A new World !
Blockchain, Tokens, Staking, Crypto Currencies, NFT’s (Non Fungible Tokens), Digital-Assets, Stable-Coins, Alt-Coins, Meme-Coins, Metaverse, are all terms that may seem barbaric to the neophyte.
However, it is important to quickly get used to this new lexicon as the level of growth of investments in the field of digital assets is exponential. To date, these assets, listed on stock exchanges (decentralized or not), have a cumulative capitalization of 2.5 trillion dollars. At the beginning of November, a peak has been observed at around 3 trillion dollars. The capitalization of these markets shows an insolent growth of more than 1 trillion dollars, an increase of 66% since the end of May 2021. As a comparison, the current total market capitalization of the crypto market is twice that of the silver metal.
This new world, dominated by post-pubescent engineers and wild speculators, is being built day after day, right in front of our eyes. The specific language that has developed in parallel to the technological evolution, property of this isolated living cohort, is to be digested and integrated quickly as the digital industry will disrupt our daily lives in the years to come. Hymn to this young generation who invents the rules of a new era; a society to which it has already taken the key.
No one would have missed that since the 2008 crisis, the injection of liquidity by central banks into monetary systems has influenced all asset class prices. As a result, yield curves of developed countries are, or are still stagnating, close to their historical lows. As for the equity markets, they are reaching new highs. Commodities, led by oil, are also performing strongly, while real estate markets are following the euphoria.
Some would say that this abundant and generous injection of liquidity has also greatly benefited the world of digital assets. Obviously, we cannot deny it!
The inflow of funds into the cryptosphere was mainly motivated by the search for alternatives to fiat currencies, the interest generated by the emergence of disruptive technologies, a hedge against emerging inflation and the importation of a dose of volatile assets into an invested portfolio in order to help optimize its risk and return.
In the end, it doesn’t matter why you invest in cryptos, while everyone is free to adopt or reject these new economic and societal standards. We are not here to convince anyone about the evolution that is on the horizon. Undeniably, a new world is on the way and our youth has already integrated the codes
Furthermore, the rating of the Turkish sovereign debt has been downgraded 4 times in 24 months by Moody’s. The latest rating adjustment by the rating agency took place on the 11th of September sending the country rating to B2 while maintaining a negative outlook on its longterm rating.
In 2020, foreign investors sold nearly $8 billion worth of Turkish government bonds and nearly $5.5 billion worth of shares. These amounts represent the largest capital outflows ever recorded by the country. The challenge for Turkey in the months to come is to restore foreign investors’ confidence, given that a third of the $431 billion of total foreign debt is due to mature in the next 12 months.
There is no doubt that both the Central Bank and the Turkish government are willing to stop the current vicious circle. That said, we are alerting investors of the current risks associated with investing in a country that is quite fragile. And let’s not forget that there aren’t a lot of Central Banks who succeeded in reversing headwind trends.
Chief Investment Officer