Funds Management Monthly Report – December 2023

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Market Commentary


Looking back over December, both our funds and the market continued their strong performance, with the Digital Asset Fund returning 14.35% for the month, culminating in a 123.93% gain for the year. The Market Neutral Fund was up 0.17% for the month, reaching 22.91% for the year.

These are satisfying numbers, but we feel that a large part of the rally was a recovery from the traumas of 2021 and 2022, rather than the beginning of a new growth cycle which we believe will come in 2024 and into 2025.




  • Early in the month, appreciation was mainly in Bitcoin and Layer 1 coins like Solana, Injective and Avalanche – which we held within our altcoin section of the DAF. The market’s focus really was on the upcoming announcement by the SEC about the Bitcoin ETF. With those positions built and prices in those assets getting toppy, the second half of the month saw a catch up from Ethereum and its ecosystem. Arbitrum, another large position in the fund that had been frustrating to that point, was a stand-out performer. Over the month, the altcoin portion of the portfolio significantly outperformed Bitcoin and Ethereum, giving us a noteworthy outperformance against the two majors.


  • As most will have already gathered the SEC has finally approved applications for spot Bitcoin ETFs in the US. This is a milestone moment for cryptocurrency which will see the likes of BlackRock, Fidelity, VanEck, Invesco, Franklin Templeton (and more) offer investors exposure to digital assets via exchange traded products. Prior to now, traditional investors wanting to gain exposure to this space could only do so by buying the publicly traded stocks of crypto proxies like MicroStrategy, Coinbase, and Bitcoin miners. The approval of a spot Bitcoin ETF will enable investments directly into the asset, increasing comfort and assisting in the reduction of volatility.


  • All of the ETF providers will be campaigning hard to gain market share for their respective products (its being called “The Cointucky Derby”). This can only increase the general awareness, comfort and appetite for the underlying asset as well as the ETF itself. Though initial inflows may not meet expectations, we believe that the steady inflow of funds, combined with Bitcoin’s inherent limited supply, will lead to significant price appreciation.


  • Our expectations were that there would be short-lived spike in the price of Bitcoin driven by the news, and that those who have gained from the anticipation-rally are likely to shift their attention to the next coin predicted to follow the same narrative – being Ethereum. We’re pleased to confirm this appears to be what has eventuated, and that we were positioned accordingly.


  • Looking forward, close on the heels of the ETF announcement will be the Bitcoin Halving in March. Historically, this has led to significant price appreciations in the 18 months that follow due to a decrease in supply being sold into the market by miners. Coupling this decrease in supply with increased demand from institutional investors who can now access the market directly through the ETF, we expect a significant price impact through the rest of the year.


  • With the noteworthy crypto specific tailwinds in the market, the macro environment will determine the significance of the rally. We expect the headwinds of 2023 to turn into tailwinds with rates starting to fall in the second half of the year and liquidity increasing. In the USA, with elections in November, we can expect government spending to increase as the government attempts to appease voters. In China and Europe, we expect supportive fiscal stimulus as governments try to kick start their ailing economies. All this points to increased liquidity which is very supportive of risk assets.


  • All bull markets experience significant selloffs at various points, and we expect this crypto market to be no different. Although our Market Neutral bucket in the Digital Asset Fund has been reduced from over 50% in 2022 to 20% now, we do have some dry powder to buy into any selloffs that we experience.


  • In summary, 2023 was a very strong year for the Digital Asset Fund. However, we believe this strength was driven by recovery from the market conditions that preceded it. We spent 2021 and 2022 with a very defensive stance which led to significant outperformance relative to the market. In 2023, we have been far more aggressive with the same outcome. We remain aggressively positioned with some dry powder to buy up any significant retracements. We feel that the risk return in crypto right now is the best we have seen since the inception of the market. If you are contemplating entering the market, we believe now is a good time to start, even if that means beginning your journey through averaging in.


Register your interest in MHC Digital Asset Fund, MHC Market Neutral Fund or in any other of MHC Digital Group’s products by contacting our team at




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