Is the Dollar Top in?
Hartmann Capital Newsletter, Monday October 31th 2022
From the Trading Floor
October was one of our firm’s best months, following August clocking in as our second-best month since inception, despite declining markets. With firm AUM approaching an all-time high we are well on our way to clawing our way back from a challenging 2022.
Our medium-term theses about the market are as follows:
1. The Dollar Rally topped out
It’s no secret that 2020 - 2022 global risk assets traded inverse to the dollar. The administration has been dropping hints that they need to be careful with strengthening the dollar as it's causing havoc on their allies and trade partners. We're of the belief that the projected rate hikes will not be surpassed and that market participants are pricing in not just the projected hikes but even Fed Funds rates ranging as far as 5-7%. As the dollar weakens again, global assets will lift from their lows.
2. ETH offers yield and growth in a world lacking both
In a world where inflation still reigns between 8-25% dependent on the country, people need to find real yield. ETH currently may be the most attractive asset in the world. It's yielding nearly 5% to stakers, meanwhile is deflationary by about 1.5%, giving it a real yield of 6-7%, all the while being a growth asset that serves as an index bet on DeFi, NFTs, Stablecoins etc.
3. Most Crypto Assets have more pain to come
Countless crypto assets have tremendous amounts of token overhang. Every single month hundreds of millions of dollars of previously locked-up value is being released to investors, founders, and the foundations building out these networks. Much of this unlocked wealth generally finds its way back into the market, causing both rising selling pressure and increasing float.
While we are bullish on networks like ETH and ATOM, and have found a handful of value investments in the DeFi space, our focus has been predominately on the short side, isolating tokens with broken token economics and large overhang being unlocked within 6 months or less.
Like in 2019, we believe to see a rise in fundamentally sound tokens as well as blue chips (back then exchange tokens like BNB performed well alongside blue chips like BTC and ETH). Return dispersion is the name of the game, and identifying long/short opportunities is what drives alpha in these challenging waters.
For a deeper look into what we are seeing in the market, in last week’s episode of Inside the War Room, we discussed the launch of Aptos, crypto regulation, and how we are utilizing our long/short strategy to generate alpha in these uncertain markets.
From the Metaverse
At this year’s MetaConnect, the annual event hosted by Meta Platforms (frmrly. Facebook), not just one, but two, of Hartmann Metaverse Ventures portfolio companies, were mentioned during Mark Zuckerberg’s 80-minute keynote. Both ShapesXR, the #1 XR prototyping app, and DressX, the #1 digital fashion marketplace were featured during this industry-defining highlight reel of the XR industry.
Aexlab’s Miami Vail Major was also a striking success on October 1st. As the biggest VR esports tournament in the world in four years, Aexlab proved the concept that VR esports are here to stay, with both a roaring crowd in the finals and engaged streamers throughout. Vail exits its private beta on November 17th and will become publicly available on steam.
With Q3 in the books, we have also completed our latest Quarterly Report highlighting both our latest two portfolio companies, as well as the progress made by our existing portfolio. If you are an accredited investor, you may reach out to invest@hartmanncapital.com to receive your copy.
Podcast Highlights
In Episode 16 we discussed decentralized web infrastructure with portfolio founder Greg Osuri, founder of Akash. From decentralized cloud computing to why Akash is building on Cosmos, this episode gets into the weeds of the emerging dWeb sector.
In Episode 17 we sat down with portfolio founder Miles Anthony of Decentral Games to discuss how he’s built one of the first Play-to-Earn ecosystems that is the first to become deflationary through real in-game revenues:
In Episode 18 I chatted with Steve Grubbs of VictoryXR, who is bringing universities to the Metaverse. With over 30 universities onboarded, including the likes of NYU, Steve is at the frontier of the biggest revolution in the education space:
All episodes are also available on YouTube, Spotify and Apple.
If you don’t yet, make sure to also follow us on LinkedIn, where we share clips from our discussions with founders on a daily basis.
Disclaimers:
This is not an offering. This is not financial advice. Always do your own research.
Our discussion may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.