Posts By :

cryptonews@arxnovum.com

Portfolio manager adding new pieces to a portfolio

Index Reconstitution Announcement
Index Reconstitution Announcement 2560 1092 cryptonews@arxnovum.com

Last week the index provider, CF Benchmarks, that guides the Arxnovum Multi Crypto Index Fund and Arxnovum DeFi Index Fund announced changes to the index constituents as part of its semi-annual reconstitution.

The CF Diversified Large Cap Index, the underlying index to the Arxnovum Multi Crypto Index Fund, experienced the biggest change expanding the number of constituents from 11 to 16.  Changes to the index will be effective September 1 and will include the addition of:

  • Ape Coin (APE)
  • Avalanche (AVAX)
  • Internet Computer (ICP)
  • Litecoin (LTC)
  • Shiba Inu (SHIB)

In our opinion, this nearly 50% increase in the number of holdings should be seen as a positive for investors in the fund for the following reasons:

  1. increases diversification
  2. reduces idiosyncratic risk 
  3. indicates that the crypto markets are maturing as 16 constituents now fall within the 95th percentile of the market

Meanwhile, the CF DeFi Composite Index, the underlying index to the Arxnovum DeFi Index Fund, will have two additions and one removal. The big change here is the removal of Amp (AMP) for reasons that relate to the regulatory scrutiny it has recently come under, see our blog on this subject from earlier this month for more details. The index will add 1inch (1INCH) and Avalanche (AVAX). 

In order to achieve each Fund’s investment objective to track these underlying indices, we are planning to implement these changes to our funds inline with the index reconstitutions next week.

The products and services offered by Arxnovum are available to qualified investors in certain provinces and territories of Canada. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
 
All investments contain risk and may lose value. Investing in the cryptocurrency market is subject to risks.  Cryptocurrency, often referred to as “virtual currency” or “digital currency”, operates as a decentralized, peer-to-peer financial exchange and value storage that is used like money. Cryptocurrency operates without the oversight of a central authority or the banks and is not backed by any government. Even indirectly, cryptocurrencies such as bitcoin may experience high volatility, and related investment vehicles may be affected by such volatility. Cryptocurrency is not legal tender. Federal, state, provincial, territorial or foreign governments may restrict the use and exchange of cryptocurrency, and regulation in North America is still developing. Cryptocurrency trading platforms may stop operating or permanently shut down due to fraud, technical glitches, hackers or malware, which could have an adverse impact on the net asset value per unit of the Fund. Please consult the Funds Term Sheet for a complete list of risks.
 
Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what Arxnovum Investments Inc. and the portfolio manager believe to be reasonable assumptions, neither Arxnovum Investments Inc. nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.
Amp token illustration

Crypto token AMP deemed a security by the SEC
Crypto token AMP deemed a security by the SEC 1024 573 cryptonews@arxnovum.com

Constituent of Arxnovum DeFi Index Fund to be removed

Late last month the Securities and Exchange Commission (SEC) declared that AMP, along with 8 other crypto tokens, were potentially a security instead of a crypto asset. AMP has been a constituent in the Arxnovum DeFi Index Fund since its inception. 

In a 62 page complaint the SEC states that “a digital token or crypto asset is a crypto asset security if it meets the definition of a security, which the Securities Act defines to include “investment contract,” i.e., if it constitutes an investment of money, in a common enterprise, with a reasonable expectation of profit derived from the efforts of others.”

The complaint then goes on to outline how AMP, or its predecessor Flexacoin, meets the definition of a security. See pages 23-28 or the complaint for a complete review of the SEC’s position. 

As a result of the SEC complaint, prominent crypto exchange Binance.US has announced on Monday that they will be delisting AMP from its platform.  Of those nine tokens, only Amp (AMP) is listed on the Binance.US platform.

Arxnovum Investments is an investment manager that is dedicated to bringing you the best of the digital asset investing aligned with responsible regulatory oversight.  The construction of all of our investment strategies includes well defined rules to either exclude constituents from the initial screen or remove constituents that are included in the index if there exists Regulatory or legal actions that cast doubt as to whether the asset in question is indeed a crypto asset.  

Thus, we take the SEC’s allegations about AMP seriously and have elected to remove the constituent from the Fund.  The active decision to remove AMP and its 4.03% weight (as at August 3, 2022) from the Arxnovum DeFi Index Fund in advance of the removal from the underlying Index means that the fund will have a small amount of tracking error. We expect the CF Benchmarks to make an announcement on the status of AMP in the index in the coming weeks. 

