December 2020 – Market Commentary

Bullish sentiment continued throughout December as Bitcoin climbed to a new high of $29k, setting the largest monthly percentage gain since June 2019 and a 304% yearly return. Lost in the frenzy of institutional Bitcoin adoption is the broad-based strength across the asset class. Notably among the large caps, Ethereum and Litecoin rocketed to levels not seen since early 2018, finishing +473% and +203%, respectively.

This month was another stark example of the rather counterintuitive idea that new all-time-highs (ATHs) are for buying. Indeed, quite a bit of research exists around the efficacy of only holding assets while they are printing new ATHs. This is doubly true in the realm of digital assets where no fundamental valuation models exist as a reference rate for “fair value.”

On the other end of the sentiment spectrum was XRP which collapsed 67% following news that the SEC was filing charges against Ripple and its executives for running an unregistered securities sale. A healthy reminder that despite calling an asset decentralized, centralized entities still can impact the market, and of the unique risks that can cause the music to stop any moment in this nascent and volatile market.