• Ben Upward

Flash update - 2022-06-14


Here is what we have been doing in ChainLogic Fund in 2022 and, more specifically, through May and the 1st half of June (scroll down for performance):

  • The Fund has kept its net-long (non-beta adjusted) exposure on the conservative side through most of this year.

  • The Fund then typically looks to layer in puts based on a combination of different technical factors, macro, implied volatility, and expiration. The goal here is to use these puts to automatically lower exposure during times of market dislocation.

  • In addition, most months during 2022, ChainLogic has added call exposure to position for any potential snap-back rallies.

  • The Fund recently completed (this week) tax loss harvesting across our stock and spot cryptocurrency buckets.

  • ChainLogic had almost zero (~20bp) exposure to LUNA - and in fact we were able to go in post-crash and spend ~15bp to buy up what are now referred to as Luna Classic (LUNC) in order to receive the air drop of new LUNA tokens.

  • ChainLogic is currently outperforming BTC (and other coins) by a large margin MTD in June (see below).

  • On a net exposure (non-beta adjusted) basis the Fund has raised its exposure from 30 to 42% in the last 24-48 hours.

  • If BTC falls below ~$20k between now and the end of expiration next week, Fund exposure will drop to 0% and the portfolio may potentially* start to make money back as prices go lower.

  • If, on the other hand, prices rise from current levels (around ~$22k at the time of this writing at ~4pm ET on Tuesday, June 14th), the Fund will keep participating at ~42% up to $28-29k at which point exposure will jump to 70.5%. At ~$33k 95%, at $35k (BTC would be up 10% for the month of June at this level) 145%. (These exposure increases are based on long call positions, not structural leverage).

  • In sum, ChainLogic is fully* hedged below $20k, is outperforming BTC and other coins in June and YTD with less volatility, and has the chance to outperform on the upside if the market snaps back to positive for the month.

*This is a best-efforts estimate only in regard to June 2022 performance and the effect that it has on the other periods listed above. The ‘ChainLogic Fund’ net estimate was added to actual client performance (which is then pro-forma’d to 2 and 20 fees by the Fund’s admin based on a $100k account) through the end of April that was produced by the Fund’s Third Party Administrator and accountant. This snapshot was taken at 12:42pm ET on June 14th. Given that the month is not over, this will likely change. Individual Partner returns may differ from the aggregate pro-forma returns listed above based on subscription/redemption timing and other factors including whether investors have sidepocket exposure. Past performance is not necessarily indicative of future results.


  • CPI staying over 8% - inflation hasn't gone away

  • Not surprisingly then, most commodities continue higher or are hanging out near recent highs

  • Fed is still in a tightening cycle

  • The US Treasury market continues to sprint ahead of the Fed selling bonds and pushing rates higher

  • US Dollar Index at multi-year highs (i.e. 'strong-dollar')

  • Mortgage applications down, housing starting to feel some pricing weakness

  • QT and raising rates have sent stock indexes (particularly growth indices) lower into bear territory

  • Crypto specific risks/narratives

  • Terra stable coin collapse caused forced BTC selling in May starting around the $34-35k price level - some big Fund managers have exposure

  • BlockFi reported to raise money at a lower valuation than the previous round - a 'down round'

  • Coinbase,, BlockFi announce layoffs (source, CoinDesk Daily Node email 6/14/2022)

  • Celsius pauses client redemptions over this past weekend believed to be partly due to the asset-liability mismatch of their ETH staking-as-a-service partnership with Lido - Celsius is said to have over $10B in assets

  • MicroStrategy (MSTR) is thought to potentially need to post additional margin (they have taken out loans against some of their BTC and raised debt at the corporate level to fund BTC purchases) to back its bitcoin holdings at the ~$21k BTCUSD level according to their CFO in their most recent earnings call. MSTR owns over 100,000 bitcoins. The CEO Michael Saylor came out in the last 24-hours to calm fears saying that "...MicroStrategy has enough bitcoin to put as collateral to fund the loan all the way down to a BTC price of $3,562. Were bitcoin to drop below that price point, the company intends to further collateralize with other assets." It is unclear at this time how the market will interpret this information.

