Dear investors and partners,

 

In extraordinary circumstances, where environmental noises and personal impulses may lead to poor decision-making, Hashdex has the habit of addressing you to recall the principles we have always advocated for investing in crypto assets. This was the case during the crisis caused by the pandemic in 2020, the strong appreciation observed in early 2021, the adverse events recorded in 2022, and once again, now.

2023 has been very favorable to crypto assets; the Nasdaq Crypto Index rose over 130% and Spot Bitcoin ETF approvals on January 11 have accelerated the appreciation of crypto assets.Bitcoin has already accumulated over 50% appreciation this year and is approaching its all-time high, recorded in November 2021. Given this situation, it is natural that many investors feel tempted to increase their exposure to crypto assets and take further advantage of the appreciation trend.

Although we are very optimistic about the market outlook, caution is the friend of good investments, as we reminded in the letter written in January 2021, amidst a strong bull market:

"We reinforce here the two principles that we repeat almost like a mantra:

The first principle relates to the size of the allocation in crypto assets in your portfolio. We advocate that, for most risk profiles, the allocated percentage should be in the single digits, generally low. It is important that the allocation size be such that, even in an adverse scenario of a sharp decline, the investor feels comfortable keeping it. Furthermore, due to their very different fluctuations from traditional assets, crypto assets require more frequent portfolio rebalancing.

The second principle concerns the investment horizon. As tempting as it may be to seek quick profits when the market rises so rapidly, timing it is extremely difficult. At hashdex, we advise that investments in crypto assets should have multi-year timeframes. For example, those who invested in Bitcoin at the end of 2017 only saw a positive return at the end of 2020, three years later." 

It is indeed true that the main crypto assets have shown a substantial reduction in their volatility, which, all else being equal, allows for larger allocations within portfolios. Nevertheless, they continue to be a class with a high level of risk compared to traditional assets such as stocks. Therefore, we continue to prescribe diligent and responsible behavior regarding investments in crypto.

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_{This material expresses Hashdex Asset Management Ltd. and its subsidiaries and affiliates (“Hashdex”)'s opinion for informational purposes only and does not consider the investment objectives, financial situation or individual needs of one or a particular group of investors. We recommend consulting specialized professionals for investment decisions. Investors are advised to carefully read the prospectus or regulations before investing their funds. The information and conclusions contained in this material may be changed at any time, without prior notice. Nothing contained herein constitutes an offer, solicitation or recommendation regarding any investment management product or service. This information is not directed at or intended for distribution to or use by any person or entity located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Hashdex to any registration or licensing requirements within such jurisdiction. No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of Hashdex. By receiving or reviewing this material, you agree that this material is confidential intellectual property of Hashdex and that you will not directly or indirectly copy, modify, recast, publish or redistribute this material and the information therein, in whole or in part, or otherwise make any commercial use of this material without Hashdex’s prior written consent.} 

_{Investment in any investment vehicle and cryptoassets is highly speculative and is not intended as a complete investment program. It is designed only for sophisticated persons who can bear the economic risk of the loss of their entire investment and who have limited need for liquidity in their investment. There can be no assurance that the investment vehicles will achieve its investment objective or return any capital. No guarantee or representation is made that Hashdex’s investment strategy, including, without limitation, its business and investment objectives, diversification strategies or risk monitoring goals, will be successful, and investment results may vary substantially over time. Nothing herein is intended to imply that the Hashdex s investment methodology or that investing any of the protocols or tokens listed in the Information may be considered “conservative,” “safe,” “risk free,” or “risk averse.”}

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