Monthly Update - March

March was defined almost entirely by a single macro event. U.S. and Israeli strikes on Iran began on the night of February 28, killing Supreme Leader Khamenei and triggering immediate risk-off moves across global markets. Bitcoin, as the only major liquid market trading at the time, absorbed the initial shock alone, falling roughly 4% to around $63,000 before recovering to approximately $69,000 by Monday morning. What followed was a pattern that repeated throughout the month: each escalation triggered a sell-off that found buyers at progressively higher levels, with the market demonstrating a consistent ability to absorb and recover from geopolitical shocks in real time.

Digital Assets Decouple from Traditional Markets

The month's most notable market development was digital assets' relative outperformance versus both risk assets and traditional safe havens. The Strait of Hormuz closure on March 3 sent oil surging, pushing WTI briefly above $100 per barrel for the first time since 2022 and rattling energy markets globally. Equities sold off sharply and commodities typically regarded as stores of value came under pressure. From the outbreak of the conflict through month-end, Bitcoin returned approximately +2% and Ethereum gained roughly +7%, while the S&P 500 fell over 7%, semiconductors dropped more than 10%, and gold and silver declined 11.5% and 20% respectively.

This divergence is worth examining closely. Bitcoin did not rally as a classic safe haven in the way gold historically does. Instead, it behaved as a 24/7 liquidity pool, one that could price in news and recover from shocks in real time while every other major market was closed or in disarray. That structural characteristic, being always open and always liquid, proved increasingly relevant throughout the month as investors sought assets that could respond immediately to fast-moving developments.

Institutional Flows and On-Chain Activity

March marked the first positive month for Bitcoin spot ETF flows in 2026, recording approximately $1.2 billion in net inflows after four consecutive months of outflows. Combined with rising long-term holder supply since mid-February, the data points toward structural accumulation rather than continued distribution. The market appears to be resetting at a higher base, with patient capital gradually absorbing supply from shorter-term sellers.

Ethereum told a more nuanced story. At the ETF level, flows remained slightly negative, extending the outflow streak to five consecutive months and highlighting the ongoing divergence in institutional conviction between the two largest assets. On-chain, however, the picture was considerably more constructive: accumulation wallets added approximately 2.7 million ETH during March, the strongest single-month inflow since early 2024. Ethereum closed the month with its best performance since last summer, ending six consecutive months of decline. The Glamsterdam upgrade remains on track for H1 2026, and the broader Strawmap roadmap published in late February continues to set the direction for protocol development around scalability, privacy, and post-quantum security.

On monetary policy, the Federal Reserve held rates steady, with Chair Powell signalling the intention to look past the Iran-related energy shock rather than respond directly to its inflationary impulse. The decision reflected a view that the shock is likely transitory rather than structural. Markets interpreted this as constructive for risk assets in the medium term, particularly as the Warsh Senate confirmation process continued to progress with markets increasingly pricing in a more accommodative stance once the Fed leadership transition completes in May.

If you'd like to learn more about how MN Fund is positioned, you can request our factsheet or book an introductory call via mnfund.nl.

Fund Performance

MN Fund closed March at +16.47% gross. The elevated volatility environment created by the geopolitical backdrop proved well-suited to our strategy, with our volatility trading pillar delivering the primary return contribution for the month. Our approach is specifically designed to capitalise on periods of elevated price swings rather than relying on directional market exposure, and March demonstrated that positioning clearly. After two consecutive months of drawdown to open the year, the fund's YTD position has improved materially, and we continue to manage the portfolio with a focus on capital preservation alongside active volatility capture.

Portfolio Developments

Several of our holdings saw meaningful fundamental developments during the month. Arbitrum continued to build on February's all-time high in monthly transactions, with Robinhood Chain's testnet advancing further on the network and reinforcing Arbitrum's positioning as infrastructure for regulated financial products, including tokenized stocks and ETFs. The network's TVL and stablecoin supply remained resilient relative to broader market volatility, and RWA tokenization activity on the network continued to grow.

AAVE's "Aave Will Win" governance proposal passed during March, formalising a token-centric revenue model and directing 100% of product revenue to the DAO treasury. The proposal represents a meaningful structural shift for the protocol, aligning token holders directly with revenue generation. Aave V4 development continued toward audit completion ahead of a near-term mainnet launch, while the Horizon RWA marketplace, having crossed $1 billion in deposits in February, continued to attract institutional attention as on-chain lending gains credibility within the broader DeFi ecosystem.

Outlook

Looking ahead, the key variables remain geopolitical. The trajectory of the U.S.-Iran conflict, the duration and severity of energy price disruption, and the downstream impact on global inflation will continue to shape the macro environment in April and beyond. Central bank responses, particularly in the context of supply-side inflation that monetary policy cannot easily address, will be a key variable for risk appetite across asset classes.

We are also watching the Warsh confirmation closely. A Fed leadership transition in May toward a more accommodative stance would represent a meaningful shift in the rate expectations that have weighed on risk assets through late 2025 and early 2026. If confirmed, the policy pivot that markets have been anticipating could begin to materialise in the second half of the year.

Our positioning remains disciplined: lean core holdings, active volatility capture, and selective OTC deployment where opportunities meet our criteria. The environment heading into Q2 is uncertain, but the fund is well-positioned to continue navigating it.

If March's performance raises questions about whether MN Fund fits your portfolio, we're happy to walk you through our strategy in more detail. Request our factsheet or schedule a call directly using our Calendly.

Past performance is not indicative of future results. This content is provided for informational purposes only and does not constitute investment advice or an offer to invest. Investing in digital assets involves significant risk, including the potential loss of capital.