Strategic Reserve - Flagship Vault Update Week 31

Over the past seven days, the Portfolio Vault's share price has increased from $58.55 to $56.84, a 2.92% decrease. Regarding BTC and ETH, the Flagship portfolio vault underperformed BTC by 2.99% and ETH by 2.96%.

Portfolio Vault Assets update

Bitcoin

Bitcoin is up 0.07% this week. Inflows into the nine exchange-traded funds (ETFs) tied to Bitcoin have been up. This week, we have seen average inflows of $40 million. In other news, The idea of a Bitcoin Strategic Reserve for America has recently gained support. Former President Donald Trump announced plans to establish a strategic Bitcoin stockpile if re-elected, aiming to keep all Bitcoin the U.S. currently holds or acquires.

This initiative is intended to position the U.S. as a leader in the crypto industry and counter current regulatory challenges. Senator Cynthia Lummis introduced a bill to create a Bitcoin Strategic Reserve, proposing that the U.S. accumulate 1 million Bitcoins over five years, or 5% of the total supply. Managed by the Treasury, this reserve aims to reduce national debt by 2045. The bill emphasizes secure storage and transparency in managing the government’s Bitcoin holdings.

This shift in policy towards Bitcoin could increase its legitimacy and market value, positioning the U.S. as a global crypto leader and preventing other nations from taking the lead

Regarding technical indicators, Bitcoin has now testing its daily trend and the previous range low. If Bitcoin is able to close the close above $64k, we will be positioned nicely.

The Open Network

Over the past week, TON has seen a 1.42% increase. The Open Network (TON) blockchain has seen a significant rise in daily active users. As of July 2024, TON recorded over 600,000 daily active addresses, surpassing Ethereum's daily active addresses on most days in early July.

TON has been one of the strongest alts in the space and one of the strongest alt blockchains for the last month. Currently, it is exhibiting some strength relative to the market. If TON can reclaim the daily trend, it can become a leader.

Pendle Finance

Pendle has decreased by 6.63% over the last seven days, continuing its long-term and short-term trends. Pendle Price Tokens are currently expiring, over 3.3 Billion dollars will need to find a place to be productive.

Pendle has remained in its range. It is now reclaiming the daily trend. If Pendle can make a higher low, it would show that we are in for a volatility crunch, with one side needing to break.

Solana

Solana has decreased by 0.89% in the last seven days. With Solana overtaking Ethereum on DEX volumes, most on-chain participants have flipped over to Solana because of the cheap fees.

The chart for Solana looks good in terms of a high time frame, as it has retraced a large part of its previous move. It has now attempting to hold its daily trend.

Fetch

Fetch is down 5.57% in the last seven days. The Fetch merger is now complete, and the ASI token merger integrates FET, AGIX, and OCEAN into a unified platform to advance decentralized AI technologies.

Fetch is reclaiming its daily trend and is testing its previous lows. We want to see a range from here. Losing these lows would insinuate a further downward trend.

Bittensor

Bittensoris down 10.32% in the last seven days. The Bittensor blockchain is now back up after an attack on several user wallets.

Bittensor has emerged as one of the strongest AI projects in the last week, recently reclaiming the daily trend. From a fundamental perspective, it is one of the strongest projects out there. It captures every sub-AI sector, as these can be built on the Bittensor Network.

Ondo

Ondo Finance is down 0.89% in the last seven days. Ondo is a DeFi protocol that aims to provide institutional-grade financial products on the blockchain, including tokens backed by U.S. Treasuries. It has been supported by prominent figures in the financial industry, including Larry Fink, the CEO of BlackRock, one of the world's largest asset management firms.

Ondo's technical indicators are also bullish. It's one of the few alts that has held its daily trend. With the ETH ETF, the tokenization narrative can catch a bid with Ondo being the lead RWA narrative and backed by Larry Fink. Ondo can be a top performer.

Stacks

Stacks is up 0.02% in the last seven days. The Stacks network has reached an important milestone with the Nakamoto Upgrade, now "code complete". This upgrade aims to enhance transaction speeds, ensure full Bitcoin finality, and prepare for the upcoming release of sBTC. The codebase includes new features to improve Signer and Miner resiliency and has passed initial testing phases. The final testing and audits are scheduled to continue, with the mainnet release anticipated at the end of August​

Stacks is the biggest BTC beta, consolidating at weekly support. If BTC can move up and break out of its current range, we can see Stacks following.

Render Network

Render is down 17.90% in the last seven days. The Render Network Summer Update highlights significant growth and key milestones achieved in spring 2024. The network saw a 17.7% increase in frames rendered and a 60.28% rise in token usage year-over-year. Noteworthy developments include the integration of Blender's Cycles, enhanced node operator incentives, and the introduction of new Compute Clients like Prime Intellect and Exabits. Additionally, automated payments and the implementation of the Burn-Mint-Equilibrium model advanced.

