Letter to Cryptology Asset Group Shareholders

EQS-Media / 17.11.2022 / 10:00 CET/CEST Letter to Cryptology Asset Group Shareholders

 

Dear Shareholders of Cryptology Asset Group,

Just when everybody thought the worst may be over in the crypto world, and just when first inflation prints have come in lower than expected, potentially allowing the FED to hike rates more slowly, the blow up of FTX may seem like a death kiss to the “crypto industry” to you.

Maybe, in a certain light, it actually is, which – you might be surprised to learn – doesn’t make us unhappy. The reason for this is because we at Cryptology have always disliked the notion of a “crypto” industry. We believe the “crypto” industry has gone astray from what we resoundingly believe should be, and is, a “BITCOIN industry”.

Allow me to explain… the “crypto industry” was JUST BITCOIN in the early years, from Bitcoin’s birth in 2009 to roughly 2014. Bitcoin, in this context, stands the test of time relative to its peers. Even now, in these difficult moments, it has a value proposition which is significantly more attractive today than ever before: a decentralized structure, a finite number of coins and an immutable ledger culminating in the ultimate store of value… DIGITAL GOLD. Bitcoin is the world’s hardest form of money and the unquestioned king of its industry.

The existence of Bitcoin justifies the existence of ancillary services like Bitcoin miners, exchanges, retail brokers etc. This is why our portfolio is focused on exactly that: a directional bet on Bitcoin via our stake in B1 and further stakes in a few ancillary service and infrastructure providers around Bitcoin. We prefer an extremely concentrated portfolio with high conviction over spreading out too broadly, diluting our beliefs. Thus, our investment thesis is formed.

Looking back at industry developments, with the rise of Bitcoin in 2014/15, people began craving “more”. Sometimes, however, it is very hard to recreate something which is itself, pretty perfect. This is where the “crypto industry” took a wrong turn. This turn widened the market scope from a “Bitcoin industry” to the “crypto industry”. As a result, thousands of crypto assets have been created and launched over the past few years – the vast majority of which will be, or already are, completely and utterly worthless. Massive leverage was taken by investors and issuers to prop up these worthless, illiquid coins, some of which were even used as collateral for debt themselves.