four to five Percent This is something that many others are Saying including the likes of bill Dudley a former head of the fed bank of New york

We still have a long way to go and That’s if you even believe that four to Five percent is enough Back in the 1970s when there was Similarly high inflation paul volcker Jacked the fed’s fund rate up to almost 20 percent So how much will the fed tighten before Deciding to ease off Well according to dan the fed will have To keep on tightening despite a Recession it’s so far off both targets Of its dual mandate now admittedly this Isn’t all the fed’s fault the pandemic Restrictions have led to a great Resignation that has starved the market Of labor quote for the first time in History there are two job openings for Each person looking for a job What times we are living in Now that’s it for most of our breakdown Of pantera’s blockchain letter but it’s Time for a few of my thoughts It’s great to see that some of the og Funds out there are still bullish on the Space pantera has been hodling bitcoin For almost 10 years which can only mean They have diamond hands forged with Extreme pressure Clumsy metaphors aside their investment Thesis is strong and their belief in web 3 remains unwavering despite the market Turmoil In fact as outlined in the report the

Collapse of the cfi lending firms should Be the clearest sign yet that defy is The only answer Many vc firms seem to have backed away From the space as they’re unable to make That distinction Pantera on the other hand is doubling Down For example they’re launching a new fund Which will focus on growth stage Investment series b c and d As i’ve maintained a number of times the Next bull market 100 x’s will be made in This bear market and it seems that Pantera is laser focused on sniffing out These opportunities When it comes to the price of bitcoin And the broader crypto market there’s Still going to be some volatility and we Could indeed see prices reach lower Levels but you have to ask yourself if This is because of fundamental factors Or because of general risk positioning Crypto should not fundamentally be an Asset correlated with rates Yes it has been correlated in the recent Past and it still remains sensitive to Interest rate policy but past Performance is not indicative of future Returns Crypto has no inherent interest rate Exposure this means that over a long Enough time frame current interest rates In the market shouldn’t impact its

Valuation The billion dollar question then becomes How long until these inherent crypto Fundamentals start bearing fruit When will we see that elusive decoupling Well your guess is as good as mine but Reports like this one from pantera can Help inform our guesses And that’s it for my video today but i Love some feedback so do you think we’ll See a decoupling anytime soon are there Any other reports that you think i Should look into let me know down below While you’re down there i would love to Direct you to my socials page it has Links to my twitter telegram instagram And tiktok lots of content over there That you’re not getting here You’ll also find a link to my newsletter Which is where i share my personal Portfolio as well as my upcoming video Pipeline The links to all of these are in my Socials page below Finally if you found this video helpful Slap a like on it subscribe and ping That bell as well to make sure you never Miss another one time’s up for this Crypto guy but i’ll be seeing you guys Very soon [Music] You


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