To the investment community,
After an exciting and profitable second quarter, cryptocurrency prices spent the summer months headed lower, with selling pressure culminating in late September with the lackluster debut of Intercontinental Group’s crypto-futures-experiment Baakt. After reaching a high price of over $14,000 in June, Bitcoin and other cryptocurrencies proceeded to fall for three consecutive months, with Bitcoin’s price finally stabilizing around $8,150. Bitcoin’s peak-to-trough correction of just over 40% comes following a stellar second quarter for cryptocurrencies with many, including Bitcoin, rallying 300% or more. Despite these negative short-term price trends, we believe prices are headed higher and that many blockchains will see their token prices reaching new all-time highs in the not-too-distant-future.
While volatility remains an ever-present factor in these early stages of digital asset investing, we are confident that the Bitcoin investment thesis remains very much intact. We believe this because we are still noticing an accelerating pace of growth for cryptocurrency networks both in the United States and around the world. The markets for alternative cryptocurrencies (aka “alt-coins”) have shown a high level of correlation to Bitcoin during the 2019 recovery and we expect that to continue for the foreseeable future.
At Sarson Funds, we feel the correction that the market just experienced was normal for an over-excited market within the confines of a broader uptrend. We share the opinion of Standpoint Research’s Ronnie Moas in his most recent note on crypto. (Thank you, Jim F. for sharing.)
For people in the stock market, 40% corrections are not normal … but in crypto… where volatility is 2 to 3 times what it is in the stock market … this is actually a normal correction.” – Ronnie Moas
Our analysts measure the value of Bitcoin and other cryptocurrencies by measuring the growth of their networks (Metcalfe Value) and by the pace of institutional adoption. We see both metrics accelerating on a year-over-year basis. It must be noted, that these important metrics are also ahead of where they were when Bitcoin last made headlines in late 2017.
We remain confident in previously shared forecasts and continue to see constructive industry regulations being implemented in the US and in other G20 countries (excluding Saudi Arabia). Bitcoin seems to be on its way to being normalized into existing financial frameworks. We don’t think it will be very long before Bitcoin and other cryptocurrencies see their prices rise to reflect the increasingly digital future of finance and the world.
Warm regards,
John Sarson
Managing Partner & CIO
Sarson Funds
Disclosures: Not investment advice. It should be assumed that Sarson Funds or its affiliated managers hold positions in all projects that are discussed. It is not possible to invest in any project directly through Sarson Funds, Inc. or its affiliated managers. Any investment product offered by managers affiliated with Sarson Funds should be assumed to be only available to Accredited Investors and subject to the individual terms and conditions of that offering including but not limited to those eligibility requirements associated with U.S. Securities Regulation D, section 506c. Talk with your financial advisor before making any investment decisions or have them contact Sarson Funds directly at info@sarsonfunds.com
