Portfolio Vault Update - Week 12

Macro

At its March 2024 meeting, the Federal Reserve (Fed) decided to keep the overnight federal funds rate between 5.25% and 5.5%. This is the fifth time in a row the Fed has chosen not to change rates, maintaining them at their highest level in over 22 years. Chairman Jerome Powell stated the Fed is dedicated to reducing inflation to its 2% goal. He mentioned significant progress towards the Fed's dual mandate, noting the reduction in inflation and a strong labour market, which he described as very positive developments.

Market experts had expected the Fed to maintain current rates, influenced by recent labour market data and inflation rates. The Federal Open Market Committee (FOMC) did not specify when rate cuts might occur, though predictions suggest the first cut could be in June. The Fed continues to project three rate cuts in 2024, but this is subject to change based on incoming data. Powell highlighted a data-dependent approach, evaluating each decision one meeting at a time.

The FOMC's post-meeting press conference shed light on its current thinking and potential next moves but provided little certainty on the timing for rate reductions. Despite high-interest rates, economic growth has been strong, and inflation has decreased significantly over the last year, leading to raised growth and inflation expectations for 2024. However, Powell pointed out that inflation is still above the target and the labour market is overly tight, adding that the economic outlook remains uncertain.

Powell indicated that while interest rates might have reached their peak for this cycle, any reduction would only happen once there is greater confidence that inflation is steadily moving towards the 2% target. He also mentioned the Fed's readiness to keep rates steady for an extended period if necessary, to ensure inflation decreases significantly. Powell considered achieving a soft economic landing uncertain, yet noted that the risks to the Fed's employment and inflation goals are becoming more balanced, thanks to the recent moderation in the labour market and inflation.

Risk profile

We have decided to 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 decided to not rebalance our vault and let our winners ride. Therefore, our risk profile can be classified as ultra-bullish.

Portfolio Vault Assets update

Bitcoin

The Bitcoin ETFs are currently seeing their largest three-day outflow since their inception. This reversal from the previous massive inflows comes after Bitcoin reached an all-time high of $72,000 last week. The outflows totalled over $742 million this week, with the Grayscale Bitcoin Trust experiencing $1.4 billion in outflows alone, in addition to slower inflows into the BlackRock and Fidelity offerings, which are the second and third most popular products, respectively.

Despite the success of spot Bitcoin ETFs, they cannot attract new investments every day. The outflows from GBTC, in particular, seem to be driven by early investors seeking to capitalize on recent all-time highs. Grayscale acknowledged that its diverse shareholder base might engage in various strategies affecting the trust's flows, including gains harvesting, arbitrage trading, and share liquidation for debt repayment in bankruptcy cases.

The Open Network

Over the past week, TON has seen a 0.98% decrease. Telegram will start sharing advertisement revenue with channel owners starting in March. All payments and withdrawals will be settled on The Open Network (TON). On top of this Telegram is on the way to issuing their stock on the NYSE.

Pendle Finance

Pendle has decreased by 5.17% over the last seven days, continuing both its long-term and short-term trends. The Total Value Locked (TVL) has reached a new all-time high this week, but Pendle keeps achieving milestones every week.

Solana

Solana has increased by 12.83% in the last seven days. 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 3.43% in the last seven days. Fetch's use case is somewhat similar to the new release of OpenAI, Custom GPTs. OpenAI saw a surge of new users after the announcement of this feature, as has temporarily stopped the onboarding of new users because of a network

Bittensor

Bittensor is down 0.84% 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 12.95% 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 up 14.67% 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 every day, 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 up 11.92% 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 an ATH total value locked for Bitcoin L2 Stacks.

Vault Composition

Due to the recent price action and market circumstances, we have decided to not rebalance our vaults.

Until next week,

Flagship’s Captain team