Nickel Research Centre

Nickel News Roundup - Week 2

13th January, 2022 

Market Overview:

Digital assets continued last week’s decline into the weekend, before recovering on the basis of statements by Federal Reserve chairman Jerome Powell.

  • Bitcoin fell to lows not seen since September, briefly dropping below $40,000 on Sunday; but large spot buying volume at that price point and increased market confidence due to CPI data helped to reverse momentum and erase the majority of last week’s losses
  • Bitcoin’s weekly low was $39,820, rising to a weekly high of $43,920 on Wednesday after the release of US inflation figures
  • Bitcoin is currently priced at $43,730, up about 1.2% from last week
  • Ether’s movements mirrored Bitcoin, dropping below $3,000 for a weekly low of $2,962 on Sunday, before strong demand at those levels drove prices back up, peaking at $3,383 on Wednesday
  • Ether is currently priced at $3,347; a 3.1% weekly decline
  • Total market capitalisation rose slightly from last week’s snapshot to $2.09tn, recovering from levels below $1.87tn during Sunday’s market nadir
  • Total value locked in DeFi declined to $95.3bn, according to industry analytics platform DeFi Pulse

Market pessimism turned to optimism on Wednesday, as US inflation news was perceived positively by industry analysts. Along with Jerome Powell, several other individuals made headlines in the industry this week; billionaire investor Bill Miller declared himself a “Bitcoin Bull” with half his net worth in digital assets, Binance CEO Changpeng Zhao was recognised as the 11th-richest person in the world, ex-Andreessen Horowitz partner Katie Haun was featured in the FT for her new crypto VC funds, and custodians Bitcoin Suisse announced the hire of Barclays’ head of wealth management.


What happened: Jerome Powell clarifies Federal Reserve stance on digital assets

How is this significant?
  • Speaking at the Senate Banking Committee meeting on Tuesday, Federal Reserve Chairman Jerome Powell made several statements that were enthusiastically received by analysts of the digital asset industry
  • In response to a question from noted congressional digital asset advocate Pat Toomey, Powell said he saw no restrictions to privately-issued stablecoins existing alongside federally-issued stablecoins, such as the proposed Digital Dollar CBDC
  • He also confirmed the Federal Reserve will publish a report on digital assets “in the coming weeks”, giving further acknowledgement to their increased profile in the financial space
  • The report will likely prove more consultative than definitive, as Powell noted “it’s more going to be an exercise in asking questions and seeking answers from the public”
  • On Wednesday, Consumer Price Index (CPI) data for the United States was released, and although inflation rose to the highest levels in nearly 40 years, it proved to be in line with predictions, rather than exceeding them
  • This led to a recovery for Bitcoin and other major digital assets as analysts commented “What we’re seeing today is not ‘yay, inflation hedge’ and all that, it’s risk assets are in again… because we don’t think that Powell is going to raise rates as much as the market has been discounting because inflation was in line with expectations and not worse”

What happened: Macro investor Bill Miller has half of personal fortune in Bitcoin

How is this significant?
  • Renowned macro investor and hedge fund billionaire Bill Miller, in an interview with Wealthtrack this week, revealed that he has moved 50% of his personal wealth into Bitcoin 
  • Previously, he introduced Bitcoin into his corporate portfolios through his flagship Miller Opportunity Trust fund, but the 50% allocation in his personal net worth far exceeds the fund’s more conservative allocation
  • In the interview, he explained the move, citing increased adoption and institutional presence; “My reasoning was there are a lot more people using it now. There's a lot more money going into it in the venture capital world”
  • He noted that in the last 10 years, gold has decreased in value, whereas Bitcoin is the best-performing asset of the last decade
  • Miller also praised the tokenomic design of the leading digital asset, saying “It comes down to the very basic level of supply and demand… Bitcoin is the only economic entity where the supply is unaffected by the demand”
  • He revealed that he no longer classifies himself as a “Bitcoin observer”, and now describes himself as a “Bitcoin bull”
  • Further explaining the investment appeal of Bitcoin, he stated “I think the average investor has to ask his or herself what do you have in your portfolio that has this kind of track record… is very, very underpenetrated, can provide a service of insurance against financial catastrophe… and can go up 10 times or 50 times?
  • Miller also disclosed that he first purchased Bitcoin in 2014, at around $200, buying up to $500, before stopping his accumulation until early 2021 in the $30,000 range

What happened: PayPal investigates creation of proprietary stablecoin

How is this significant?
  • Reporting by Bloomberg this week revealed work on a proprietary stablecoin by the payment processor
  • Following the discovery of a hidden “PayPal Coin” logo within the PayPal app, the company’s senior vice president of crypto and digital, Jose Fernandez da Ponte, told Bloomberg in a statement that “We are exploring a stablecoin; if and when we seek to move forward, we will of course, work closely with relevant regulators” 
  • If they develop their own coin, it would mark the first legitimate digital asset developed by a major corporation intended for consumer usage
  • Speaking on a podcast recently, Fernandez da Ponte revealed that the company has “not yet seen a stablecoin out there that is purpose-built for payments”
  • PayPal was one of the first major corporations to embrace digital assets, arguably helping to kickstart the move into a bull market late in 2020 when they first allowed customers to buy and sell digital assets through their app

