Analysing the 2023 Scorecard: Unveiling Our Recommendations

Theme	True	False
2023 very bullish for risk assets	✓
GBTC is cheap and could be broken up	Somewhat True
Bitcoin will outperform stocks	✓
Solana could double		False
Sandbox token will suffer	✓
Polygon will power ahead		False
Litecoin halving is bullish	✓
Ethereum implement the ‘surge’	✓
Near completes Nightsharding	Somewhat True
Bitcoin vol avg. <40%	Somewhat True
Score	_80%	20%

‘Matrix on Target’ scorecard from the December 2022 published ‘2023 Outlook Report’. Source: Matrixport Technologies

 

(1) A Very Bullish Macro Backdrop Will Lift all Risk Assets in 2023 ✓

Despite Chair Powell’s comments that they could raise rates further, our view remains that inflation will continue to decline, supporting risk assets. The model expects inflation to fall further this year and the macro tailwind for risk assets should continue, supporting higher prices for stocks and crypto (Bitcoin). ‘Matrix on Target’ remains bullish, and we even suggest the possibility that U.S. stocks could reach new all-time highs by Q1 2024.

(2) GBTC is cheap and could be broken up Somewhat True

While we initially anticipated an investor like Carl Icahn to pursue this breakup, it is worth noting that BlackRock has since filed an application for Bitcoin ETF, and market expectations lean towards approval by the SEC for the ETF, which would result in a narrower GBTC discount than the current -33%. Since December 9, 2022, GBTC has rallied by +142%, outperforming Bitcoin’s +78% rally. 

(3) Bitcoin will outperform stocks ✓

We identified two key factors necessary for Bitcoin to perform well; bullish sentiment from either U.S investors — which is currently occuring — or China-based investors to become bullish. One investor segment was enough to lift Bitcoin prices higher. 

(4) Solana could double False

Solana was one of the critical drivers of the 2021 bull market. However, the protocol was controversial due to its relationship with FTX’s founder Sam Bankman-Fried, and it continued to suffer from network outage problems. While Solana initially rallied by +90%, just shy of our +100% projection, the token has now retraced as network outages have continued. While still up +19% from our December outlook report, altcoins (and the high-flyers of the 2021 bull market) are struggling to regain a foothold and drive momentum. This is a sign that retail is less involved in crypto, and that institutional investors are the ones potentially driving Bitcoin prices.

(5) The Sandbox Token Price Will Suffer due to Large ‘Unlock Cliff’ ✓

One of our more bearish altcoins expressions was ‘SAND’, the native token of The Sandbox. ‘Matrix on Target’ was (and still remains) cautious as Venture Capital and early investors may look to convert their SAND tokens into fiat, increasing the token’s supply and exerting a downward pressure on prices. SAND has declined by -28% since our report — massively underperforming Bitcoin prices, which have rallied by +78%. Additionally, regulatory uncertainties and restricted access to some altcoins on various retail trading platforms have dampened the outlook for these tokens. The ongoing trend of large financial institutions entering the crypto space will likely benefit Bitcoin, which is why altcoins are underperforming.

(6) Polygon Will Power Ahead With ZK Rollup Implementation False

‘Matrix on Target’ favoured Polygon’s MATIC token due to its successful partnerships with prominent brands and companies like Adobe, Adidas, Disney, Ebay, Meta, Prada, Reddit, Starbucks and Stripe back in 2022. We also anticipated the rise of ZK rollups (zero-knowledge) as a significant theme in 2023. ZK rollups provide a layer-2 scalability solution, enabling blockchains to complete transactions faster while keeping gas fees minimal. They combine on and off-chain processing to perform better than layer-1 blockchains. While MATIC initially rallied +66% from the publication date of our December report, the token price has now declined by -29%. MATIC entered a free fall after the U.S. SEC listed the token among the ten cryptos identified as securities on June 7, 2023.

(7) Litecoin’s Halving Will be Bullish, as it has Been Before ✓

Litecoin’s halving event, expected for August 2, 2023, historically serves as a bullish price catalyst. Litecoin, which was initially designed as a form of ‘Bitcoin Lite’ when it was created in 2011, has rallied by +11% since our outlook report. Given that the halving event is just 5 weeks away, we might see a more substantial rally into the event.  With a market cap of $6.4bn, at current prices, Litecoin still appears a good bet for a trade into the halving event and has high odds to participate in any future crypto bull market(s).

(8) Ethereum Will Implement The ‘Surge’ In Late 2023 ✓

The Ethereum Surge focuses on scaling and improving the network's transaction throughput. It also leverages the strengths of rollups for layer-2 scalability. Sharding is no longer a scaling solution for the Ethereum base layer but prioritises making data availability cheaper. There is no precise data yet but the ‘surge’ should be positive for the business case integration of Ethereum. 

(9) NEAR Will Complete its 4 Phases of Nightshade Sharding Somewhat True

While NEAR is also working on its upgrade plan to address scalability issues in blockchains. The protocol’s four phases of Nightshade Sharding are expected to improve transaction speeds from 800 - 1,000, to 2,500 - 3,000 TPS. NEAR is also collaborating with Chinese tech giant Alibaba Cloud, to advance Web3 in Asia and the Middle East. Despite a -16% decline in prices since our report, continued developments and support provide potential for an upturn in price. 

(10) Bitcoin’s Volatility Will Likely Average Less Than 40% in 2023 Somewhat True

Bitcoin’s thirty-day realised volatility is averaging 45% so far in 2023. Our ambitious projection of sub-40% could still be achievable. Our recommendation to sell straddles (ideally one-month 110% calls and 90% puts) could provide us with roughly 20-25% buffers on either side before the strategy loses money. On two separate occasions, we noticed that the 1-month change in Bitcoin prices was much more significant than the 25% return, but it is essential to keep trading this strategy. In the absence of increased leverage, Bitcoin prices should move up gradually rather than burst higher as we saw in Q1 2023.

 

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