(Sep 13, 2021)
“In the future you will own nothing and be happy” we are told by the World Economic Forum (WEF) founder Klaus Schwab. Just not as happy, we imagine, as Klaus and his mates – because they will own everything. We have recently read his book “The Great Reset” and much of it provides a well researched, insightful and accurate description of the challenges posed by Covid-19 in the economic, social and environmental realms. His proposed solutions however, are for far greater governmental control in all fields, under the influence of transnational authorities such as the WEF and made possible by Modern Monetary Theory. All of which has a predictable sense of inevitability. Ironically, many thought leaders in gold and crypto space have for many years, been using the phrase “The Great Reset” to describe what will happen when the great fiat currency experiment concludes.
Although we are principally concerned with trading chart patterns, it is impossible not to be overawed by the accelerating rate of innovation in the crypto realm and the genius of its developers. The ‘Total Crypto Market Cap’ (TCMC) currently sits at approximately $2 Trillion. We are confident that TCMC will soon reflect and then overshoot the fundamental improvements in the crypto industry. However, we are also rather confident that the agendas driving the US Infrastructure Bill, the ‘suggestions’ of the Financial Action Task Force and the WEF regarding cryptocurrencies will significantly (albeit temporarily) impact cryptocurrencies market capitalization at some point in 2022.
In a Historic milestone, Bitcoin became legal tender in El Salvador in early September. As discussed in our July newsletter, we predicted that this will be a long run success, will upset the IMF and would also inspire other Latin American countries. What we did not expect however, is that the next domino to fall would be Cuba. Given that Cuba is a communist country that has used inflation as an important tool in creating its ‘Utopia of the Soup Kitchen’, it seems at first an unlikely candidate to adopt Bitcoin as legal tender. However, survival always trumps ideology eventually and Bitcoin provides an opportunity for Cuba to evade US sanctions. Bitcoin’s appeal is infiltrating the minds of Latin Americans and it is possible that they are on the cusp of rejecting fiat currency en masse.
August’s Price Action
August was a broadly positive month for cryptocurrencies. SCF outperformed BTC by leaning into some alternative crypto currencies such as Cardano. The decreasing supply of BTC from exchanges and the improving hash rate set the tone for a largely positive sentiment for the industry as a whole. It appears the ‘risk on/risk off’ relationship between BTC and the rest of the market remains fairly constant and the Bitcoin Dominance Index fell from 48% to 43% during the month.
TTI Quantitative Trading Strategy
As mentioned in the March newsletter, our engineer Glenn Mamacos has written a quantitative algorithm which codifies TTI’s trading strategy. It is based on 24 parameters and is called ‘Pactolus’. In order to improve this, Glenn also programmed a “Genetic Optimiser” which is in itself extremely interesting. After extensive back testing and demo testing, TTI placed $50,000 of its own funds into a brokerage account in August for the bot to trade. In less than a month, Pactolus returned approximately 24% with a Sortino ratio of 4.2. Whilst impressive, this was below Pactolus’s back tested long term median average. We shall be placing approximately 2% on SCF’s funds with Pactolus starting in October. We firmly believe that this will provide SCF with an edge over the markets. SCF will host a zoom call presentation about the Pactolus on Monday 20th September at 6pm SGT. Glenn will do a short presentation on the topic and there will be time for some questions and answers. A further email with details will follow in due course.