Please contact us if you have any questions or would like to discuss further.

The products and services offered by Arxnovum are available to qualified investors in certain provinces and territories of Canada. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
 
All investments contain risk and may lose value. Investing in the cryptocurrency market is subject to risks.  Cryptocurrency, often referred to as “virtual currency” or “digital currency”, operates as a decentralized, peer-to-peer financial exchange and value storage that is used like money. Cryptocurrency operates without the oversight of a central authority or the banks and is not backed by any government. Even indirectly, cryptocurrencies such as bitcoin may experience high volatility, and related investment vehicles may be affected by such volatility. Cryptocurrency is not legal tender. Federal, state, provincial, territorial or foreign governments may restrict the use and exchange of cryptocurrency, and regulation in North America is still developing. Cryptocurrency trading platforms may stop operating or permanently shut down due to fraud, technical glitches, hackers or malware, which could have an adverse impact on the net asset value per unit of the Fund. Please consult the Funds Term Sheet for a complete list of risks.
 
Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what Arxnovum Investments Inc. and the portfolio manager believe to be reasonable assumptions, neither Arxnovum Investments Inc. nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.
Illustration of a man and woman riding paper planes while looking through telescopes

Quarterly Crypto Market Review Highlights
Quarterly Crypto Market Review Highlights 2560 855 cryptonews@arxnovum.com

The following are the key highlights and takeaways from our June 2022 Quarterly Crypto Markets Review letter to investors.  

  • LUNA, an algorithmic-driven pair that attempted to peg UST 1:1 with the US dollar, failed miserably impacting retail and institutional investors.  We had no exposure to the LUNA/Terra/Anchor fiasco.
  • The fallout from LUNA has us keeping a close eye on other stablecoins like USDT (“Tether”) and USDC (“Circle”) as neither are bankruptcy remote from a backing point of view.
  • Furthermore, Silvergate Bank (SI-NYSE) and Signature Bank (SBNY-NASDAQ) are also on our mind for counterparty losses.
  • Bitcoin has been through such periods before and appears to move in four year cycles related to the halving events where the supply of bitcoin created with each block is reduced by half.
  • Bitcoin is perhaps best regarded as a technology with massive potential to address a fundamental human activity – value transfers – through network activity with extremely low costs outside of traditional channels. 
  • Bitcoin is and will remain highly volatile which reduces its use case as a store of value or a medium of exchange – both of which have faced a wall of anxiety by regulators and central bankers.
  • As with any risky asset, the valuation of bitcoin is sensitive to rising rates and when the Fed’s hiking turns to cutting, we expect that bitcoin will rally accordingly.
  • Staking of ETH2 is so far operating according to plan though with relatively low yields that are comparable to the yields available in Canadian bank or energy pipeline stocks.
  • The primary issues that have prevented our involvement in staking are that the ETH2 is locked until the full merge of ETH into ETH2; that yield is paid out only when the merge happens and finally there are some issues around the custody of ETH2 that has given us pause.
  • We did not invest in or with Celsius, BlockFi or any other yield farming platforms that we viewed as offering unsustainable and unsupportable yields. 

If you are interested in receiving future Quarterly Crypto Markets Reviews please sign up at investor registration.

The products and services offered by Arxnovum are available to qualified investors in certain provinces and territories of Canada. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
 
All investments contain risk and may lose value. Investing in the cryptocurrency market is subject to risks.  Cryptocurrency, often referred to as “virtual currency” or “digital currency”, operates as a decentralized, peer-to-peer financial exchange and value storage that is used like money. Cryptocurrency operates without the oversight of a central authority or the banks and is not backed by any government. Even indirectly, cryptocurrencies such as bitcoin may experience high volatility, and related investment vehicles may be affected by such volatility. Cryptocurrency is not legal tender. Federal, state, provincial, territorial or foreign governments may restrict the use and exchange of cryptocurrency, and regulation in North America is still developing. Cryptocurrency trading platforms may stop operating or permanently shut down due to fraud, technical glitches, hackers or malware, which could have an adverse impact on the net asset value per unit of the Fund. Please consult the Funds Term Sheet for a complete list of risks.
 
Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what Arxnovum Investments Inc. and the portfolio manager believe to be reasonable assumptions, neither Arxnovum Investments Inc. nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.
An illustrated rocket launches off of a laptop

Arxnovum Investments is pleased to announce another milestone in our growth
Arxnovum Investments is pleased to announce another milestone in our growth 1800 850 cryptonews@arxnovum.com

Our goal at Arxnovum Investments is to become Canada’s leading digital asset investor and we believe that begins with investor education and awareness. Digital asset investing, from bitcoin to other assets, can be overwhelming, even for the most sophisticated investors. We hope to make it clear. Given the many benefits and risks associated with investing in cryptocurrency, our investors can arm themselves with information to make more knowledgeable investing decisions.

To that end we’ve been working on something big and the time has come to launch something new. Our inaugural private funds are available for accredited investors and we are pleased to announce the launch of our website:

arxnovum.com

The website includes a number of new and exciting features designed to provide investors and crypto enthusiasts with timely and relevant content on our funds, our current thinking and the crypto market more broadly. 

There are three key areas included in the launch:

  • Fund summary cards – that include detailed information on the Arxnovum Bitcoin Fund, Arxnovum Ether Fund, Arxnovum DeFi Index Fund and the Arxnovum Multi Crypto Index Fund.
  • Insights blog – that include written and video commentary and educational pieces on the cryptocurrency markets.
  • Client access portal – that allows investors access to their account information.

One last thing, we are also pleased to announce the launch of Crypto Corner, our e-newsletter, which is a daily summary of the latest news impacting crypto markets globally. Sign up here to be added to the distribution list: Investor Registration

We are very excited for the launch but even more interested in hearing your feedback. Leave a comment below or email us at info@arxnovum.com.

The products and services offered by Arxnovum are available to qualified investors in certain provinces and territories of Canada. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
 
All investments contain risk and may lose value. Investing in the cryptocurrency market is subject to risks.  Cryptocurrency, often referred to as “virtual currency” or “digital currency”, operates as a decentralized, peer-to-peer financial exchange and value storage that is used like money. Cryptocurrency operates without the oversight of a central authority or the banks and is not backed by any government. Even indirectly, cryptocurrencies such as bitcoin may experience high volatility, and related investment vehicles may be affected by such volatility. Cryptocurrency is not legal tender. Federal, state, provincial, territorial or foreign governments may restrict the use and exchange of cryptocurrency, and regulation in North America is still developing. Cryptocurrency trading platforms may stop operating or permanently shut down due to fraud, technical glitches, hackers or malware, which could have an adverse impact on the net asset value per unit of the Fund. Please consult the Funds Term Sheet for a complete list of risks.
 
Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what Arxnovum Investments Inc. and the portfolio manager believe to be reasonable assumptions, neither Arxnovum Investments Inc. nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.
Illustrated version of Munch's Scream painting with glitches

Rising rates and stablecoins’ stumble
Rising rates and stablecoins’ stumble 1280 720 cryptonews@arxnovum.com

Across financial assets there are new dynamics on prices and yields as the US Federal Reserve (the Fed) has moved from passively watching inflationary pressures building to economic prints of 8.3% annual inflation.  Against this backdrop there is a war in the Ukraine and Covid lockdowns in major Chinese cities.  In our opinion, the main force impacting all risky assets is the Fed’s race to deal with inflation and we see them as woefully behind the curve.

US CPI year-over-year

In order to address the rising inflation levels that have clearly moved well past transitory, the Fed has embarked on an aggressive path of increasing interest rates.  Having already increased the influential fed funds rate by 75 bps (100 bps = 1.00%) at its last two meetings, the Fed has signalled to the market to expect more increases at future meetings.  

As US rates rise, capital will flow into the US and strengthen the US dollar (USD).  This has been evident in the Yen and the Euro.  Our view is that the USD is the largest asset globally.  Its recent strength means that anything priced in USD is falling – from bond prices to equities to commodities to bitcoin and cryptocurrencies.  

The strengthening US dollar can be witnessed through the US Dollar Index (Ticker: DXY), which is an index that measures the value of the US dollar relative to a basket of foreign currencies, including Euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc.  The 15% move higher in the US Dollar Index over the last year has been driven by expectations for higher rates and by a flight to safety in the face of geopolitical tensions around the globe.

