Nickel Research Centre

Nickel News Roundup - Week 10

11th March, 2021

Market Overview:

The digital assets market grew strongly, returning to near-record levels as Bitcoin, Ethereum, and the majority of altcoins rallied

  • Bitcoin rose significantly in value during the week, crossing a trillion dollar market cap, and reaching highs of over $57,000 on Wednesday; within touching distance of its $58,330 record posted in February. At the time of writing, Bitcoin is priced at $54,430, a weekly gain of more than 10%
  • Ethereum also performed strongly, gaining over $250 in value as it surged to a weekly high of $1,873. Ether’s present price is $1,738, representing 11% weekly growth
  • The majority of market performed bullishly, with more than two-thirds of the top 100 coins and tokens rising in value over the week
  • Growth in altcoins alongside market leaders led to a new record overall market cap of $1.74tn—nearly $250bn growth within a week
  • The DeFi sector saw another new record of value locked in decentralised applications, with a total of $51bn across Bitcoin and Ethereum

Digital assets performed strongly, amidst enthusiastic commentary from JP Morgan, Goldman Sachs, and Bloomberg. Adoption is growing globally, from Norway to Southeast Asia to Colombia, as banks, institutions, and individuals all display enthusiasm for the potential of blockchain technology and crypto assets.


What happened: JP Morgan launching “basket” of crypto asset companies to increase institutional exposure

How is this significant?
  • For the first time, JP Morgan has filed to issue investments linked to the equity performance of companies dealing with crypto assets
  • The “Cryptocurrency Exposure Basket” will feature the stocks of companies involved in direct investment (Microstrategy), mining (Riot blockchain), payment processing (Square), and even computer chip manufacturing (NVIDIA)
  • According to JP Morgan’s SEC filing, “The Reference Stocks in the Basket represent the common stocks / American depositary shares of 11 U.S.-listed companies that operate businesses that we believe to be, directly or indirectly, related to cryptocurrencies or other digital assets, including as a result of bitcoin holdings, cryptocurrency technology products, cryptocurrency mining products, digital payments or bitcoin trading”
  • The notes will pay out based on the market performance of the companies’ stocks, rather than directly on the price of any particular crypto asset, offering clients a new means of exposure
  • Also this week, JP Morgan released results from a survey of over 3,000 investors from 1,500 institutions at their Macro Quantitative Conference on Thursday 
  • The findings showed that approximately a third of their clients were interested in crypto asset investment; 11% were already invested, 22% planned to invest in future, 58% believed crypto assets would remain part of the financial landscape, and 7% believed that crypto assets will "become one of the most important assets"
  • JP Morgan also appear to be investing in their JPM Coin, and are on a large recruiting drive to improve their blockchain capabilities; there are currently 34 jobs listed on their careers site involving the keyword “blockchain”

What happened: Bitcoin firm NYDig secures $200m from investors including Morgan Stanley, MassMutual, and Soros Fund Management

How is this significant?
  • Best known as the company that facilitated MassMutual’s $100m Bitcoin purchase last year (referred to as “a milestone in Bitcoin adoption by institutional investors”), NYDIG announced they had achieved $200m in a growth capital round from a variety of institutions
  • Investors included Stone Ridge Holdings Group, Morgan Stanley, New York Life, MassMutual, Soros Fund Management, FS Investments, Bessemer Venture Partners, and FinTech Collective
  • NYDIG’s CEO Robert Gutman identified all of the investors as “partners”, promising that they “will be working with these firms on Bitcoin-related strategic initiatives spanning investment management, insurance, banking, clean energy, and philanthropy”
  • As part of the investment announcement, NYDIG also disclosed that “life, annuity, and property & casualty insurers now own, in aggregate, more than $1 billion of direct and indirect bitcoin exposure facilitated exclusively by NYDIG, and held on NYDIG's secure, audited, and insured institutional custody platform”
  • Gutman indicated that they will be providing a variety of new methods for institutional investors to gain digital asset exposure, saying; “In the months and quarters ahead, look out for an explosion of innovation in bitcoin products and services delivered by NYDIG, in partnership with our new investors”

What happened: Goldman Sachs comments on rising popularity of digital assets amongst institutional investors

