Alts Cafe – Jul 7

READ TIME: ±6 minutes

Hello and welcome to Alts Cafe for July 7, 2022.

This is everything you need to know about what’s going on in the world of alternative assets. Best enjoyed with your morning coffee.

Let’s go!

Pulse check: What’s the overall market doing?

Another choppy week in the markets, but both the S&P 500 and NASDAQ ticked up for the week. I’m not going to call a bottom yet, though. Based on the last two recessions, the market still has another 20% to 30% to decline.

YTD return for the major US indices

More broadly, the head of the IMF, Kristialina Georgieva gave a major hint that a global recession is on the way.

What are we doing?

Fractional Alts picks

We removed two assets from Rally from our picks this week:

  • Kevin Durant 2008 Topps Chrome Orange Refractor PSA 10 @ $4.45 / sh (13% loss)
  • Derek Jeter 1993 SP Auth BGS 9.5 @ $8.20/sh (15% gain)

ALTS 1 fund news

Just finalising the purchase of two stunning pieces. Announcement coming soon.

Crypto

Here’s what you need to know:

Bitcoin is treading water around the $19k to $20k mark right now waiting to either pop up to $25k or sink down to $15k.

People are slightly less terrified.

While it’s still near historic lows (very fearful), this is the highest we’ve seen the Fear and Greed index for awhile. Could be people are just getting bored of moaning about the price of crypto.

Bullish News

  • 51% of Latin Americans have reportedly used cryptocurrencies, according to a Mastercard survey (CD)

That’s it.

Bearish News

  • Crypto hedge fund Three Arrows filed for Chapter 15 bankruptcy (CNBC)
  • Indian Crypto Trading Volumes Plunge as New Tax Rules Kick In (BW)
  • Crypto lender Vauld froze withdrawals and hired advisers to explore a potential restructuring (BBG)
  • Crypto lender Celsius hired restructuring advisors and laid off 150 employees (CD)
  • Crypto brokerage Voyager Digital filed for Chapter 11 bankruptcy protection (CNBC)

What to do with that info:

This thing isn’t going to go sideways forever. BTC is either going to smash up to $25k or crash down to $15k. At this point, it feels like a coin toss for me.

Real Estate

Here’s what you need to know:

Zillow, which is one of the most bullish real estate voices around, revised down again.

This is down from 17.8% three months ago.

In other bearish news, mortgage applications decreased 5.4% from the week prior while refinances were down 8% week over week and off 78% from last year.

Meanwhile, notoriously choppy housing market Las Vegas recorded its first price decline in two years.

Housing stocks such as Zillow, Redfin, and Compass are all off 15% to 30% for the last thirty days against less than 8% for the S&P 500.

What to do with that info:

I wouldn’t buy a house right now.

NFTs

Here’s what you need to know:

NFT sales volume hit a 12-month low in June, totalling just over $1B, which has resulted in flat to up markets for NFTs recently.

caption for image

Moonbirds have done particularly well, up 50% over the last 14 days.

What to do with that info:

We’re picking up a couple pieces that are chock full of external utility.

Startups

Here’s what you need to know:

Crunchbase released its quarterly report, and it’s not pretty.

This looks bad.

Both quarterly and annual numbers were off over 25%, and this isn’t the worst of it yet.

Startup funding takes months to negotiate and close, so deals done in Q2 largely began before things got nasty. I expect Q3 to be significantly worse.

There are dozens (more?) of zombie unicorns out there with $1B+ valuations, very little revenue, and no path to profitability. The ones who raised a round recently (and are still flush with cash) will carry on for several more months, but they’ll have to either pivot or collapse.

It’s not until then that we’ll see the market shake itself out.

Over 24k startup employees have lost their jobs already, and recent layoffs have come from household names like Covid darlings Substack and Remote. Celsius has also cut 25% of its workforce, but that’s another thing.

It’s not all bad news, though. African venture funding hasn’t missed a beat in 2022. Deals done this year are outpacing 2021 by more than 100%.

What to do with that info:

If you’ve got dry powder, everything’s on sale. Or maybe put all your money into African funds.

Quick hits

I did a short twitter thread on a potential comics investment opportunity this week. Have a look if you’d like.

FWIW, GoCollect thinks the price will go lower before it goes higher again.

Ever since whisky became the darling of the investable spirits world two years ago (up 42% last year), investors have been asking what’s next. At Alts, we’ve been digging into tequila, but sake is making a strong case for itself too.

Bourbon is also in with a shout – it’s up 50% year over year.

Scottish billionaire brothers James and Sandy Easdale are trying to buy up the music rights to several of Tina Turner’s songs, including The Best.

No one will be buying up Kate Bush’s rights anytime soon, though — she owns 100% of her music rights. Whereas most musicians make pennies for thousands of steams, she’s currently pulling in $200k per week.

Wrapping up the London art auction season, Phillips brought in a combined total of £17.5 million ($21 million) in contemporary and modern art sales. The first nine sales were by female artists.

Don’t sleep on female artists.

That’s all for this week. Hope you enjoyed your coffee and this edition of Alts Cafe.

Any comments, questions or concerns – respond to this email.

Cheers,

Wyatt

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Author

Wyatt Cavalier

Wyatt Cavalier

With a background in finance & intelligence analysis, Wyatt has an unhealthy obsession with finding the best blue chip investment opportunities. His previous newsletter, Fractional, resonated deeply with subscribers, bringing actionable insights and unconventional trading strategies. His rare book collection specializes in banned editions. He currently lives in Spain with his beautiful wife, three young boys, and dog Monty.

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