This blog post is the sixth report in 2024 about the Kaleido Digital Asset Core Strategy. Read more about our crypto portfolio framework here. Don't forget to sign up to our newsletter to get the next reporting straight in your mailbox!
After the market correction in April, cryptocurrency prices rose again in May, resulting in a positive performance of +14.4% for the Kaleido Digital Asset Core strategy. Even if traditional investors see such a performance as very positive, the chart shows that we are currently in a relatively boring sideways phase of the market and that new dominant price drivers, like the recent first step towards the approval of Ether ETFs, are needed to climb to the next level.
Positive May in a dull sideways phase
It is interesting to see that there was also a wide range of price movements in the portfolio holdings last May. While Chainlink (LINK) gained 37% in value, Cardano (ADA) and Cosmos (ATOM) even saw slight price losses. Bitcoin moved in line with the strategy, while large-cap blue chips such as Ether and Solana each gained more than 25% in value. This outperformance of large-caps could be a first indication of an upcoming altcoin rally.
KDAC keeps up despite altcoin underperformance
Staking rewards continue to be a central component and ensure a steady accumulation of additional coins and protection against dilution precisely in these rather leisurely sideways phases. Even if we have not yet reached new staking rewards highs measured in USD, these will be all the more noticeable in an altcoin rally.
Ongoing coin accumulation through Staking
In general, we continue to observe a strong increase in interest in digital assets. The quarterly survey of fund managers conducted by CoinShares shows that an average of 3% of the portfolios of the survey participants are now invested in digital assets. (Read more about the findings of the survey: https://coinshares.com/research/digital-asset-quarterly-fund-manager-survey-apr-24) At the same time, we are observing accelerating outflows of Bitcoin from crypto exchanges, as shown by Cryptoquant.
Accelerated outflows of bitcoins from crypto exchanges
The next chart shows that the trend is now also spreading to other assets such as ether. Large wallets in particular, i.e. those of whales, have further increased their holdings in recent days.
But Ether is also picking up speed
This effectively raises the question of how Bitcoin's dominance, i.e. its market share of the overall crypto market, will continue to develop. The phase of slowly increasing Bitcoin dominance could come to an end for this cycle between 50 and 60% and be followed by a strong altcoin rally. This would be similar to what we saw in 2017 and 2021. Will this picture repeat itself in 2025, or will we be even earlier this time, as was the case with Bitcoin's all-time high, which was reached before the halving this time? We will continue to monitor this in the coming months and expect the KDAC strategy to participate in any such altcoin rally.
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