The crypto universe has been riddled with chaos after chaos, with the Silicon Valley Bank collapse following the FTX downfall. Witnessing the cracks in crypto ecosystems, organisations and people had to rethink their investments. Blockchain tech company DigitalX (ASX: DCC) did so—letting go of some assets to keep peace among shareholders.
First, DigitalX sold off all of its FTT tokens (from FTX) and then 15% of its Bitcoin holdings. Now, things are finally looking up. Since its lull at the start of March, Bitcoin’s value has shot up, giving a much-needed boost to DigitalX’s portfolio.
The DigitalX Bitcoin Fund increased by 19.6%, and DigitalX Fund rose by 11.4%. Bigger digital assets, like Bitcoin and Ethereum, increased in value more than other digital assets and even more than global stock markets and gold after some banks in the US (SVB, for instance) and Europe failed in March.
Making a case for the validity of cryptocurrency, DigitalX Chief Executive Officer, Lisa Wade, shared, “We are pleased with our outperformance this month which is directly attributed to our decision to overweight positions in Bitcoin and Ethereum, and to reposition the portfolio more aggressively following the January flushing of bad news in the sector.”
She added, “We believe the recent collapse of several prominent banks was a reminder to the broader market of why Bitcoin was invented – as per the Bitcoin Whitepaper: ‘A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution’.”
The DigitalX Fund has outperformed the Index for the month, thanks to its focus on Bitcoin and Ethereum. The beginning of the year has been promising for digital assets, as shown by the impressive performance of the DigitalX Bitcoin Fund, which rose 69.1% over the March quarter. Similarly, the DigitalX Fund also achieved remarkable returns, with a return of 47.0%. Meanwhile, the Index managed to rise by 50.3%, and the All Ordinaries Index returned 2.1%. Gold saw a 10.1% rise in the same period, further highlighting the positive trend in the market.
Wade said, “The “Gap” between Bitcoin and US equity markets tightened from 48% to 43% over the month, which we believe is a broader trend and an opportunity for Bitcoin to outperform equity markets and close the 2022 underperformance gap.”
As of March, DigitalX’s Bitcoin and other asset holdings stand at $18.3 million, up from $15.2 million in February 2023. Looking at the bigger picture, since its inception, the Company’s Bitcoin fund has grown by nearly 300%, suffering the occasional let-ups, characteristic of cryptocurrencies. That’s not to say it didn’t hurt the Company’s financials.
In H1 FY23, the Company’s revenue fell 18% to $969.3k, incurring losses of $6.5 million. The value of its digital asset holdings fell, and it received lower management fees, largely driven by the fall in Bitcoin’s value.
That crypto had a tough year is well-known. It also had a rocky start to 2023 as its volatility was made worse by the vulnerabilities in traditional banking systems supporting it.
Alinda is a Business Reporter for The Sentiment
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