Category: Blockchain

Alternative Markets Update H2 2019

21/1/2020

Hedge Funds
The industry had its best year since 2013 and the average hedge fund is up more than 9%. Especially the results, which were achieved in H1, are extraordinary. H2 was more volatile, in which equity strategies did very well, while e.g. macro and cryptocurrency strategies lost compared to their results of H1 2019. When considering the economic and political environment, these results are even better, as 2019 faced many uncertainties. Noteworthy are the debate about Brexit all year, the trade war between the US and China, the attack on an oil facility in Saudi Arabia as well as the recent assassination of Iranian general Soleimani, which may have further consequences. Nevertheless, our cryptocurrency strategy remains the

most profitable strategy this year with a YTD of 82%, followed by several equity strategies and our global macro strategy. Figure 1 shows the performance of our strategies compared to several benchmarks, whereas Figure 2 shows the returns sorted by hedge fund strategy.

Figure 1: Overview of Performance of Different Hedge Fund Strategies: December 2019, Source: Stone Mountain Capital Research

Figure 2: Overview of Performance of Different Hedge Fund Strategies: January 2020, Source: Eurekahedge

Alternative Markets Update 2019 - Cryptocurrency & blockchain 2020 outlook

13/1/2020

The hedge fund industry performed strongly in 2019, as the industry achieved a steady gain of 9%, whereas several single managers beat the market and gained double digits. Despite those positive numbers, hedge funds still underperformed the equity market and the trend of the past years continues. In order to compete, hedge fund reduced their fees. In each of the last five years, more hedge funds have been shut down than launched. In total, more than 4,000 hedge funds have been liquidated in this period. 2019 was a good year, as all of our strategies yielded positive returns. Particularly strong this year were the equity strategies, especially in H1 2019 and towards the end of 2019. Furthermore, the tactical trading strategies performed even better until summer 2019, but faced losses at the end of 2019. Regarding the macroeconomic environment, the assassination of Iranian general Soleimani by the US and the counterattack of Iran on a US military base causes high uncertainty. The passenger plane, which got hit by a missile in Iran, further

increases tensions, even though the launch of the missile was likely unintentional. As a reaction of this newly escalated situation, safe haven assets, such as gold, which is now at a seven-year high, see increased demand. Similar developments were observed for Bitcoin. A cryptocurrency 2020 outlook is provided by BeQuant and a blockchain 2019 review and 2020 outlook is provided by Pantera Capital below.

Alternative Markets Update And Macro Outlook September 2019

14/9/2019

Hedge funds achieved a performance of 0.31% in August 2019, despite the continuously increasing unstable economic environment. Brexit is getting more chaotic with the suspension of the UK parliament and a newly created law, which forcing the PM to delay Brexit to 2020. A general election was denied twice. The trade war between China and the US tightens further with the new tariffs on consumer goods. Furthermore, the conflict in Hongkong does not seem to end very soon either. Aside from political problems, the current economic situation with diminishing yields of fixed income and the inverted yield curve in UK and the US does certainly not help. Despite these developments in the fixed income market, our strategies have yielded an 0.80% gain in July. Alternative assets getting further boosted by pension funds, as they are looking for yields, due to the current fixed income market situation. Bitcoin was more or less stable over the last month. However, the interest in Bitcoin surely did not decline, as for example China starts its own cryptocurrency and Bitfinex issuing

leveraged trading on Bitcoin and Ethereum with 100x. There may be several drivers for this development, such as its increased acceptance as well as its market development during the year. The Bitcoin Altcoin Actively Managed strategy achieved the best YTD performance of all strategies on our platform. Another key driver might be, that investors seek uncorrelated assets, for which cryptocurrencies are ideal investments, as shown in Figure 1.

Figure 1: Correlation of Different Asset Classes When Comparing Weekly Returns from Q2 2016 to Q2 2019, Source: Binance Research Report: Bloomberg

Alternative Markets Update H1 2019

30/7/2019

Alternative Markets Update H1 2019

Hedge Funds
After the difficulties for hedge funds in 2018, 2019 started strong, despite the current uncertainties, such as the Brexit, the European elections and the trade war. Only in May, there were some difficulties. This short downturn was offset and more than compensated in June, which yielded extraordinary results. Our best performing strategy was the cryptocurrency strategy, followed by US equity disruptive technology and US equity high conviction. The best performing asset class was tactical trading, which achieved a 30.78% YTD, as shown in figure 1. Furthermore, all strategies had positive return in H1 2019.

Figure 1: Overview of Performance of Different Hedge Fund Strategies: June 2019, Source: Stone Mountain Capital Research

Alternative Markets Update July 2019

12/7/2019

Alternative Markets Update July 2019

Hedge funds have achieved their best half year within the last decade, despite the controversies about hedge funds in the last year. Hedge funds overall have gained 5.7% since January 2019. Especially the month June was profitable, as hedge fund managers achieved a performance of 1.82%, which originates from a strong equity market. As of the beginning of July, only the long volatility strategy yielded negative returns, while the equity long bias strategy realized the highest gain with 10.56% in 2019 as per the Eurekahedge report below.

Figure 1: Hedge Fund Strategy Return Map, Source: Eurekahedge July 2019

Elliot waves Principle and Cryptocurrencies

19/5/2018

Oliver Fochler
Managing Partner, CEO
Tel.: +44 7922 436360

Alexandros Kyparissis
Analyst Hedge Funds
Tel.: +44 7843 144007

STONE MOUNTAIN CAPITAL RESEARCH PERSPECTIVE VOL.81

Indubitably, the cryptocurrency market has caught the attention of investors and traders, who are engaging vigorously due to its volatile nature. The crypto market has reached a market capitalisation of ca. $400 billion, half of which is in Bitcoin ($140bn) and Ethereum ($70bn). Crypto markets are affected on a large scale by regulatory and sentiment factors, which makes technical analysis desirable, hence many CTAs that apply such techniques have added cryptocurrencies in their trading portfolios. One of the theories that could reveal patterns is the Elliott Wave Principle, developed in the late 1920s and believing that the swings of market psychology appear in similar repetitive patterns, which Elliot classified as waves. The waves were essentially the consistencies of investors’ reactions to external factors. Despite the principle’s popularity, its difficulty to be applied should be stressed out as investors attempt to analyse the patterns. The divergence in opinions about the Bitcoin’s price projection highlights the predicaments in applying theories and considering the unregulated nature of crypto markets all theories may lead to a worth of zero. The main and biggest issue that technical traders face is defining the duration and length of the first wave and then to apply the rules, therefore many traders that analyse the same horizon may end up with different signals. The other hurdle is the applicability of the principle in cryptocurrencies. This perspective will consider it applicable due to the sentiment driven Bitcoin, although this may change in the future with the inclusion of more computerised trading. For the purpose of this perspective, we will examine different time horizons and the most recent crashes and rallies of the Bitcoin price.

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