Portfolio Vault Update - week 6

Vault rebalances

The current economic landscape in the United States, presents a mixed picture with implications for risk assets. On one hand, the Federal Reserve Bank of New York's report highlights increasing financial stress among lower-income Americans. This group is beginning to feel the effects of the withdrawal of government support programs that were in place during the coronavirus pandemic. Early delinquencies on car and credit card loans have started to rise, particularly in lower-income households, surpassing pre-pandemic levels. Even higher-income Americans are facing challenges with mortgages, auto loans, and credit cards.

Conversely, the labor market appears resilient, with the number of Americans filing new claims for unemployment benefits falling to the lowest level in nearly one and a half years. This decline suggests robust job growth, painting an optimistic picture of the economy. Such strength in the labor market could influence the Federal Reserve's interest rate decisions, potentially delaying cuts. The data points to a tight labor market, with companies hesitant to lay off workers, a trend consistent with labor market conditions during and after the COVID-19 pandemic.

For risk assets, this presents a complex scenario. The financial strain on lower-income households could lead to increased volatility in markets related to consumer spending and credit, such as retail and banking sectors. Delinquencies in auto and credit card loans might affect the financial industry, potentially increasing credit risk and impacting investor sentiment. On the other hand, the strong labor market data suggests robust consumer spending power, which could support the performance of risk assets, particularly in consumer-driven sectors.

Risk profile

We have decided to remain Neutral as our indicators are flashing a neutral environment. While it's not a risk off environment, we are observing certain altcoins outperforming the market. Consequently, we have decided to maintain our current portfolio allocations and not rebalance. Therefore, our risk profile remains classified as neutral.

Portfolio Vault Assets update

Bitcoin

This week, the 10 spot Bitcoin ETFs witnessed their consecitive net inflows in a week, marking a significant shift in investor sentiment and contributing to a surge in Bitcoin's value to its highest point since the day following the commencement of trading for these funds. This change comes despite the Grayscale Bitcoin Trust (GBTC) experiencing a slowdown in its previously substantial net outflows. Collectively, ETF issuers increased their Bitcoin holdings by more than 4,200, valued at approximately $183 million, a stark contrast to the continuous daily outflows observed last week. From January 23 to January 26, the funds saw about 20,000 Bitcoin withdrawn, with the last net inflow recorded on January 22, when the group collectively added just over 1,200 Bitcoin.

This turnaround has positively impacted Bitcoin's market price, which had dipped below $39,000 last week due to accumulating sales. However,the price rebounded to a high of $45,500. The slowing of outflows from GBTC since the ETFs' launch is notable. Initially, the fund experienced an average of $470 million exiting in the six days following the ETFs' introduction. By Monday, this figure had decreased to $192 million, as reported by BitMEX.

Pax Gold

Over the last week, Pax Gold has experienced a slight decrease of 0.5%. As political unrest and conflict in the Middle East remains uncertain, the price of gold seems to remain in range for now. We will be monitoring the situation closely.

The Open Network

Over the past week, TON has seen a 0.84% increase. The thesis for TON has not changed, as the integration of wallets is fostering more dapp development within the TON ecosystem, further strengthening its position. 

Pendle Finance

Pendle has increased by 9.63% over the last seven days, continuingboth 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 fallen by 6.85% in the last seven days. With Solana overtaking Ethereum on DEX volumes, it seems that most on chain participants have flipped over to Solana. We are now seeing a new wave of innovation with the SPL token standard.

Fetch

Fetch is down 2.20% 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 5.00% 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 up 18.98% 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.

Vault Composition

Due to the recent price action and market circumstances, we have also decided to add Pyth to the Vault. The updated vault looks as such:

Pyth

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. There is a lot of speculation going around that Pyth Stakers will also be receiving numerous airdrops in the future.

Until next week,

Flagship’s Captain team