ByteFolio Update 21

ByteFolio Update 21

Disclaimer: Your capital is at risk. This is not investment advice.

ByteTree's Crypto Leaders

ByteFolio brings together ATOMIC, ByteTrend and Token Takeaway to create ByteTree’s model portfolio, known as ByteFolio. This is a selection of crypto tokens, which are weighted according to their risk/reward characteristics. ByteFolio has a modest turnover and will not suit traders. It will appeal to investors who wish to diversify beyond bitcoin, with the aim to beat it.

ByteFolio will sell the Sandbox (SAND) and Maker DAO (MKR).

Following the recent crypto crash, there are two sales this week to bolster exposure to bitcoin and remove the two weakest links. Although there has been some strength over the past 24 hours, the red skies are telling us to get more defensive as 40% of tokens are now in a downtrend in US$ terms.

Source: ByteTree. ByteTrend Crypto Breadth chart, relative to USD, over the past three months.

That is also visible in bitcoin, which reaffirms the status quo that bitcoin is the relative safe haven during troubled times.

Source: ByteTree. ByteTrend Crypto Breadth chart, relative to BTC, over the past three months.

The Sandbox (SAND) and Polkadot (DOT) are 1 star, while Tezos (XTZ) and Maker DAO (MKR) have dropped to zero stars.

Following our Monday morning analyst meeting, DOT and XTZ have been reprieved. XTZ has an unusual chart. Firstly, the volatility is low, but more importantly, the lines have converged, meaning it wouldn’t be difficult for it to upgrade quite quickly. Naturally, should it deteriorate, it will be sold at a later date. We also like the potential for the project and its financial might.

Source: ByteTree. ByteTrend for Tezos (XTZ), relative to BTC, since February 2022.

DOT was also reprieved this week as the underperformance in BTC was minor, and there are still rising lows. DOT remains a hold.

Source: ByteTree. ByteTrend for Polkadot (DOT), relative to BTC, since February 2022.

Selling MKR

Maker DAO (MKR) has hit a regulatory wall as they are potentially unableto continue to use USDC in their collateral as it could be blacklisted. This does not necessarily reflect badly on the MKR project, but there are heightened risks. Stablecoins sit at the forefront of regulation, and this cloud has weighed on the price. The risk is potentially systemic and could break the peg, which would be devastating.

The reason to buy MKR was impressive growth, but this could go into reverse. In the battle against the regulators, there is little point in fighting.

Source: ByteTree. ByteTrend for Maker (MKR), relative to BTC, since February 2022.

Selling SAND

Our analysts believe this to be one of the stronger gaming projects in crypto, but the hope that the uptrend would resume has been thwarted.

Source: ByteTree. ByteTrend for The Sandbox (SAND), relative to BTC, over the past year.

We are always looking for confirmation, and the reality is that the network activity on SAND has slowed markedly. NFTs are no longer as popular as they were, and SAND is feeling it with a steady decline in transactional activity.


The analysts have been put to work to provide an update on Polkadot (DOT), which they believe continues to be a promising project.

These actions will bolster bitcoin exposure by 8.8%, which makes the portfolio slightly more defensive. Although crypto has weakened again, I don’t believe a Q2-style crash is likely. More likely is a period of “frustrating consolidation”, as Dominic Frisby describes it. More on the market tomorrow in ATOMIC.

ByteFolio started on 6 April 2022 with 10 BTC. Prices bought or sold are recorded at the end of the day after publication. Historical ByteFolio trades have been recorded as follows:

Purchases and sales

Action: ByteFolio will sell the Sandbox (SAND) and Maker DAO (MKR).