State of the Bear Market – June 2022


Given the state of the market, we would like to provide you some insight into one of our positions. As you know, we hold larger allocations of “large caps” like ETH and a basket of other foundational Web3 infrastructure coins, but the real alpha will come from our mid cap positions (DAG) and a “sample” low cap opportunity we are currently monitoring to potentially accumulate in the future.

The chart below shows that BTC dominance has continued to decline over the long term, increasingly giving other coins higher growth rates. We expect this trend to continue, and this is analyzed in further detail here.

However, BTC dominance has grown in the past year because of risk-off behavior in markets this year and the Ukraine conflict highlighting bitcoin as a neutral, uncensorable, safe-haven asset.

With cryptocurrencies gaining utility and early stage adoption, the market downturn is a long term buying opportunity for digital assets with clear product-market fit along with market caps beyond the top 50 coins by market capitalization.

As someone can see here, our mid cap positions are 50-70% off their all time high. Buying DAG right now is comparable to buying ETH in 2018.

Regulatory clarity for digital assets arrives in the fall or spring. Iron Key Capital uses event driven catalysts to decide portfolio allocation in investments sure to flourish in a post-regulatory world. Newsletters in the future will further examine crypto regulation and wise decision factors to consider for investments.

Crypto market cycles are closely intertwined with the bitcoin halving happening every four years. However, early stage and institutional adoption of digital assets may create a change in the market cycles. Iron Key Capital is now positioning for the next cycle, anticipated to be even sooner as each market cycle has proven to be shorter than the last.

For low cap cryptocurrencies, uncertainty surrounds a definite bottom, however, many low caps’ prices change based on their development lifecycle. They go through a distribution phase seen here, and then find a bottom. With the majority of low caps 60-95% off their all time high, Iron Key Capital makes small portfolio allocations to capture risk adjusted VC returns. The farther the digital assets cascade, the more attractive they become for our diversified portfolio.

Feel free to contact us any time.

Joseph Argiro
Founder & CEO

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