Portfolio Vault Update - Week 10

Vault rebalances

Jerome Powell recently concluded his two-day visit to Capitol Hill, delivering key testimony to both the House Financial Services Committee and the Senate Banking Committee. During these sessions, Powell expressed anticipation of interest rate cuts occurring within this year, reinforcing the sentiment that the Federal Reserve is prepared to adjust its monetary policy as needed.

Throughout his testimony, Powell highlighted that the Federal Reserve's policy-setting committee remains cautious. They seek assurance of continued progress towards the 2% inflation target before considering rate cuts. Despite this caution, Powell noted significant easing in inflation over the past year, without a corresponding spike in unemployment. He emphasized that the labor market remains robust, even with increased worker availability due to a surge in immigration.

This stance by the central bank mirrors the perspectives shared following the Federal Open Market Committee's January meeting, suggesting a consistent approach to monetary policy. Powell's comments underscore the Federal Reserve's responsiveness to changing economic conditions, including the unexpected decline in inflation and the recent bank failures.

In discussions with the Senate Banking Committee Powell faced questions about the efficacy of rate adjustments in addressing high living costs. Brown criticized the reliance on rate adjustments, pointing to corporate price gouging as a root cause of inflated costs, which rate changes do not address.

Additionally, Powell addressed regulatory concerns, particularly regarding the Basel III proposal for banking regulation. In a dialogue with Senator Elizabeth Warren (D-Mass.), he assured that any forthcoming changes to the proposal would be both broad and material, aiming to maintain strong capital standards for big banks without undermining the regulation's effectiveness.

Risk profile

We have decided remain ultra bullish Bitcoin as our indicators are flashing an ultra bullish crypto environment. While it's not an alt season environment, we are observing certain altcoins outperforming the market. Consequently, we have not ebalanced our vault and our letting our winners ride. Therefore, our risk profile can be classified as ultra bullish.

Portfolio Vault Assets update

Bitcoin

United States-based spot Bitcoin Exchange-Traded Funds (ETFs) experienced significant net inflows of $1.4 Billion as the price of Bitcoin surpassed the ATH on certain exchanges. This surge in inflows represented the third-largest single-day increase for spot Bitcoin ETFs since they began trading on January 11. Despite some outflows from smaller entities and the Grayscale Bitcoin Trust, which saw $368 million in outflows, the net positive influx into Bitcoin ETFs was remarkable, amounting to ten times the quantity of new BTC generated by mining activities on that day.

The substantial inflows were led by BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Trust, which recorded inflows of $420 million and $404 million, respectively. The collective net inflows into spot Bitcoin ETFs underscored a burgeoning interest and confidence in Bitcoin as an investment, markedly outpacing the current market supply.

On the same day, trading volumes for spot Bitcoin ETFs soared to $5.5 billion, marking it as the second-highest volume day since the products' launch. This spike in trading volume, coupled with strong institutional demand, indicates that spot Bitcoin ETFs, exchange-traded products, and trackers now manage approximately 1 million BTC, or about 5.13% of the total circulating supply of Bitcoin. Remarkably, nearly 83% of this is managed by U.S.-based spot and futures ETFs, showcasing the dominant role of American financial products in the Bitcoin market.

This trend of net inflows into Bitcoin ETFs continued despite facing over $9 billion in outflows, with the sector seeing net inflows totaling $7.5 billion worth of BTC within just two months of their operation. Notably, BlackRock’s IBIT has already accumulated $10 billion in assets under management, achieving a milestone that took gold ETFs nearly two years to reach.

The Open Network

Over the past week, TON has seen a 4.23% increase. Telegram will start sharing advertisement revenue with channel owners starting in March. All payments and withdrawals will be settled on The Open Network (TON).

Pendle Finance

Pendle has increased by 0.17% over the last seven days, continuing both its long-term and short-term trends. The Total Value Locked (TVL) has consolidated after reaching a new all time high this week, but Pendle keeps achieving milestones on a weekly basis.

Solana

Solana has increased by 11.40% in the last seven days, with the chance of it breaking out of its range. With Solana overtaking Ethereum on DEX volumes, it seems that most on chain participants have flipped over to Solana because of the cheap fees. We are now seeing a new wave of innovation with the SPL token standard.

Fetch

Fetch is up 102.55% in the last seven days. Fetch's usecase is somewhat similar to the new release of OpenAI, Custom GPTs. OpenAI saw a surge of new users after the annoucement of this feature, as has temporarily stopped the onboarding of new users because of a network

Bittensor

Bittensor is down 17.10% in the last seven days. The launch of subnets in October was a tremendous success, with subnet slots filling up with exciting projects. Subnets have allowed the creation of a plethora of mechanisms on Bittensor, but the design is not complete. Subnet emissions are currently determined by a group of validators on Subnet 0. This was a good initial way to bootstrap the system, but is not sustainable long term, as it creates centralization around subnet 0.

Celestia

Celestia is down 5.45% in the last 7 days. Celestia is a modular consensus and data network that enables anyone to easily deploy their own blockchain with minimal overhead. Celestia is built on the Cosmos SDK and uses Tendermint as its consensus mechanism. Celestia has a huge hype for airdrop farmers, as every celestia partner is airdroping tokens to Celestia stakers.

Pyth

Pyth Network is down 4.36% in the last 7 days. The core application of Pyth Network lies in providing real-time, accurate financial data to blockchain-based DeFi applications, thereby enhancing their functionality and reliability. With new applications being launched everyday, more and more of these are picking Pyth over Chainlink as an oracle provider. This has caused the gap in market cap to diminish. There is a lot of speculation going around that Pyth Stakers will also be receiving numerous airdrops in the future.

Stacks

Stacks is down 7.01% in the last seven days. Stacks is a Bitcoin layer for smart contracts; it enables smart contracts and decentralized applications to use Bitcoin as an asset and settle transactions on the Bitcoin blockchain. DeFi Llama reports all time high total value locked for Bitcoin L2 Stacks.

Vault Composition

Due to the recent price action and market circumstances, we have decided to not rebalance the vault and have left our winners to ride

Until next week,

Flagship’s Captain team