Last night, June 13, BTC briefly traded below $21k putting it in the same price range we last saw in December of 2020 (which was an all-time high then). At $21k, BTC is down roughly $48k from its high of ~$69k in November of last year - or down roughly 69.5% from that peak. Ethereum is down even more (on a % basis) from its November 2021 peak.



We like to use momentum structure (in this case the difference between the BTC price and BTC's 200day simple moving average) to put some of these moves into perspective vs prior periods.

You can see in the chart below that the last 2 times BTC experienced levels south of -40% (dark green dashed line) below its 200-day moving average were the end of Crypto Winter (December 2018) and very briefly in March of 2020.

We did get one brief foray below -50% (solid pink line) all the way down to -61% (solid orange line) back in January of 2015. As of today's writing, the 200-day moving average sits at $40,491 on BitStamp (via - here are the key levels:

  • -40% below the 200d MA = $24,294

  • -44% below the 200d MA = $22,674

  • -50% below the 200d MA = $20,245

  • -61% below the 200d MA = $15,791

This is just one of our charts/indicators and one small piece of analysis and gauging probabilities. This study has been helpful throughout the years - but like any technical reading, new highs and lows can occur - given the macro backdrop and the potentially unresolved and opaque situations at MicroStrategy and Celsius, we very well could see the -50% breached if BTC heads decidedly below $20k. That said, if that were to occur, we would expect it to be a low probability that those sub -50% readings could persist for more than a short period of time.

Here is one more chart of BTCUSD from BitStamp exchange via with the 1st panel below the price showing flat lows (short horizontal green line) in 14-day RSI momentum vs lower lows in price (short declining red line) from May 12th through the present. This isn't a huge divergence but still counts for now as slightly bullish. The other 2 bottom panels of momentum indicators show deeply oversold conditions but there are no momentum divergences yet. This evidence would suggest that after some relief we may well need one more trip down to lows from last night (at which point some divergences might show up).



Tuesday (June 14th) and going forward for the remainder of June:

Tomorrow is the Fed meeting where they are expected to hike rates by 75 bps. The market reaction to the Fed's decision may determine where cryptocurrencies are heading in the short-term if the correlation between the Nasdaq and crypto remains very high. We believe the stock market and cryptocurrencies will experience a snap-back rally very soon here. If this bounce is to be sustainable, we will need to see evidence of both technical and narrative improvement for both markets in the face of inflation, slowing growth, and QT. That said, we will also be on the lookout for a de-linking, or a falling correlation between technology stocks and digital assets. Finally, back to the current market, any move below $20,000 in Bitcoin could see a flush to roughly the $16,800 - $17,500 area or lower. We remain cautious and vigilant over the coming months and have positioned the portfolio accordingly.


Everything feels bearish right now. Sentiment seems very bleak. We've outlined the headwinds. Potential bullish catalysts may be:

  • Some action by the Fed and/or fiscal stimulus in front of mid-term elections that allows for a relief rally (we grant the current narrative of the Fed being between a rock and a hard place makes this difficult to envision).

  • A drop in commodity prices

  • A sell-off in the Dollar Index

  • Clarity and/or resolution of the MicroStrategy and Celsius situations

  • Higher digital asset prices (and maybe also a potential de-coupling from a weak tech market)


  • ​The entire cryptocurrency market now has a market capitalization of $912B (as of 6/14 via — less than half of the $2.9 trillion it was worth in November 2021.

  • Bitcoin reached a low of $20,816 and for Ethereum, $1074 according to Coinbase via


  • We are seeing a combination of headline risk (Inflation, Russia, China, Growth Concerns, etc.) and the underlying consequences of a Federal Reserve that has continued to be dangerously behind the curve on inflation while government spending and debt has spiraled essentially out of control.

  • The mix of assets and trading options we have put together in the fund we believe help us not only from an investment diversification standpoint, but also on an operational diversification level.

* If beta-exposure is higher-than expected then the beta-adjusted net exposure may be higher (and may mean the portfolio is not fully hedged). There is no guarantee that positioning will not change after the writing of this post.

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