Vikara February 2024 Update: The Time to Invest in Digital Assets is Now!

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FOMO is always required for investors to jump into an emerging market. Bitcoin has made fresh relative all-time highs versus the US 30-year bond, the Russell 2000, and it is knocking on the door relative to the S&P500 and NASDAQ. It is also close to its absolute all-time high. 

A portfolio without digital asset exposure is fast becoming an underperforming one. Digital assets capture the return streams of novel business models and the demand from high net worths, family offices and institutions via the new launched spot ETFs is a first step towards a shift in capital flows. 

The game theory of digital assets is structured for early adopters to be rewarded the most. Digital scarcity is real and an ever-expanding monetary system is fuelling adoption. As we’ve repeated – infinite fiat supply is meeting finite token supply. Sadly, much of the outperformance will have been earned by few by the time most realise the potential. 

We are 23-months into the fastest tightening cycle in history and what many believed was a rate sensitive, long duration asset class, is teetering on new highs. We continue to ask investors the same question we have been asking since we launched: what are you waiting for? 

Vikara launched in October 2022 and it felt like the worst possible time. Hindsight is 20:20 (Chart 1). 

Many continue to claim they don’t understand the space, that there are better returns elsewhere, or that digital assets won’t be around long-term. In the last cycle, the ex-Bitcoin and Ethereum market capitalization rose 27x in 22-months. This opportunity doesn’t exist elsewhere. 

The next iteration of the digital economy is being built and adopted in real time. We are front row investors into what will be foundational infrastructure running global commerce. Just as Apple was to Blackberry and Netflix to Blockbuster, Web3 will be to Web2. 

As an example, Uniswap (the largest decentralized exchange) proposed this week that wants to start charging fees for its services. If approved, it would have a price to earnings ratio overnight. Uniswap captured its audience, built its service, and will now monetize its work. Sounds like Web2 right?

Uniswap has had $1.8 trillion in cumulative traded volumes in four years, earning $3.3bn in fees. With average monthly volumes of >$40bn, even a 0.2% fee would see ~$1 billion in fees sent to holders, translating to a ~10x price to earnings ratio. This is remarkably cheap given its growth potential.

Understanding digital assets and investing in the space is an all-encompassing task. The opportunities are incredible and the pace is exponential. We built Vikara because we knew many would want exposure and needed a trusted partner to do this work for them.

We have spent the three years conducting due diligence on hundreds of tokens so that our portfolio is ready to capture this opportunity. We are ready. We hope you are too.

 

To access the full report, please download the PDF.

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