Quarterly Report — Q3 2023
Blockchain & Digital Assets
Product: Atonra Blockchain and Digital Assets II - Vontobel Asset Management AG - USD - CH1182967427
Marketing Communication
  • Performance Comment
    Our Blockchain & Digital Assets portfolio faced challenges in the third quarter, with a performance of -16.9%. This aligns with the average performance of our peers.

    The quarter can be divided into two distinct phases. In July, the portfolio continued the rally that began in June when large U.S. asset managers submitted applications for a spot Bitcoin ETF to the SEC.

    But the SEC continued to delay its decision regarding the review of Bitcoin ETF applications. No decision is expected before the beginning of 2024. Still, a positive legal development occurred in a related matter: a federal court ruled that the SEC had "no grounds" to reject the conversion of the Grayscale Bitcoin Trust into an ETF.

    It's worth noting that digital assets responded more swiftly than stocks to ETF-related events. When the possibility of an ETF in June arose, Bitcoin saw a rapid increase in value within days, whereas it took miners a few weeks to catch up. Conversely, when the ETF decision was delayed, Bitcoin quickly retraced returning to the mid-June levels within days, while miners took several weeks to erase their June and July rally.
  • Positioning
    During the quarter, we made a minor adjustment in the portfolio exiting low purity holdings with respect to the blockchain environment.

    The proceeds from these sales were reinvested in two new positions: a cryptocurrency miner and a leading hosting company. Crypto miner hosting services are supposed to show a slightly different risk profile from pure miners. They rent computing power to miners: their revenues are expected to be more steady and less sensitive to the price moves of Bitcoin and other cryptocurrencies.

    Currently, miners, cryptocurrency exchanges, and companies with delta-one exposure through Bitcoin holdings on their balance sheets (i.e. stocks highly correlated with digital assets) make up approximately 75% of the portfolio.
  • Outlook
    We are confident that a Bitcoin ETF will be approved, most likely at the beginning of 2024. We expect the SEC to simultaneously approve all pending applications, including the Grayscale trust's conversion, to prevent any single player from gaining a first-mover advantage. This development should bolster short-term sentiment.

    Conversely, the Bitcoin halving, expected in April 2024, is likely to have a more lasting effect on Bitcoin prices, based on historical patterns. Miners should not suffer from the halving, assuming that Bitcoin prices will experience a rapid upward trend afterward.

    Given the ongoing macroeconomic uncertainties, investors should consider the unique (and uncorrelated) risk-return profile of blockchain-related companies.
Sub-Theme Allocation
Peers Comparison
Top 3 Contributors
  • Coinbase Global Inc
  • Block
  • Bakkt
Bottom 3 Contributors
  • Marathon Digital
  • Riot Platforms
  • CleanSpark Inc
Quarterly Contribution
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Important information

AtonRâ Partners is an asset management company, founded in 2004 with head office in Geneva, incorporated under Swiss law, duly approved by the Swiss Financial Market Supervisory Authority (FINMA) under the Swiss Collective Investment Schemes Act. AtonRâ Partners is a conviction-driven asset manager combining industrial and scientific research with financial analysis. AtonRâ Partners focuses on long-term trends powerful enough to be turned into thematic equity portfolios. This is a marketing communication. Please refer to the prospectus of the UCITS and to the KIIDs before making any final investment decisions. The information contained in these publications is exclusively intended for a client base consisting of professionals or qualified investors. As an internationally active company, AtonRâ Partners SA may be subject to a number of provisions in drawing up and distributing its investment research documents. These regulations include the Directives on the Independence of Financial Research issued by the Swiss Bankers Association. While all reasonable effort has been made to ensure that the information provided in this document is based on reliable sources, it cannot assume responsibility for the quality, correctness, timeliness or completeness of the information contained in this report at the time of publication. Past performance is not indicative or a guarantee of future results. Investment losses may occur, and investors could lose some or all of their investment. Any indices cited herein are provided only as examples of general market performance and no index is directly comparable to the past or future performance of the Funds or Certificates. It should not be assumed that the Funds or Certificates will invest in any specific securities that comprise any index, nor should it be understood to mean that there is a correlation between the Funds or Certificates’ returns and any index returns. All net estimated returns are based on unaudited, internally prepared assessments and have not been independently verified. The net estimated returns are subject to adjustments as a result of changes or delays in AtonRâ’s calculations of the profit and loss of the portfolio. Any such adjustments could have a material impact on the estimated net returns of the AtonRâ Basket. Net returns are reported after deduction of AtonRâ’s management and/or performance fees. Any material provided to you is intended only for discussion purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security and should not be relied upon by you in evaluating the merits of investing in any securities. It is shared with you by way of information and cannot be divulged to a third party without the prior consent of AtonRâ Partners.