Nickel Research Centre

Nickel News Roundup - Week 15

14th April, 2022 

Market Overview:

Digital asset performance retraced slightly this week, as markets appeared to price in wider concerns over record inflation figures.

  • Bitcoin declined steadily throughout the week, before a sharper fall on Monday as inflation figures hit the news, leading to volatility around the $40,000 mark on Tuesday and Wednesday
  • Bitcoin’s weekly low was around $39,400 on Monday, before rallying slightly back to current levels of $41,260; a weekly drop of 4.9%
  • Ether dipped below the $3,000 mark for a weekly low of $2,960 on Tuesday, before rising to current prices of $3,115; 3.4% below last week’s figure
  • Total market capitalisation dropped to $1.91tn
  • Total value locked in DeFi declined slightly to $77.4bn, according to industry analytics platform DeFi Pulse

The digital asset market experienced some declines this week, as inflation figures (and expected measures to combat them) hit the headlines. Investment nevertheless continued to flow into the sector; BlackRock, Fidelity, SoftBank, Goldman Sachs, Sequoia, and Andreessen Horowitz were amongst those allocating major capital to the crypto asset industry, and the institutional enthusiasm also filtered down to individuals, with several billionaires voicing support for Bitcoin whilst executives moved from traditional finance to digital asset startups.


What happened: BlackRock participates in $400m funding round for stablecoin issuer

How is this significant?
  • The world’s largest asset manager, BlackRock, made a direct investment in the digital asset industry this week, by participating in a funding round for USDC stablecoin issuers Circle
  • As part of BlackRock’s new strategic partnership with Circle, they will be exploring capital market applications of USDC, and in an earnings call on Tuesday, CEO Larry Fink said that they “look forward to begin expanding our relationship to become the primary manager of the [Circle] cash reserves”
  • In the same earnings call, Fink acknowledged growing institutional investor interest in digital assets, saying “We are increasingly seeing interest from our clients that BlackRock is also studying digital assets and their associated ecosystem, including crypto assets, stablecoin, tokenization and permission blockchains, where we see a potential to benefit our clients and capital markets more broadly”
  • Jeremy Allaire, Co-Founder and CEO of Circle said “This funding round will drive the next evolution of Circle's growth. It's particularly gratifying to add BlackRock as a strategic investor in the company. We look forward to developing our partnership"
  • Other investors in the $400m round included other industry heavyweights such as Fidelity, hedge fund Marshall Wace LLP, and Fin Capital
  • It was also reported this week that Circle representatives have met UK officials several times over the last year, ahead of last week’s announcement by Rishi Sunak that the UK plans to recognise stablecoins “as a valid form of payment”

What happened: Fidelity unveils Metaverse and Crypto ETFs

How is this significant?
  • Alongside their participation in the aforementioned Circle funding round, Fidelity also made industry news this week by announcing the launch of ETFs concentrating on both the crypto asset and metaverse industries
  • The two thematic funds are the Fidelity Crypto Industry and Digital Payments ETF (FDIG) and Fidelity Metaverse ETF (FMET) will not offer direct exposure to digital assets due to current regulatory uncertainty, but rather will provide “the opportunity to invest in companies that support the broader digital assets ecosystem, including those involved in crypto mining and trading, blockchain technology, and digital payments processing”
  • According to the company’s press release, they are “self-indexed ETFs, utilising Fidelity’s proprietary indices, constructed by Fidelity’s quantitative investing team, to identify equity securities that offer exposure to these rapidly growing industries”
  • Fidelity appear keen to position themselves at the Vanguard of the nascent digital asset industry, stating in their press release “The addition of Fidelity Crypto Industry and Digital Payments ETF is one more milestone in advancing Fidelity’s position as a leader in digital assets… The new ETF offering allows a broader set of investors to participate in the emerging digital assets ecosystem through exposure to related equity securities”

What happened: Former Citigroup executives launch $100m digital asset hedge fund

How is this significant?
  • Three former Citigroup executives who left the company last month announced their new venture this week; a hedge fund aimed at simplifying digital asset exposure for High Net Worth individuals
  • Alex Kriete, Greg Girasole and Frank Cavallo are in the process of raising $100m for two actively-managed funds under the auspices of Motus Capital Management, their new company
  • Kriete and Girasole previously led Citigroup’s digital assets unit, whilst Cavallo managed $8bn of assets as an investment counsellor
  • Kriete told Bloomberg that their role was to make digital asset investing beyond Bitcoin into a less daunting prospect ““Clients are hungry for returns…They’re wanting exposure, but they have a hard time telling… what are real investment opportunities”

What happened: Mexican billionaire reveals 60% of liquid portfolio held in Bitcoin

How is this significant?
  • Mexico’s third-richest (and the world’s 151st-richest) man, Ricardo Salinas Pliego spoke at the recent Bitcoin 2022 conference in Miami, where he revealed that the majority of his liquid portfolio is held in the world’s leading digital asset
  • Salinas’ fortune spans across multiple industries, including telecoms, media, retail, and finance; including Grupo Elektra and Banco Azteca
  • “I definitely don't have any bonds… I have 60% in bitcoin and bitcoin equities and then 40% in hard-asset stock like oil and gas and gold miners and that's where I am", he told conference attendees during a panel discussion
  • He was particularly scathing about bond performances, as governments around the world continue to grapple with record inflation levels 
  • “Bond investment is a terrible investment. I wouldn't touch a bond with a 10-foot pole. It's just the worst thing. I mean, the best thing that can happen to you is you get back your $100. That's the best thing that can happen”
  • According to strategists from Bank of America in March, US government bonds are experiencing their worst performance since 1949; the year after the Marshall Plan was introduced, declaring “the third great bond bear market”
  • This underperformance of bonds as an asset class has led some to question the traditional 60/40 investment split, with hedge fund billionaire Bill Miller thinking along the same lines as Salinas, holding half of his personal wealth in digital assets

