5 Insights from Stanford

View this email in your browser

Friends and associates,

Stanford University in Palo Alto was my home for the last week as one of the world's most prestigious universities hosted its annual Stanford Blockchain Conference (SBC)

KEY CONCLUSIONS FROM SBC

1. The crypto industry is alive and well with high-quality developers, investors, academics and students building stronger financial infrastructure, products and communities. The tourist speculators have left the building and the space is now dominated by committed participants

2. Asian-based capital is prominent in crypto at the moment, particularly Chinese investors domiciled in Singapore. I am unsure if this is due to availability of capital, a greater risk tolerance, the need to get around Chinese capital controls, a more constructive regulatory regime in Singapore, or a combination of all these factors but there is a lot of activity on the other side of the globe

3. Most large investors at SBC were focused on Venture Capital. This could be biased by the conference which was focused on builders and developers (i.e. prospects for VC investors) but I suspect there remains some value in this insight

4. Most VC funds are only 20-40% deployed and are struggling to find attractive projects

5. There appears to be a divergence between developers: Infrastructure focused developers & founders are prioritising protocol decentralisation and capacity. By contrast, application developers are abstracting away the underlying blockchain complexity, shifting towards intent based execution, which runs the risk of creating centralisation. It will be interesting to see how these trends reconcile themselves, who accrues power as a result of execution centralisation. (thanks to my friend Jack Lu at NGC ventures for bringing this to my attention)

It was wonderful to dig into the latest technological developments in crypto. It is great that proof of stake developers are working to maintain decentralisation. I also think account abstraction is interesting and may encourage a new wave of users into crypto through simplifying user interfaces. But the consequences of account abstraction on decentralisation/ centralisation still have to be determined and I am wary because there are very rarely free lunches in this world

These insights renewed my confidence in the importance of blue-chip liquid tokens which already have product market fit and robust decentralisation. I expect that investors who are too focused on venture capital as the core avenue to access crypto will find it difficult to deploy into high-quality projects and that either the quality of investments will decline significantly, or capital will turn towards liquid tokens due to the opportunity cost of being out of the market in the next 12-18 months

Sound Money Capital is an actively managed fund for HNWs & family offices. Fund specific commentary and factsheet available on request

FIND OUT MORE

CFA ARTICLE: CRYPTO RISING, BEYOND HIGH-BETA EQUITY & FTX

It was great to collaborate with the CFA Institute recently and dispel a couple of the misconceptions levied on crypto in 2022. CFA's Enterprising Investor published "Crypto rising - beyond high-beta equity and FTX". Conclusions:

• Bitcoin has decoupled from equity confirming that it is not high-beta equity

• FTX created a toxic perception but this was the opportunity to look closer

Read more here

FINANCIAL ADVISORS, INTRO TO BITCOIN & CRYPTO

I had the privilege of educating almost 200 advisors and consultants about the 3 trends that make bitcoin and crypto adoption inevitable. If your network would benefit from a similar session, let me know

MARKET UPDATE: STRONG DOLLAR PUTS RISK APPETITE ON THE BACK-BURNER

August has been a challenging month for risk appetite, marked by the strengthening of the US dollar and rising interest rates. We anticipate that this trend may persist into September, maintaining constraints on risk appetite

Turning our attention to the cryptocurrency landscape, we are closely monitoring developments regarding a potential indictment by the US Department of Justice against Binance. While we acknowledge the possibility of a short-term price decline in the event of a Binance clampdown, we view this as an excellent opportunity to establish long-term positions

Bitcoin faced adverse reactions to the news of the SEC's delay in deciding on a spot bitcoin ETF. Nevertheless, we remain optimistic that mounting pressure from major US institutions and legal proceedings will lead to ETF approval within the coming year. In our previous month's article, we elaborated on our thesis of short-term market weakness followed by strength in the next year, so we won't reiterate those points this month. We did anticipate the likelihood of Bitcoin trading in the mid-$20K range, a prediction that has materialized. While weakness could persist, Bitcoin in the low $20Ks presents an attractive value proposition

Have a great month ahead

Rob Price, CFA

SHARE THIS CONTENT WITH YOUR NETWORK

The information contained or attached herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations. This presentation may contain forward-looking statements that are within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to be correct. This email is for informational purposes only and does not constitute an offer to sell, or the solicitation of an offer to buy, any security, product, service of Sound Money LLC as well as Sound Money Capital LP and Sound Money Capital (BVI), whether an existing or contemplated fund, for which an offer can be made only by such fund’s Confidential Private Placement Memorandum and in compliance with applicable law. Past performance is not indicative nor a guarantee of future returns. Please consult your own independent advisors. All information is intended only for the named recipient(s) above and is covered by the Electronic Communications Privacy Act 18 U.S.C. Section 2510-2521. This email is confidential and may contain information that is privileged or exempt from disclosure under applicable law. If you have received this message in error please immediately notify the sender by return email and delete this email message from your computer.

NOT INVESTMENT ADVICE; FOR INFORMATION ONLY

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS

Copyright (C) Want to change how you receive these emails?You can update your preferences or unsubscribe