DAFM

Category: Australian Domiciled Investors

Early September saw headline cryptocurrency Bitcoin (BTC) consolidate from its decline in August. Although BTC failed to find any solid momentum in September, late in the month, U.S. dollar weakness saw crypto assets start to move higher again.
Bitcoin set a new all-time high in August, trading above US$124,000 for the first time. Positive sentiment was driven by increased institutional backing and further U.S. regulatory support, notably easing rules around holding cryptocurrency in retirement accounts. The new high in BTC found strong resistance, and profit-taking saw prices settle around $108,000 by month-end.
Montgomery Investment Management (Montgomery) is pleased to announce an exclusive partnership with Sydney’s Digital Asset Funds Management (DAFM), introducing a unique opportunity for Australian investors beyond traditional assets and strategies.
Similar to the equity market, the crypto market is pricing in further interest rate cuts from the Fed and many developed market central banks. Positive U.S. regulatory momentum continues to build for crypto. The GENIUS Act was enacted by U.S. President Trump on July 18, and new SEC Chair Atkins announced plans for major regulatory reforms on cryptocurrencies at month close.
A similar trend to what occurred last month, where yields on crypto-specific trading venues remained below those on the Chicago Mercantile Exchange (CME). The algorithm was able to take advantage of the opportunities, particularly as the spread between the CME and the crypto-specific trading exchanges narrowed towards the back end of the month.
BTC rose to a new all-time high of $111,970 on 22 May. Despite the record high, BTC futures yields were not overly responsive, but they did hold up well throughout the spike and volatile period. BTC seems to be trading more like gold as time goes on.
Basis volatility (the premium futures command over spot) was muted throughout the month, with yields never really finding a bid even toward the back end of April's recovery. At times CME yields decoupled from broader crypto-centric venues, which provided a convenient avenue for returns. Otherwise, the system took advantage of inter/intra exchange opportunities as they became available.
“Trump-pumps” seem to be a thing of the past for the time being. Various headlines regarding Trump related entities buying alt-coins or spruiking Ripple (XRP) as a viable payment platform failed to spark any ongoing buoyancy in the market. Consequently, it was a relatively benign month in terms of crypto-centric news. BTC remained heavy as did ETH and alt coins. Indices reflecting “Fear and Greed” approached the year's low for BTC.
There were two notable events in February. First, a liquidation event in early February, which caused Ethereum to fall some -15% within 1 minute. The second event was news that the Bybit crypto exchange had been hacked for some US $1.5bn worth of Ethereum. Despite the immediate fall in ETH and BTC, it was not as large a fall as that following the November 2022 FTX fraud. Helping the market to stabilize and recover was the very quick and open communication by Bybit's CEO.
The month of January saw the inauguration of Donald Trump as U.S. President. The 20th January inauguration coincided with Bitcoin printing at a new all time high just below US$110,000. The record high in Bitcoin appears to be driven by the perception that President Trump remains a crypto friendly U.S. President. Trump has announced a variety of crypto-friendly cabinet heads and has been communicating optimistically about the role of crypto in the United States. Over coming months, the market will learn more about Trump’s plans in the crypto space.