What happened: ARK Investments moves PayPal investment to Bitcoin-centric Block 

How is this significant?
  • Block, the payments processor founded by Jack Dorsey and formerly known as Square, secured the support of Cathie Wood’s ARK Investments recently, thanks largely to the company’s focus on digital assets
  • Speaking at the Bitcoin 2022 conference in Miami, Wood revealed that Block now constitutes their fourth-largest holding at over $930m, after the company completely exited their PayPal position and allocated the capital towards Block
  • “We tend to put our bets with who we believe will be the winners… As we consolidated our portfolios during a risk-off period, we chose Block over PayPal… Block’s singular focus on Bitcoin is critical here and this is how Bitcoin is going to proliferate around”
  • Block’s Cash App is a key adopter of Bitcoin’s Lightning Network scaling solution, which Wood praised as increasingly robust and ready for “prime time” as adoption increases
  • Although PayPal (and their Cash App competitor Venmo) also allow for the purchase of digital assets, Wood deems them more ingrained in Block as a company, led by noted Bitcoin advocate Jack Dorsey

What happened: Blockchain security firm CertiK doubles valuation with new raise

How is this significant?
  • On Thursday, blockchain security and analysis experts Certik confirmed the successful conclusion of an oversubscribed $88m funding round, doubling their December 2021 valuation to $2bn
  • The funding round was co-led by Insight Partners. Tiger Global, and Advent International, with additional investment from Lightspeed Venture Partners, Sequoia Capital, and Goldman Sachs
  • According to the press release announcing the funding, CertiK has protected over $300bn in assets for 3,200 enterprise clients, and “ For the year 2021, CertiK saw its revenue surge 12x, while its profits surged by 3,000x”
  • Goldman Sachs MD Oli Harris stated “Goldman Sachs is excited to be an investor in CertiK, a leading security platform for the blockchain and Web3 ecosystem… As we see continued growth in use cases and assets on decentralized applications the solutions being built by CertiK will be integral to securing the ecosystem, helping to accelerate innovation and adoption of these novel technologies”

What happened: Robinhood releases crypto wallet app to 2 million users

How is this significant?
  • Popular trading app Robinhood officially launched their own crypto asset wallet on Thursday, allowing for the onboarding of 2 million waitlisted customers
  • Chief Product Officer Aparna Chennapragada said the company was fully behind digital asset trading; “You’ll see us play a very active role in crypto and shaping it”
  • CEO Vlad Tenev previously acknowledged high user demand for such a feature, aimed at helping regular users not only invest in digital assets, but understand their mechanics through a variety of visual guides
  • Chennapragada acknowledged the appeal of Bitcoin to investors of all levels and experience, telling attendees at the Bitcoin 2022 conference “Bitcoin is actually the top most recurring buy for our customers, more than even many of the stocks that you think about”

What happened: SoftBank and Andreessen Horowitz (a16z) lead $150m metaverse raise

How is this significant?
  • UK-based metaverse technology developer Improbable announced a successful $150m funding round co-led by SoftBank and a16z, to help build interoperability technology allowing multiple metaverses to interact with each other
  • Dubbed M² (MSquared), the technology solution “will allow companies, brands and creators to establish their own metaverses and Web3 businesses within its network, organise large-scale experiences with their communities that involve thousands of players, and provide interoperability with existing blockchains and Web3 businesses”
  • This could potentially enable interaction and collaboration across various industries and fandoms, including fashion, sports, entertainment, and music
  • Current Bloomberg Intelligence estimates predict the metaverse industry could be worth $800bn within two years, whilst a recent report by Citi forecast $13tn in value by 2030
  • Other investors in the round included Mirana Ventures, Morgan Creek Digital, the Digital Currency Group, CMT, and Ethereal Ventures

What happened: More executives depart traditional finance for roles in crypto asset industry

How is this significant?
  • The ex-Citigroup trio behind the launch of Motus aren’t the only financial industry leaders to make the leap to digital assets, as several more high-profile appointments made the news recently
  • Several executives from Bank of America joined London-based digital asset custodians Copper, to develop prime brokerage platform infrastructure
  • The bank’s former MENA region head of prime brokerage, Michael Roberts, will lead the unit, where former BofA directors and colleagues Adam Groom and Paul Barham will join him
  • Copper CEO Dmitry Tokarev acknowledged major interest in the industry, saying “There’s not a single sell-side institution on the planet, or at least in the top 20, that is not working on something in digital assets”
  • Meanwhile, former New York Federal Reserve chief compliance and ethics officer Martin Grant recently joined digital asset firm JST Trading as head of regulatory affairs
  • According to a February report by the Tech Transparency Group, over 230 officials from “Congress, the White House, federal agencies, the Federal Reserve and national political campaigns have moved to or from dozens of crypto companies, exchanges or trade associations” in 2021
News Roundups