How is this significant?
  • Goldman Sachs released the results of their Digital Assets Clients Survey, with several positive trends noted
  • 40% of survey respondents said they already had exposure to digital assets, and 61% believed that their digital asset holdings would increase over the next 12-24 months
  • 22% were very bullish on near-term price prospects, predicting a Bitcoin value of over $100,000 within a year
  • 57% of respondents believed that Bitcoin’s recent price appreciation was driven by “institutional investing or offering of additional products”
  • This view was echoed by Matthew McDermott, Goldman Sachs’ head of digital assets, in a Goldman Sachs podcast on Friday
  • McDermott said that crypto assets were gaining client attention as a hedge against negative interest rates and asset devaluation
  • In the podcast, he said that Goldman were currently inundated with client demand, saying “The team have fielded well over 300 conversations...when I talk about the broad spectrum, I'm referring to hedge funds, to asset managers, to macro funds, to banks, to corporate treasurers, insurance, and pension funds”
  • McDermott also believes that the world of traditional finance may resort to mergers and acquisitions in order to gain relevance in the digital space; “There is an expectation from clients now that the incumbent banks will develop their offerings to satisfy that demand. And so, certainly anticipate a certain amount of consolidation across that space”
  • Goldman’s latest “US Weekly Kickstart” report from the 4th of March also illustrated the degree to which Bitcoin is outperforming traditional markets with a year-to-date return of 70%; double that of the next-best performer (the energy sector), and well above gold’s flat performance since the beginning of January

What happened: First institutional Bitcoin fund for Southeast Asia launches

How is this significant?
  • On Monday, Southeast Asia’s first insured institutional Bitcoin fund, the BCMG Genesis Bitcoin fund, launched “to address the growing global interest from institutional and corporate investors”
  • According to BCMG’s press release, “Bitcoin has fast become a new asset class and with a diminishing supply the intrinsic value of the asset has grown remarkably in recent years”, leading to growing interest from Asian accredited investors and corporates
  • Rather than direct purchase of Bitcoin, the fund aims to invest in “market makers, bitcoin liquidity providers and other cryptocurrency investment opportunities”

What happened: Charles Schwab exploring crypto asset brokerage

How is this significant?
  • Charles Schwab is one of the largest financial services companies in the world, and the third-largest asset manager, behind BlackRock and Vanguard
  • According to reporting on crypto asset news site The Block, Charles Schwab may soon be moving into digital assets, offering exposure to Bitcoin
  • Schwab’s move would likely be in the form of a brokerage platform, partnering with existing crypto asset technology providers
  • This platform could be launched by the end of 2021

What happened: PayPal confirms the acquisition of crypto custodian Curv

How is this significant?
  • PayPal is one of the largest payment processors online, and their integration of digital assets back in October is viewed as one of the triggers behind increased institutional adoption in the space
  • On Monday, they confirmed their acquisition of crypto custodianship company Curv, in a deal rumoured to be worth $500m (though financial terms were not publicly disclosed)
  • According to PayPal’s press release the deal will “accelerate and expand its initiatives to support cryptocurrencies and digital assets”
  • PayPal noted this acquisition was part of a wider structural shift within the company; “In October 2020, PayPal announced its commitment to help shape the role that digital currencies will play in the future of financial services and commerce. To drive sustained growth and innovation in this area, the company recently created a business unit focused on blockchain, crypto and digital currencies. Curv will join the newly formed group, with its strong team of technologists adding technical expertise to PayPal”

What happened: Norwegian oil billionaire Kjell Inge Rokke moves into crypto assets

How is this significant?
  • Norway’s second-richest man has become the latest major voice to rally behind digital assets, saying that Bitcoin could “become the core of a new monetary ­architecture”
  • Rokke’s Aker ASA company has major interests in oil, construction, and fisheries, and is now setting up a new unit focused on investing in Bitcoin and blockchain technology
  • According to Aker ASA’s announcement, the new unit will be named Seetee, and initially focus on “1) investing in and owning bitcoin, 2) joining the Bitcoin and broader blockchain community and establishing partnerships with leading players, 3) launching Bitcoin verification operations, and 4) building and investing in innovation projects and companies in the Bitcoin and blockchain ecosystem”
  • In a letter to investors, Rokke said “First, we will use Bitcoin as our treasury asset and join the community. In Bitcoin speak, we will be hodlers
  • The initial capital of the unit will be 500m NKR; equivalent to about $58m
  • Aker ASA’s chief executive Oeyvind Eriksen sees the launch as tapping into a massive future potential, saying “These technologies have the potential to reduce frictions in our day to day lives, enhance the security of our digitally driven economies, and unlock new business models for innovation”

What happened: More global banks offer clients crypto asset trading and custodianship

How is this significant?

