6 May, 22

May Monthly Investment View

Kurt Grumelart

Special Projects Lead

Investment View

Persisting macro headwinds during April led to a failed topside break of the existing range for Bitcoin which impacted the performance of the entire market. De-risking off the back of geopolitical tensions and tightening global monetary policy was compounded with more hawkish comments from central banks, underwhelming Q1 earnings and the impacts of Shanghai’s covid lockdown. Looking towards May, it is expected that price will continue to range in the 30s-40s.

Bitcoin began April treading water around 46k before swiftly dropping under 40k to establish support. After a consolidation phase mid-month and a retracement to 43k, we saw continued downside into month end. BTC fund flows align with macro sentiment, staging a steep drop off in the first half of the month as price retreated. This further contributes to the narrative that BTC and broader crypto price action is being governed by traditional market risk-off and heightened correlation to equities.

BTC Held In Regulated Funds – Bytetree

Similarly, there has been a surge in accumulation from spot holders causing exchange flows to move back into the negative for the first time since October. Smaller wallets appear to be the most aggressive buyers at current price levels as has been the case since the start of the year. We have also seen a recent uptick in wallets with > 1,000 BTC accumulating, although this can be partly attributed to the publicly disclosed accumulation by the Luna Foundation Guard and Microstrategy.

BTC Balance on Exchanges – Zerocap

Ethereum followed BTC’s price action closely during April although managed to outperform due to a stronger narrative. With the successful merge of the beacon chain with Ethereum’s ‘Kiln’ test net, the network is edging closer to the mainnet merge estimated to take place mid-year. The merge would see the network pivot to a proof-of-stake model, enabling (estimated) double digit APYs for validators and a cheaper consensus model. The merge will also likely result in ETH’s inflation rate dropping from 4.3% p.a. to 0.43% p.a., excluding any burn rate which already causes periodic deflationary issuance.

Zerocap’s Yield Notes performed well over the month with our rolling customers outperforming due to the current seesaw market, capturing an average premium of 25% p.a. Our yield notes remain the best play for those wishing to monetise the volatility in the space while awaiting entries/exits, or simply to harvest the volatility premium.

Rolling Yield Note performance

Congratulations to those who partook in our opportunity based bull call spread in January, ending up in the green at expiry in March. If you are interested in our next opportunity-based trade please reach out to your Zerocap relationship manager to have your name added to our shortlist. 

Finally, we would like to announce the upcoming launch of the world’s first crypto based principal protected note (PPN) – expected mid-May. Investors in these notes are exposed to positive appreciation of the BTC price (50% upside capture) with price principal protection if the price of BTC falls below your entry level. The note has a 1-year duration, and capital is locked for this period. Further details available in our latest marketing material, feel free to reach out to the team for a copy or join us for our PPN Webinar next Tuesday at 4 pm AEST.


This document has been prepared by Zerocap Pty Ltd, its directors, employees and agents for information purposes only and by no means constitutes a solicitation to investment or disinvestment. The views expressed in this update reflect the analysts’ personal views about the cryptocurrencies. These views may change without notice and are subject to market conditions. Contents presented may be subject to errors. The updates are for personal use only and should not be republished or redistributed. Zerocap Pty Ltd reserves the right of final interpretation for the content hereinabove.

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