Digital Wealth Insider - Portfolio Update Sep ‘24

First and foremost, thank you for your continued partnership on this investment journey. Your support is invaluable to us.

Fund Performance

The fund's performance this past month (October) was down -5.09% (after fees).

We’re pleased to provide you with an additional update following the issuance of your October account statements based on NAV. As you may be aware, the market has experienced notable upward momentum since then. To keep you informed, we wanted to offer a special snapshot of the fund’s performance to date in November. Currently, the fund’s performance is up +25.1% since the start of November.

This upward trend aligns with the bullish outlook we’ve discussed over the past several months. We believe that this is just the start of a rally fueled by pro-crypto sentiment, anticipated regulatory clarity, and growing mainstream adoption of digital assets. With the possibility of pro-crypto political leadership on the horizon, we’re optimistic about continued positive movement in the space.

As of November 11, 2024, the fund has a positive annualized return of +31.02% since the fund launched in August 2023.

1. A Pivotal Election for Cryptocurrency: Turning the Tide

This election season marks a transformative moment for the cryptocurrency industry. For years, crypto has been met with skepticism, regulatory challenges, and negative political stances. But this election has changed the landscape significantly. For the first time in history, crypto has political momentum on its side, and the implications are profound.

How the Election Impacts Crypto and You

Changing Stances on Crypto: In recent years, political leaders have generally held negative views on cryptocurrency, with an emphasis on skepticism and caution. But the tide has turned. Candidates across the spectrum now realize that being "anti-crypto" is akin to being "anti-technology"—an outdated stance that alienates modern voters and innovators alike. Taking a negative position on crypto is increasingly seen as politically disadvantageous, with some comparing it to opposing the internet in the 1990s.

Crypto’s Seat at the Political Table: This election season, the crypto industry chose to engage with policymakers in a major way, contributing significantly to political campaigns and influencing discussions. In the world of politics, you’re either “at the table or on the menu,” and crypto’s seat at the table could lead to favorable policies and enduring support.

2. Regulatory Tailwinds: Building a Foundation for Growth

With the election bringing crypto to the table we are awaiting big changes in the following ways:

• Office of the Comptroller of the Currency (OCC): We might see new laws prohibiting bias against crypto companies applying for banking services. This would mean easier access to banking for crypto firms, further integrating digital assets into mainstream finance.

• Federal Deposit Insurance Corporation (FDIC): Anticipated adjustments could extend protections to crypto-related assets, enhancing investor security and market stability.

• Securities and Exchange Commission (SEC): There’s talk of appointing a new SEC Chair to replace the current leader, who has been a vocal critic of cryptocurrency. This change could soften the agency’s stance, reduce aggressive enforcement actions, and bring a more supportive regulatory approach.

What This Means for Investors:

Regulatory clarity could bring more capital and credibility into the crypto market, making it a more attractive asset class for high-net-worth individuals seeking diversification. Reduced regulatory friction will open doors for greater institutional involvement, creating new opportunities.

3. Long-Term Legislative Strategy: A Path to Stability

Effective, enduring legislation will require bipartisan cooperation and time. Lawmakers are starting to understand that crypto and blockchain are here to stay, and they recognize the importance of establishing a stable, long-term framework that won’t be easily reversed with changing administrations.

Implications:

• Enhanced Investor Confidence: Clear, stable regulations mean that investors can approach crypto with confidence, without the fear of sudden policy shifts.

• Foundation for Innovation: Consistent legislation would create a solid base for the next wave of blockchain innovation, especially in sectors like decentralized finance (DeFi) and tokenized assets.

Investor Takeaway:

This election has the potential to establish the long-term foundation the industry needs to thrive. With legislation that offers consistency, crypto investments can be viewed with a level of confidence and stability more typical of traditional assets.

Fund Composition

Our fund’s portfolio positions itself across 26 blockchains. Less than 1% of projects make it in.

Yield (interest awarded for various on-chain activities) is being generated from 39 unique protocols. Managing this breadth is time-intensive but crucial for mitigating risks and maximizing returns.

~84% of all assets are secured via cold storage, the industry’s highest standard for keeping assets safe. The other 16% of fund assets are on Kraken, known for its robust security standards.

Conclusion: A Transformative Moment for Crypto

The outcome of this election could have a lasting impact on the cryptocurrency market. With political engagement, regulatory support, and institutional interest at an all-time high, now is an opportune time for high-net-worth investors to explore crypto as part of a diversified portfolio.

If you’re interested in how these developments could shape your investment strategy, click here to schedule a call with our team.

Talk soon,
Mike Klein
Digital Wealth Insider

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_{Disclaimer: The information in this newsletter is for general informational purposes only and is not financial or investment advice. All investments involve risk, including the loss of principal. Past performance is not indicative of future results. Consult with a professional before making any investment decisions. Digital Wealth Insider is not responsible for any losses or damages from the use of this information.}