What happened: Senior Bloomberg strategist announces Bitcoin is “replacing gold as a store of value in investor portfolios”

How is this significant?
  • Mike McGlone, senior commodity strategist at Bloomberg Intelligence, tweeted on Monday that Bitcoin is living up to its “Digital Gold” nickname, writing that “most indicators point to an accelerating pace of #Bitcoin replacing the metal as a store of value in investor portfolios”
  • McGlone’s tweet illustrated how strongly Bitcoin has outperformed gold since mid-2020, including the fact that total known holdings of gold ETFs have actively declined
  • McGlone is a vocal supporter of Bitcoin’s digital gold narrative, having predicted an imminent $50,000 valuation in February, two weeks before the price was achieved
  • In other news from Bloomberg, they announced on Friday that they are adding price data for six additional digital assets to their price terminal, with data provided by CF benchmarks, whose CEO Sui Chung noted that it exemplifies a rising trend of “how the asset class is being viewed alongside the traditional asset classes”

What happened: Deutsche Boerse lists Ether ETPs

How is this significant?
  • On Wednesday, Deutsche Boerse listed physically-backed Exchange Traded Notes for the crypto assets Ether and Bitcoin Cash on the regulated markets of the Frankfurt Stock Exchange
  • Stephan Kraus, Head of Deutsche Börse's ETF segment cited simplicity for traditional traders as a key driver behind the listings, saying “Cryptocurrencies are a rapidly growing market segment. With the expansion to Ethereum and Bitcoin Cash, we are now offering further investment opportunities to trade crypto products efficiently in a regulated on-exchange environment. This means investors no longer have to turn to unregulated crypto venues or set up their own crypto wallets”
  • These assets follow previous the listing of Bitcoin-backed ETNs by the same company (21shares), with the announcement release noting the investor enthusiasm for such products; “Last June, Deutsche Börse launched the world's first centrally cleared Bitcoin ETN on Xetra. The product has been heavily traded by both private and institutional investors and was recently the highest-volume product in the ETF & ETP segment on Xetra for some days”

What happened: NBA Leadership form blockchain committee to increase usage of crypto assets

How is this significant?
  • According to reporting from sports business platform Sportico, several NBA owners—including noted digital asset bull Mark Cuban, owner of the Dallas Mavericks—have formed a “blockchain advisory committee” with a mandate “to explore ways to integrate blockchain across the league’s business”
  • As well as being used for ticket or merchandise payment, and the creation of collectibles as non-fungible tokens, the committee of six team owners believe that various applications of blockchain, both public and private, could have a positive financial impact on the league
  • Teams such as the Sacramento Kings and Dallas Mavericks have been ahead of the curve on crypto asset adoption, accepting Bitcoin as payment as early as 2014, and Joe Tsai, owner of the Brooklyn Nets is the co-founder and executive vice chairman of Alibaba, one of the largest tech companies in the world

What happened: launches $200m investment fund

How is this significant?
  • has launched a venture arm dedicated to funding emerging digital asset companies at the seed and Series A stages, with the aim of accelerating growth in the space
  • According to their announcement, Capital will lead seed rounds with between $100k and $3m and Series A rounds with $3m to $10m
  • As a top 10 exchange globally, has a vested interest in the success of companies who benefit from funds, as they intend to drive business towards their trading platform, with Kris Marszalek (CEO) noting “ Capital gives founders building in the crypto industry two things: a reputable lead investor for their seed or series A rounds AND priority of launch on the world’s fastest growing retail crypto platform with over 10 million users”

What happened: Gemini digital asset exchange becomes sponsor of the University Boat Race

How is this significant?
  • The Winklevoss brothers, former collegiate rowers who represented the United States at the Beijing Olympics and Oxford in the 2010 boat race, have taken up one of the most visible sponsorships in global sports, with their digital asset exchange Gemini confirmed as the title sponsors of the 2021 University Boat Race
  • Taking over sponsorship from BNY Mellon, Gemini will act as Principal Partners of the race, with branding widely visible across the event
  • First run in 1829, the varsity boat race is one of the oldest and most popular amateur sporting events in the world, with TV viewership in the millions
  • Gemini’s Head of UK, Blair Halliday is enthusiastic about the exposure offered, saying “We’re thrilled to bring Gemini’s retail and institutional cryptocurrency services to new audiences as the Principal Partner of The Boat Race”

What happened: Gerber Kawasaki begins investing in digital assets 

How is this significant?
  • Gerber Kawasaki, a wealth management firm with over $1.8bn assets under management, has begun investing in Bitcoin and Ethereum
  • CEO Ross Gerber (an early adopter of Tesla and cannabis stocks) is enthusiastic about the potential of crypto assets, noting in an interview with Decrypt that “If I don’t offer this to my clients, in essence, I’m taking away an opportunity that could be incredibly lucrative”
  • Gerber Kawasaki will be purchasing through Gemini, one of the largest American digital asset exchanges (and freshly-minted sponsors of the University Boat Race)
  • Gerber is an advocate of Bitcoin as “digital gold”, citing that concerns about volatility may be exaggerated on a like-for-like basis; “gold isn't as volatile, because it has a 5,000 year experience of having so many people own gold... But this is like Year 10 for Bitcoin. So in ten years, it's done pretty well... I do think it's a store of value, relative to, for example, a dollar”
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