May 2020 Market Commentary

The month of May was marked by Bitcoin’s halving as well as elevated levels of volatility with the markets experiencing several violent sell-offs and run-ups within the 24% range on the month. Despite the uncertainty apparent in price, the asset closed the month up 9.5% in May, slightly lagging Ethereum as the second best performing large cap for the month and the best performing asset we trade YTD.

The news and narrative cycle in May was fueled by hedge fund traders and banks opining on Bitcoin’s role within financial markets. Many pundits pointed to the Paul Tudor Jones revelation as a potential catalyst for more buyers, however that relationship remains merely a narrative that cannot be quantified. Goldman Sachs’ bearish proclamations on Bitcoin struck a nerve with the crypto evangelists who spent a good part of the past week defending the asset class. The truth can be tough to face, and while unpopular, we largely agree with their assessment; crypto does not produce cash flows, does not generate earnings, shows no evidence of an inflation hedge and has unstable correlations. Directly holding cryptocurrencies is not a viable investment option and over the long run the best returns in this space will come from active management.