Regarding technical indicators, Render is trending down and about to hit a high time frame support level. Once it has reached this level, it could have bottomed.

Indicator list

Forex Markets

The Forex market is a proxy for risk on or off the environment. EUR/USD looks weak, and the Forex market looks like a risk on environment. The dollar is looking weak. It has lost its range high break out and its daily trend.

DeFi Stablecoin TVL.

When the Total Value Locked (TVL) exceeds the market capitalization, it indicates a risk-on environment. Conversely, if the TVL falls below the market cap, it suggests a risk-off scenario where investors are more cautious. Recently, TVL has been trending upward, but is stagnating. Thus indicating a neutral environment.

Relative Strength Index

The relative strength index (RSI) is a momentum indicator that measures the speed and magnitude of an asset's recent price changes. When the RSI is above 50 on either daily or weekly charts, it signals a risk-on environment. Conversely, an RSI below 50 on these timeframes suggests a risk-off atmosphere. BTC is now testing the 50 on the daily level, indicating a risk-on environment.

Trends

We utilise the 12, 21, and 36 Exponential Moving Averages (EMA), precise tools for market analysis, to determine the daily and weekly trends. A move below these EMAs on the daily chart will indicate a shift towards a risk-off environment, signalling caution among investors. The market shows signs of stagnation but has yet to lose the daily trend, suggesting a steady state without clear indications of a downturn. When the market reclaims its position above these EMAs on the daily timeframe, it will be considered a sign of transitioning into a risk-on environment. We are testing the daily trend, indicating a bullish environment.

Bitcoin Dominance

Bitcoin Dominance (BTC.D) doesn't directly indicate a risk-on or risk-off environment. Still, deciding our allocation strategy between Bitcoin and the rest of our portfolio is crucial. An upward trend in BTC.D suggests an increased allocation towards Bitcoin, while a downward trend signals a shift in preference towards investing more in blockchains and decentralized applications (dApps). Currently, we're on the lookout for an upward move. This could be a significant move up for BTC that will lead to ALTS underperforming.

ETF Inflows

Reviewing BTC ETF inflows helps us understand the money movements of institutional investors. The dynamics of spot Bitcoin ETFs have recently displayed notable volatility in their inflow patterns. This week, inflows have been positive, with the average inflows for the last week being around $10-$124 million daily.

The Ethereum (ETH) ETF has officially started trading, mirroring the price action from the initial Bitcoin ETF launch days. In conjunction, Grayscale has been selling its ETH holdings significantly, with over $2 billion worth sold today. We are now seeing some slow down in selling, potentially leading to a bottom.

Total Market Caps

When analyzing market cap indicators to gauge the overall sentiment in the crypto market, we consider three different aspects. The first indicator, the total market cap of the cryptocurrency sector, hasn't reached an all-time high but is showing bullish signs.

The second market cap indicator, which excludes Bitcoin, appears weaker than the first and faces resistance. This situation presents a risk-on sentiment for altcoins while still bullish for Bitcoin, suggesting that Bitcoin might be a safer bet than other cryptocurrencies in the current market condition.

The third indicator excludes Bitcoin and Ethereum from the total market cap, revealing a bullishoutlook. This hints at a potential increase in bullish sentiment across altcoins, except Bitcoin, which remains neutral.

Liquidity

Global liquidity trends serve as a barometer for market sentiment, with an upward trend being synonymous with a risk-on environment. This suggests investors are more willing to take on risk, buoyed by the availability of capital. Conversely, a downward trend in global liquidity marks a shift towards a risk-off environment, indicating a more cautious approach by investors as capital becomes scarcer.

Equally significant is the trend in US liquidity, which mirrors the global pattern. A rise in US liquidity reflects a risk-on sentiment within the country, indicating investor confidence and a willingness to explore riskier assets. Conversely, a decrease in US liquidity signals a risk-off mood, where there's a tendency to avoid risk, favoring stability and safer investments. Understanding these trends is vital for investors, as it can guide their investment strategies and decisions.

Both global and US liquidity have started to show upward trends, suggesting a more risk-on environment in markets. This indicates that globally and US investors could have a larger risk appetite. But it is summer and can be seen as more of a ranging environment for risk-on assets.

Brent Crude Oil

Brent crude oil prices impact risk assets significantly. When oil prices rise, the cost of goods and transportation increases, leading to higher inflation. This often results in central banks raising interest rates to combat inflation, making borrowing more expensive and reducing investment in risk assets like stocks. Conversely, when oil prices fall, inflation pressures ease, potentially leading to lower interest rates, cheaper borrowing costs, and increased investment in risk assets. We are now seeing a strong rebound from oil.

Risk profile

We have decided to remain ultra-bullish on Bitcoin. We are still in a bull market and are already completely deployed at better prices. Consequently, we have decided not to rebalance the vault. As such, the vault allocations are:

Until next week,

Flagship’s Captain team