Digital Assets Weekly: March 27th 2020

Portfolio Strategy

It continues to be our view that crypto markets are in the 2nd or 3rd innings of a prolonged recovery following their December 2018 bottom.

The earlier months sell off likely flushed a significant portion of leverage and speculative short term traders out of the ecosystem, as we discussed on our FS Insight Digital Assets call earlier this week. This dynamic bodes well for reducing market downside risks and positions crypto on firmer footing for a healthier recovery. At the same time, while global market prices are improving, the situation remains uncertain and that means crypto liquidity and prices are still fragile.

Overall, we have enough confidence to continue recommending investors maintain the increased exposure to crypto assets that we called for on March 13th. Then, valuations had just swiftly shifted down from levels we'd previously advised were reasonable long term but weren't cheap, to levels we considered more attractive, and we urged investors to buy. Prices have since rebounded a bit, but valuations still look fairly cheap across the board, and while that doesn’t mean they can’t temporarily get cheaper, our view is we’re close, and the 12-month risk/reward looks attractive. If prices retrace to 6x P/CMR multiples or below, we’d advise long...