DAFM

Category: Australian Domiciled Investors

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.
A busy month of trading activity in December, with futures basis and spot both volatile over the month. We saw some great trading opportunities across all the main crypto exchanges and expect these trading opportunities to continue over the new year. A potentially interesting development over 2025 will be the continued increase in options-related activity as ETF options increase in popularity. Additional liquidity in ETF options should broadly assist basis market liquidity, which will in turn assist trading opportunities in the Digital Income Class.
November was a busy month of trading activity. There were good volumes in the futures spread across both the Deribit and Okx exchanges. Futures basis found a steady bid, in line with a strong bid in spot. The market was relatively well behaved. However, we would expect it to become more chaotic, and conducive to the volatility strategy, if $100k convincingly breaks to the upside. We're starting to see the benefits of our engineers’ development work undertaken earlier this year, on DAFM’s algorithm.