Source: Bloomberg.com

The US dollar should revert to a weakening trend if rates return to a path lower to the zero-interest-rate boundary and this will occur if there is a U.S. recession or severe market crash or both.  The US yield curve has inverted which is seen as an advanced signal of a recession.  The next signal to watch is the unemployment rate against its 12 month moving average.

The digital asset market has not escaped the drawdown we’ve seen in other risky assets. The CF Diversified Large Cap Crypto Index which measures a basket of the largest and most liquid crypto currencies is down 49% year to date.  Bitcoin which is the largest, oldest and widely seen as one of the safer crypto currencies has not avoided the market carnage with the CME CF Bitcoin Reference Rate Index down 36% year to date.

Crypto currency markets were further roiled this past week with an algorithmic stablecoin called Terra depegging from the USD$1 it was meant to maintain.  From what we have seen this was an engineered attack, but no matter, our funds have no direct exposure to Terra, Luna nor Anchor.  Part of the Terra/Luna defence was to have bitcoin reserves which may have been sold in haste causing the fall in bitcoin prices.  Bitcoin is in a time period relative to its past halving where the price tends to move sideways as we move towards the next halving, which will be in May 2024.  We are watching the markets closely and welcome questions from our investors.

Disclosures

The products and services offered by Arxnovum are available to qualified investors in certain provinces and territories of Canada. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
 
All investments contain risk and may lose value. Investing in the cryptocurrency market is subject to risks.  Cryptocurrency, often referred to as “virtual currency” or “digital currency”, operates as a decentralized, peer-to-peer financial exchange and value storage that is used like money. Cryptocurrency operates without the oversight of a central authority or the banks and is not backed by any government. Even indirectly, cryptocurrencies such as bitcoin may experience high volatility, and related investment vehicles may be affected by such volatility. Cryptocurrency is not legal tender. Federal, state, provincial, territorial or foreign governments may restrict the use and exchange of cryptocurrency, and regulation in North America is still developing. Cryptocurrency trading platforms may stop operating or permanently shut down due to fraud, technical glitches, hackers or malware, which could have an adverse impact on the net asset value per unit of the Fund. Please consult the Funds Term Sheet for a complete list of risks.
 
Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what Arxnovum Investments Inc. and the portfolio manager believe to be reasonable assumptions, neither Arxnovum Investments Inc. nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.

What is DeFi?
What is DeFi? 2560 1711 cryptonews@arxnovum.com

Simplifying the new world of decentralized finance (or DeFi) into its most basic form.

We are an investment management company that specializes in cryptocurrency investing. Led by Shaun Cumby, Canada’s first CIO of a publicly traded Bitcoin fund, and a diverse team with years of investing expertise in both traditional and crypto assets, our strategies are designed to effectively combine crypto assets within traditional portfolio holdings. We’re excited to be introducing our DeFi Index Fund to Canadian investors.

The products and services offered by Arxnovum are available to qualified investors in certain provinces and territories of Canada. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
 
All investments contain risk and may lose value. Investing in the cryptocurrency market is subject to risks.  Cryptocurrency, often referred to as “virtual currency” or “digital currency”, operates as a decentralized, peer-to-peer financial exchange and value storage that is used like money. Cryptocurrency operates without the oversight of a central authority or the banks and is not backed by any government. Even indirectly, cryptocurrencies such as bitcoin may experience high volatility, and related investment vehicles may be affected by such volatility. Cryptocurrency is not legal tender. Federal, state, provincial, territorial or foreign governments may restrict the use and exchange of cryptocurrency, and regulation in North America is still developing. Cryptocurrency trading platforms may stop operating or permanently shut down due to fraud, technical glitches, hackers or malware, which could have an adverse impact on the net asset value per unit of the Fund. Please consult the Funds Term Sheet for a complete list of risks.
 
Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what Arxnovum Investments Inc. and the portfolio manager believe to be reasonable assumptions, neither Arxnovum Investments Inc. nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.

Why investors should care about Bitcoin: Part 2
Why investors should care about Bitcoin: Part 2 2560 1706 cryptonews@arxnovum.com

High growth and low correlation make Bitcoin or cryptocurrency a compelling addition to an investor’s portfolio. Shaun Cumby, CEO & CIO of Arxnovum Investments, talks about Bitcoin’s value for investors. Arxnovum is an investment management company that specializes in cryptocurrency investing. Led by Shaun Cumby, Canada’s first CIO of a publicly traded Bitcoin fund, and a diverse team with years of investing expertise in both traditional and crypto assets, our strategies are designed to effectively combine crypto assets within traditional portfolio holdings. We’re excited to be introducing our Bitcoin Fund to Canadian investors.

