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April/May PVI Newsletter

May 19th Crypto Market Sell-off and Volatility

Although our investor letters normally focus on the previous month or quarter, given the volatility
over the past week, the Parkour Team felt that an abbreviated mid-month update was also
warranted for May to assuage any concerns our investors may have.
After reaching a mid-month high of $59,500 on May 10th, the Bitcoin price started to fade, and a
handful of negative news stories began to compound, leading to the largest correction event we
have seen this cycle — and one of the largest during a Bitcoin “bull market”.
Early in the morning, on May 19th, the price of Bitcoin broke through a key technical level
around $40,000 and began to cascade down to $30,000, again, causing a large number of
liquidations across the market. Ethereum also suffered from the drawdown in Bitcoin, falling to a
low south of $2,000 before finding support. The Parkour Team was able to recognize early
warning signs of this event and managed out of a number of positions, effectively hedging the
portfolio during the drawdown, and thereby preserving capital and side-stepping the majority of
the damage that was felt by the majority of crypto investors and funds. As of today (5/19), while
Bitcoin is down over -35% on the month, Parkour Ventures I is down significantly less. We
believe this puts the fund in an extremely advantageous position for the future. We are looking
forward to continuing to navigate the crypto markets, searching out optimal risk/return
opportunities for our investment partners.

April General Market Commentary

April proved to be the most volatile month since the inception of the Parkour Venture Fund
(aside from the May sell-off). One major event for the space was the Coinbase IPO, where one
of the leading cryptocurrency exchanges went public through a direct listing on the Nasdaq. This
came on the back of the March Consumer Price Index report, indicating rising levels of inflation
due to further reopening efforts. The news cycle around the IPO brought attention to
cryptocurrencies, propelling Bitcoin and Ethereum to new all-time highs. However, this

significant run-up led to markets becoming somewhat frothy and overleveraged, as we saw the
hype spillover into less established markets, such as crypto “meme-coins”. This exuberance,
combined with a retest of the psychological level of $60,000, during thin (low volume), weekend
trading set the stage for a dangerous market flush. A handful of news stories were released,
combined with a wave of selling, including an unconfirmed and inaccurate tweet claiming that a
US Treasury money laundering investigation was underway. The selloff led to a number of
traders’ positions being stopped out and liquidated, which further accelerated the price cascade
as the price of Bitcoin fell from $60,000 down to $50,000 in a matter of minutes; an event that
has since been coined as “Red Saturday”. After the nuke down, calmer heads prevailed as
traders were eager to buy up Bitcoin at these lower levels, leading to a short-term bounce.
However, after chopping sideways for 4 days, the price began to slide again, reaching a monthly
low on Sunday, April 25th around $47,000. After finally finding a bottom, the price then mounted
a comeback to finish the month at $57,750, resulting in an overall -2% decline for April, Bitcoin’s
first down month of the year. We are happy to report the Parkour team was able to navigate the
volatility and to produce a positive return for our investors in April (fully audited numbers will be
out shortly).

Although the April 18th selloff and May 19th “crash” caused a lot of pain in the market, we do
not believe this represents anything fundamental or long-lasting for cryptocurrency and we will
aim to capitalize on the dip as prices stabilize and continue to move toward our long-term
projections. However, we also recognize that after such an event, it can take several weeks, or
even months, for investor psychology to recover to a point where crypto assets can reclaim new
highs. We still maintain a core position in Bitcoin, but are also looking to capitalize on other
investment opportunities and developments in the crypto space, specifically in decentralized
finance or “DeFi”.

A few factors we look to in order to identify opportunities include:
● The relative performance of Ethereum as it plays catch-up to the early-year performance
of Bitcoin.
● The growth of the DeFi space, as more-and-more sophisticated projects continue to be
built on Ethereum and competing blockchains.
● The emergence of “yield-farming” as an incredibly lucrative part of the DeFi ecosystem,
and the attractive returns that are currently available without having to take on excessive
directional risk.
● The concerns over interest rates, and specifically, the Fed starting to signal a change in
their easy-money rhetoric and policies.
● The possible bottoming of the US Dollar (see chart below).

These primary factors led us to adjust some of our core allocations towards the end of April.
Specifically, we are increasing our allocation to DeFi projects through our side pocket fund. We
also plan to dynamically adjust our core holdings to increase our exposure to Ethereum and to a
basket of DeFi tokens we believe represent “Blue Chip” projects in the space. This decision has
already made a positive impact on fund performance in April, and has been continuing to do so
as Bitcoin’s early year performance permeates into other areas of the market.

We are always open to readjusting our allocation back to overweight Bitcoin when the facts
change, and Bitcoin’s dominance turns back up. We remain vigilant, and on the lookout for
Bitcoin dominance to bottom out and show strength to the upside (see chart above). As always,
our primary goal is to be the best stewards of your money by maintaining the optimal mix of
investments in the cryptocurrency ecosystem.

Thank you for your trust and for being a partner with us on this journey!

The Team @ Parkour Venture Fund LP

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