As regular readers of this newsletter might know, the 108 Token is an index that tracks the top-15 crypto assets.
One the eve of the eighth monthly rebalancing of our 108 Token portfolio, we share with our readers insights on how the index composition has changed since our launch and how the token has performed relative to top cryptocurrencies and indices. To recap, 108 Token is an index token that tracks the performance of the top 15 cryptocurrencies on a supply-adjusted market cap basis (Year 2050 Supply), with a cap weight of 20% (the maximum portfolio weight for any index constituent).
Indices, and ETFs around indices, are a great way to get broad-based passive exposure, as Vanguard proved. A significant part of capital into the crypto asset class will eventually come in through index-based products, especially once an ETF is approved in the US.
Coming back to the 108 Token, Figure 1 shows how NAV has changed over the past 8 months since our first deployment in September 2018. There was the early high of a 1.4x in NAV, partly due to the temporary XRP rally. In the recesses of the crypto winter, with white walkers almost tearing down the wall, it was well below par, but still better than holding plain vanilla BTC or ETH, and now it is back up to 0.85, and inching steadily upwards (along with Arya’s Needle) as the crypto winter shows distinct signs of thawing. (Had to stick in the mandatory GOT references in there!)
The top 15 cryptocurrencies by supply-adjusted market pretty much has not really changed except for new entrants such as Tezos, Binance Coin and Bitcoin SV. Tezos made its way straight into the top 15 immediately after its launch, but we held off for a few months before we included it in our portfolio because of security and reliability reasons we had at that point in time. Grin is currently in the top 15 but will not be added to our portfolio until a leading centralized exchange decides to list it.
Based on since-inception-to-date returns basis, 108 Token has outperformed 10 of the leading 12 cryptocurrencies by market cap. 108 Token outperformed BTC by 9.9% and ETH by 29%, respectively. Only XRP and LTC are the two cryptocurrencies to outperform 108Token over the last 8-9 months.
In fact, we back-tested a modified version of the 108 strategy, which we call the 108 Active. In summary, the strategy gives up a little bit of the upside, but focuses on keeping the NAV focused above 1x. A comparison of the 108 active strategy with the plain vanilla 108 strategy is fairly instructive, and seems to indicate that alpha-generating opportunities do exist in the choppy crypto markets, if you know where to look.
If you are an investor/ asset allocator or portfolio/risk manager in the crypto space or someone that is just. interested in learning more about the 108 active strategy, do reach out to us.
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