Part 2/2. Click here for part 1.

The products and services offered by Arxnovum are available to qualified investors in certain provinces and territories of Canada. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
 
All investments contain risk and may lose value. Investing in the cryptocurrency market is subject to risks.  Cryptocurrency, often referred to as “virtual currency” or “digital currency”, operates as a decentralized, peer-to-peer financial exchange and value storage that is used like money. Cryptocurrency operates without the oversight of a central authority or the banks and is not backed by any government. Even indirectly, cryptocurrencies such as bitcoin may experience high volatility, and related investment vehicles may be affected by such volatility. Cryptocurrency is not legal tender. Federal, state, provincial, territorial or foreign governments may restrict the use and exchange of cryptocurrency, and regulation in North America is still developing. Cryptocurrency trading platforms may stop operating or permanently shut down due to fraud, technical glitches, hackers or malware, which could have an adverse impact on the net asset value per unit of the Fund. Please consult the Funds Term Sheet for a complete list of risks.
 
Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what Arxnovum Investments Inc. and the portfolio manager believe to be reasonable assumptions, neither Arxnovum Investments Inc. nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.

Why investors should care about Bitcoin: Part 1
Why investors should care about Bitcoin: Part 1 2560 1707 cryptonews@arxnovum.com

From Google to Amazon, software has been a major driver of change in our day to day lives. Arxnovum CEO & CIO, Shaun Cumby, explains why the software that underlies bitcoin and cryptocurrency assets is driving the latest technological revolution. Arxnovum is an investment management company that specializes in cryptocurrency investing. Led by Shaun Cumby, Canada’s first CIO of a publicly traded Bitcoin fund, and a diverse team with years of investing expertise in both traditional and crypto assets, our strategies are designed to effectively combine crypto assets within traditional portfolio holdings. We’re excited to be introducing our Multi Crypto Index Fund to Canadian investors. This is part 1 of a 2-part series on this topic.

Please click here for part 2.

The products and services offered by Arxnovum are available to qualified investors in certain provinces and territories of Canada. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
 
All investments contain risk and may lose value. Investing in the cryptocurrency market is subject to risks.  Cryptocurrency, often referred to as “virtual currency” or “digital currency”, operates as a decentralized, peer-to-peer financial exchange and value storage that is used like money. Cryptocurrency operates without the oversight of a central authority or the banks and is not backed by any government. Even indirectly, cryptocurrencies such as bitcoin may experience high volatility, and related investment vehicles may be affected by such volatility. Cryptocurrency is not legal tender. Federal, state, provincial, territorial or foreign governments may restrict the use and exchange of cryptocurrency, and regulation in North America is still developing. Cryptocurrency trading platforms may stop operating or permanently shut down due to fraud, technical glitches, hackers or malware, which could have an adverse impact on the net asset value per unit of the Fund. Please consult the Funds Term Sheet for a complete list of risks.
 
Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what Arxnovum Investments Inc. and the portfolio manager believe to be reasonable assumptions, neither Arxnovum Investments Inc. nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.
Crypto charts on a wall-mounted monitor.

Crypto: What to expect in 2022
Crypto: What to expect in 2022 2560 1707 cryptonews@arxnovum.com

As a relatively young asset class, the cryptocurrency space is evolving rapidly. In today’s post we review some recent developments and provide a brief look into what we expect from the cryptocurrency market in 2022.

Crypto volatility creates opportunity

Historically cryptocurrency investors have experienced very high volatility. Since 2014, Bitcoin has had an annualized volatility of 81%. This eye-popping number is nearly six times higher than the realized annual volatility for the S&P 500. (Source: portfoliovisualizer.com BTC Jan 2014 – Dec 2021)

Over the period, Bitcoin fell 44 times yet still managed to generate cumulative returns of 6023%, or 67% annualized.

(Source: portfoliovisualizer.com BTC Jan 2014 – Dec 2021)

Last year saw a similar trajectory. Even though Bitcoin was up 59%, volatility still remained high at 80% with negative returns in six of the 12 months.  (Source: portofoliovisuializer.com BTC 2021)

I write this not to scare you, but to illustrate that volatility can be a good thing. If paired with a dollar cost average strategy, volatility can capitalize on opportunities to access this new and developing technology. We see no reason for this volatility to change in 2022, with the first few weeks of the year serving as an admittedly small sample size.

