Nickel Research Centre

Nickel News Roundup - Week 51

Market Overview:

The cryptocurrency market underwent a strong recovery from last week’s correction, with Bitcoin leading the way and achieving a new all-time high above the historic $20,000 level. 

  • Bitcoin experienced steady growth throughout the week as it recovered from last week’s dip below $18,000, posting several new all-time highs throughout Wednesday and Thursday, with a record price of $23,640 on Thursday afternoon. At the time of writing, Bitcoin is priced at $23,175
  • Ethereum recovered strongly as well, reaching a new yearly high of $674, its highest value since May 2018. The current price of Ether is $652
  • The overall cryptocurrency market cap saw upward momentum return, increasing from a low of $521bn on Friday the 11th to a high of $603bn on Wednesday, marking the first breach of $600bn since January 2018. With the bullish performance of Bitcoin and Ethereum, the overall market cap rose to a high of $671bn on Thursday, with a current level of $653bn
  • All of the top 20 cryptocurrencies (excluding stablecoins) experienced growth in price over the last week
  • The DeFi sector reached a new all-time high in Total Value Locked on Thursday at $16bn, partly driven by the increase in the value of Ether 

The market bounced back from last week’s correction. Bitcoin was the key driver of this recovery as news about continued institutional interest continued unabated; breaking through resistance at $19,500 early in the week, before passing the previous all-time high of $20,000 and continuing to grow past $23,000, as Wednesday and Thursday were both marked by bullish momentum. 

What happened: JP Morgan note cites opportunity for institutional investment into Bitcoin

How is this significant?
  • After recently launching their own cryptocurrency and opening their own blockchain division, JP Morgan publicly recognises the potential of blockchain
  • JPM analysts identified the recent $100m purchase of Bitcoin by 169-year old insurance company Massachusetts Mutual as indicative of the potential for institutional investment into cryptocurrencies
  • In a note, they cited it as “another milestone in Bitcoin adoption by institutional investors”, noting that a 1% allocation from pension funds, family offices, and insurance companies globally would equate to an additional $600bn in demand; exceeding Bitcoin’s current market value of $380bn 

What happenedCoinbase files for stock exchange listing in the USA

How is this significant?

What happenedBanca Generali joins list of banks planning to offer crypto services

How is this significant?
  • From Singapore to Russia to the USA, the last few months have seen an influx of institutions from the world of traditional finance beginning to offer access to digital assets
  • Banca Generali, a private bank in Italy, is the latest banking institution to make moves towards providing cryptocurrency custody, in collaboration with Conio, the company behind Italy's first Bitcoin wallet
  • Banca Generali bought a stake in Conio in order to offer its full range of services to clients, indicating an increased demand for institutional access to crypto in Italy

What happenedCME Group announces creation of Ethereum futures

How is this significant?
  • CME Group are the major issuers of BTC Futures products, having first introduced them in late 2017 as BTC was approaching a speculation-driven ATH
  • As the second-largest cryptocurrency in the market, an ETH Futures product will provide more exposure to Ethereum for institutional investors
  • Pending regulatory approval, ETH Futures should go live in February 2021
  • The announcement comes shortly after Ethereum began its upgrade process towards Ethereum 2.0, allowing it to scale better for institutional and enterprise adoption through Proof-of-Stake consensus
  • According to Tim McCourt, CME's global head of equity index; "Based on increasing client demand and robust growth in our Bitcoin futures and options markets, we believe the addition of Ether futures will provide our clients with a valuable tool to trade and hedge this growing cryptocurrency"

What happened: Ruffer declares position in BTC a hedge against market risks

How is this significant?
  • UK-based Ruffer Investment is the latest billion-dollar institution to move some of their funds into Bitcoin as part of portfolio diversification efforts
  • In a performance update and manager comment on the 15th December, they noted that they had moved 2.5% of the Ruffer Multi-Strategies fund into Bitcoin, to protect against an over-reliance on gold
  • This was equivalent to one of the largest-ever investments in cryptocurrency, as Ruffer confirmed that they bought $745m worth of Bitcoin last month
  • In explaining their rationale behind the move, they stated "We see this as a small but potent insurance policy against the continuing devaluation of the world's major currencies"

What happened: CBOE to list cryptocurrency indexes in Q2 2021

How is this significant?
  • In order for greater institutional adoption, there must be reliable pricing data available to institutions; CBOE plans to leverage its existing infrastructure to fulfil this role
  • A three-phase rollout is scheduled, beginning with the filling of historical prices, followed by real time price data, before the formation of indexes begins to take shape
  • This news follows on from recent reports that Dow Jones S&P also planned to launch crypto indexes, providing reliable data on prices for a wide range of digital assets

What happened: PayPal showcases strong post-crypto integration growthas report reveals historic comparison between Bitcoin and the stock market

How is this significant?
  • Since integrating cryptocurrency trading into their platform, PayPal has outperformed the NASDAQ and broader stock market, with PayPal stock rising 17%
  • This was only on the basis of US-based customers getting access to cryptocurrency services, with a global rollout of crypto on PayPal planned for early 2021, according to CEO Dan Schulman
  • Meanwhile, research published by the CEO of Compound Capital Advisors showed that Bitcoin returns outpaced the stock market in 8 of the last 10 years, serving as the top performing asset class in that period, with the exceptions being the crypto winter years of 2014 and 2018.

What happened: Cryptocurrency adoption accelerates in inflation-hit Argentina

How is this significant?
  • Argentina has faced economic issues spurred by debt and exacerbated by the effects of COVID-19, leading to widespread inflation and currency devaluation in 2020
  • Bitcoin’s guaranteed scarcity and price appreciation and cryptocurrency’s utility for cross-border remittances has driven adoption this year, acting as a hedge against inflation and governmental economic policies (Argentinian GDP is set to shrink by 12% this year)
  • One of the country’s largest cryptocurrency exchanges, Ripio, has grown from 400,000 users last year to over 1,000,000 now, alongside a ten-fold increase in volume
News Roundups