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Review on May 2021
Portfolios continue to perform well despite the crypto crack in May.
May 2021 saw a real crack in all crypto assets, with falls of between 50 and 70% in a few days. If the market had shown some nice gains in recent months, the technical analysis did not allow for such a drop, and the backlash was all the more brutal. The main bad news came once again from China, with the government's intention to limit the mining and use of Bitcoin following the creation of their national digital currency, the digital Yuan.
While this earthquake impacted the performance of our team, the damage was very limited. The largest loss was 14% and overall performance ranged from +1% to -5%. The portfolios were not heavily invested at the time of the reversal and losses were quickly absorbed. This exceptional downturn allowed us to test our risk procedures and these proved effective. Our development team continues to improve the risk monitoring tools, which reinforces Diabolo's position in the copy-trading world as a player capable of delivering performance without sacrificing risk management.
What future for the crypto assets market? It is difficult today to imagine how the players will digest this crack, but many indicators point to an ever-increasing participation of big players who have moreover taken advantage of the fall to strengthen their positions. This movement was mainly fuelled by strong liquidations of speculative accounts with high leverage effects. The leading DeFI projects are still very active and innovative, continuing to disrupt traditional finance. Diabolo remains confident in the massive adoption of blockchain technologies and anticipates a resumption of bullishness once this excess has been assimilated by the market. Crypto assets are still very young and the lack of a reference model makes their valuation difficult. While we do not rule out further shocks in the future, we do not anticipate a long downtrend in the months to come.
June will see the opening of Futures and Spot contracts on Binance. After many weeks of work, the development team has finally solved the Binance bug that was preventing us from continuing to trade futures with peace of mind. This new offer will allow our traders a much more opportunistic approach with the possibility to go short in downturns. In addition, Binance offers greater liquidity than Kucoin and spot market orders will be executed in much better conditions. The decrease in slippage (the price difference that can occur between the time an order is placed and its actual execution) will increase performance.
The Diabolo team would like to thank our clients for the great confidence they have shown in us during this complicated period; we have not seen any account closures but on the contrary have welcomed new clients looking for more security and know-how.
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