What happened: Binance CEO Changpeng Zhao named 11th-richest person in the world

How is this significant?
  • Changpeng “CZ” Zhao, CEO of the world’s largest digital asset exchange, had his wealth estimated in the Bloomberg Billionaires Index for the first time; and the results were indicative of the growing appeal of digital assets
  • The list published on Monday ranks Zhao as the 11th-richest person in the world, with an estimated fortune of $96.5bn; making him the only person from the finance industry to crack the top 35
  • With Binance making revenues from trading fees, Zhao’s fortune goes some way towards demonstrating the massive growth in digital asset interest over the last year
  • He also ranks as the wealthiest Canadian citizen, wealthiest Asian (ahead of the likes of Mukesh Ambani, Jack Ma, and Li Ka-Shing in the top 50), and largest annual increase in wealth (beating Ken Griffin and Jeff Bezos into second and third place respectively)
  • Worth noting is that Bloomberg’s calculations exclude all of Zhao’s digital asset holdings, which if included could propel him even further up the rankings. Bloomberg notes that “Zhao’s fortune could be significantly larger, as the wealth estimate doesn’t take into account his personal crypto holdings, which include Bitcoin and his firm’s own token. Binance Coin, now called BNB, surged roughly 1,300% last year”

What happened: Barclays’ Wealth Management CEO moves to Bitcoin Suisse leadership role

How is this significant?
  • On Friday, Bitcoin Suisse announced the appointment of their next CEO; the leader of Barclays Plc’s U.K. Wealth Management & Investments business, Dirk Klee
  • Klee will step into the role from April onwards, replacing former Credit Suisse banker Arthur Vavloyan
  • Bitcoin Suisse currently custodies more than $7.6bn worth of digital assets, and is one of the first major companies in the space, founded in 2013
  • The change in leadership comes after founder Niklas Nikolajsen stepped back as chairman at the start of the year, leaving on a high after bullish forecasts estimated a doubling of net income in 2021
  • Klee believes in further growth for the industry, stating “In the coming years, the growth of crypto-financial services will continue to accelerate in Europe and globally. We anticipate key shifts in regulation, client expectations, and technology… In the coming years, a once-in-a-lifetime opportunity awaits Bitcoin Suisse, our clients, investors, and employees”

What happened: Citadel Securities funding raise hints at potential digital asset moves

How is this significant?

What happened: Arab Bank Switzerland offers DeFi products to customers

How is this significant?
  • The Swiss affiliate of Arab Bank PLC is taking advantage of the country’s progressive digital asset policies, extending previous digital asset offerings to include DeFi exposure
  • Customers of Arab Bank Switzerland now have the opportunity to invest in 10 major DeFi tokens, including Aave, Chainlink, and Polygon
  • The bank’s digital assets director Romain Braud told industry publication the move was catalysed by a desire to get ahead of an impending trend; “The idea for now is just for our clients to buy, sell and hold some of the most prominent DeFi tokens… But we do believe traditional financial institutions will be replaced in the near future by these protocols, and we want to be part of this change. So, naturally in the future, we want to go deeper into these kinds of decentralized services”

What happened: WisdomTree re-files Bitcoin spot ETF, adds exposure to existing funds

How is this significant?
  • Following the recent rejection of their Bitcoin spot ETF application, issuers WisdomTree have refiled, believing the market will prove its maturity sooner or later
  • They filed for up to 5% Bitcoin futures exposure in their Managed Futures Strategy Fund last year, of which they added 1.5% this week
  • In an interview with industry publication Coindesk, the company’s global Chief Invesment Officer Jeremy Schartz explained the move, saying “Our view was that Bitcoin is serving a role similar to gold and why people buy gold in commodities strategies… Right now, we are not going short on Bitcoin futures. We think there is more risk [in shorting] given the volatility”

What happened: Katie Haun to set up $900m crypto investment funds after a16z departure

How is this significant?
  • Former Andreessen Horowitz (a16z) General Partner Katie Kaun is seeking a total of $900m for two digital asset investment funds, according to an article this week in the Financial Times
  • $300m is earmarked for an early investment fund targeting industry startups, whilst the remaining $600m will be allocated towards more mature digital asset companies and tokens, according to sources speaking to the FT
  • Named KRH, Haun’s VC includes several a16z alumni, and has already participated in the recent $300m raise by NFT marketplace Opensea

What happened: NASDAQ-listed blockchain company offers first Bitcoin dividend

How is this significant?
  • BTCS, a blockchain-focused firm listed on the NASDAQ, announced on Wednesday that its investors will have the option between receiving their share dividends in US dollars or Bitcoin, in an industry first
  • Focused on portfolio analysis and the administration of staking services, BTCS made the move to align with the interests of their customers and shareholders
  • The Bitcoin dividend—dubbed the “Bividend” by BTCS—will be payable in March, but the market reacted positively to the news, with BTCS shares rising from $4.04 on Thursday to $7.13 on Wednesday

What happened: JP Morgan analysts predict increased crypto asset adoption in 2022

How is this significant?
  • According to a research note published this week, JP Morgan foresees continued growth in adoption for digital assets this year, although only a small minority (5%) of clients foresee a landmark $100,000 Bitcoin price in 2022’
  • Equity research analyst Kenneth B. Worthington believes institutional presence in the space will continue to grow throughout the year, writing “We see likelihood for greater acceptance of cryptocurrency markets by mainstream investors and companies in 2022 with increasing relevance to financial markets”
  • Worthington also praised Bitcoin for being “particularly well-designed as a modern store of value”, and noted that its historic volatility hasn’t stopped it from growing in value
  • The report also looked beyond Bitcoin, saying that potential existed in other chains and protocols, particularly if technological advances are realised allowing them to efficiently transact and communicate with each other; if so, 2022 could be “the year of the blockchain bridge (driving greater interoperability of various chains) or the year of financial tokenization”
News Roundups