SEC likely to approve BTC ETF

In 2021 the U.S. Securities and Exchange Commission (SEC) approved the first bitcoin ETF,  which follows a futures-based strategy.

However, a futures-based strategy may not live up to investor expectations of accurately tracking the price of the underlying asset. Bitcoin futures typically trade in “contango,” a futures market situation in which longer-dated contracts trade at a higher price than shorter-dated contracts.

This can result in significant underperformance, which may persist for as long as Bitcoin remains in contango.

According to the SEC, its mission is “to protect investors; maintain fair, orderly, and efficient markets,” and it “strives to promote a market environment that is worthy of the public’s trust and characterized by transparency and integrity.” Given the potential short-comings of a futures-based strategy, we believe the SEC will likely approve a spot Bitcoin ETF before the end of 2022.

Ethereum moves to PoS

The primary goal of an effective decentralized network is to ensure that nobody spends the same money twice. In order to ensure this goal holds true, networks use consensus mechanisms to validate legitimate transactions. Proof of Work (PoW) and its newer sibling Proof of Stake (PoS) are the two consensus mechanisms used by most cryptocurrencies. PoW networks include Bitcoin and Ethereum, while newer cryptocurrencies like Ethereum 2.0, Cardano and others rely on PoS validation.

While PoW networks have developed a well-established technology and trusted network, there are limits to their growth. Steady increases in the number of transactions result in a serious drawback of PoW networks, the significant energy consumption needed to validate these transactions. In a quest to solve this dilemma, the cryptocurrency community set out to solve the energy consumption issue by creating PoS. Improved energy efficiency is a major driver for the validators staking the network and the driving force behind Ethereum’s move to a PoS network from PoW. It’s expected that this transition will take place during the second quarter of 2022.

Countries adopt Bitcoin as legal tender

2021 proved to be a milestone year for Bitcoin as it continues to evolve from being a small technology project into fulfilling its promise as a medium of exchange. El Salvador was the first country to adopt Bitcoin as legal tender. The rationale for the adoption was threefold:

  • to formalize the country’s economy, as most Salvadorans don’t have bank accounts;
  • to make it faster and cheaper to send remittances abroad; and
  • to attract foreign direct investment into the country.

We fully expect to see other countries to follow El Salvador’s lead and adopt bitcoin as legal tender.

The Global Crypto Adoption Index tracks the on-chain cryptocurrency value received, on-chain retail value transferred and the peer-to-peer exchange trade value, all weighted against the purchasing power parity per capita.

This index shows that Vietnam is well ahead of the world on Bitcoin adoption and is a likely candidate to consider adding crypto as legal tender. Asian countries round out the top three adopters with India and Pakistan coming in second and third, respectively. Ukraine leads adoption in Europe, while Kenya and Nigeria lead in Africa.

These developments suggest 2022 to be an important year in the continuing adoption of cryptocurrencies. Stay tuned for future posts on how to weight cryptocurrency within a well-diversified portfolio.

Source: https://blog.chainalysis.com/reports/2021-global-crypto-adoption-index/

Disclosures
The products and services offered by Arxnovum are available to qualified investors in certain provinces and territories of Canada. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
 
All investments contain risk and may lose value. Investing in the cryptocurrency market is subject to risks.  Cryptocurrency, often referred to as “virtual currency” or “digital currency”, operates as a decentralized, peer-to-peer financial exchange and value storage that is used like money. Cryptocurrency operates without the oversight of a central authority or the banks and is not backed by any government. Even indirectly, cryptocurrencies such as bitcoin may experience high volatility, and related investment vehicles may be affected by such volatility. Cryptocurrency is not legal tender. Federal, state, provincial, territorial or foreign governments may restrict the use and exchange of cryptocurrency, and regulation in North America is still developing. Cryptocurrency trading platforms may stop operating or permanently shut down due to fraud, technical glitches, hackers or malware, which could have an adverse impact on the net asset value per unit of the Fund. Please consult the Funds Term Sheet for a complete list of risks.
 
Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what Arxnovum Investments Inc. and the portfolio manager believe to be reasonable assumptions, neither Arxnovum Investments Inc. nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.
A metallic coin with the Ethereum logo on it (ie. an Ethereum token)

Why invest in cryptocurrencies?
Why invest in cryptocurrencies? 1884 1152 cryptonews@arxnovum.com

Cryptocurrencies have gripped the financial press for several years, with headlines focusing on fortunes made and lost in the space. This kind of coverage often ignores or even downplays the considerable benefits that cryptocurrencies may bring to the global financial system. Despite the media attention, they remain a mystery to many investors, from large institutions to individual households. Here I’ll provide a brief introduction into what cryptocurrencies are, why they’re important to the future of finance and why you should consider adding crypto exposure to your well-balanced portfolio.

What is a cryptocurrency?

At its most basic, a cryptocurrency is a digital currency that is secured by a distributed network of globally dispersed computers. This represents one of the key benefits of cryptocurrencies; this decentralization means there is no central bank involvement and no government entity holds control over it. The decentralized network is connected through an open-source technology called blockchain, which serves as a distributed ledger that is secured by strong encryption, called cryptography. In 2009, Bitcoin became the first cryptocurrency every launched on blockchain technology. While Bitcoin remains the largest, most valuable and best-known cryptocurrency, there are now over 10,000 cryptocurrencies available (source & chart: https://www.statista.com/statistics/863917/number-crypto-coins-tokens/). Some you may have heard of, such as Ether, Dogecoin and Litecoin. It is believed that the top 20 cryptocurrencies comprise up to 90% of the total market value. (Source: https://coinmarketcap.com)

Why is crypto important to the future of finance?

One of the most disruptive technologies since the advent of the internet, cryptocurrencies supported by blockchain technology will revolutionize financial services in the same way the internet changed how we gather and share information. 

The technology will allow for faster, more efficient processing of payment transactions, insurance contracts, mortgages and loans, all without the need for a trusted third party, like a credit card issuer, insurance provider or bank.

The move from relying on the centralized financial infrastructure that we’ve all become so familiar with, to one that is decentralized will introduce new risks to personal financial planning. A greater awareness of the security of your financial transactions will be required as the trusted intermediary you’ve relied on in the past will no longer be present in future transactions. Maintaining records and safekeeping of your digital transactions will be of paramount importance. And this is just the beginning. 

Why should you consider adding crypto to your portfolio?

Early cryptocurrency investors have already generated impressive returns and while we don’t hear about these stories too often, given the volatility, some have also lost. We are still in the very early stages of this financial revolution and while past performance is no guarantee of future returns, we remain bullish on the future of the cryptocurrency.

Unlike our existing financial services infrastructure, which is constrained by geography, regulation and centralization, crypto is global, open access and transparent. This allows for easy development of new applications that function seamlessly across the network and around the world.   In future posts we plan to address how to value cryptocurrencies, illustrate where they belong within a balanced portfolio and the risks of investing.

Disclosures
The products and services offered by Arxnovum are available to qualified investors in certain provinces and territories of Canada. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
 
All investments contain risk and may lose value. Investing in the cryptocurrency market is subject to risks.  Cryptocurrency, often referred to as “virtual currency” or “digital currency”, operates as a decentralized, peer-to-peer financial exchange and value storage that is used like money. Cryptocurrency operates without the oversight of a central authority or the banks and is not backed by any government. Even indirectly, cryptocurrencies such as bitcoin may experience high volatility, and related investment vehicles may be affected by such volatility. Cryptocurrency is not legal tender. Federal, state, provincial, territorial or foreign governments may restrict the use and exchange of cryptocurrency, and regulation in North America is still developing. Cryptocurrency trading platforms may stop operating or permanently shut down due to fraud, technical glitches, hackers or malware, which could have an adverse impact on the net asset value per unit of the Fund. Please consult the Funds Term Sheet for a complete list of risks.
 
Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what Arxnovum Investments Inc. and the portfolio manager believe to be reasonable assumptions, neither Arxnovum Investments Inc. nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.
  • 1
  • 2

Arxnovum is a traditional portfolio manager for separately managed accounts utilizing a breadth of financial assets and strategies. 
Arxnovum Funds, Arxnovum ETFs and Crypto Corner are trademarks of Arxnovum Investments Inc.
© 2023 Arxnovum Investments Inc.

Privacy policy

Enter your
text here