Crypto Corner: Week Summary 8 March 2021
data taken at 9:56 am 12/03/2021
After the doubts and the adverse macro conditions that precipitated the market correction a few weeks ago, the Bitcoin price soared back near its highest levels. The BTC/USD pair is now quoting around $55,000. The main cryptotocurrency has been very resilient, finding support around the $44,000 levels on February 28th, before bouncing back by 25%. It is likely on its way to reach a new all-time-high, above the $60,000 levels. Although the momentum seems to be positive, there are a few signs of fatigue seen from the mutual funds and ETFs front. Institutions are still pouring cash through available investment vehicles but the pace is gentle.
The number of BTC-related investment vehicles and structures is growing. Some are now offered by the same institutions that were vehement critics of cryptocurrencies only a year ago. These vehicles could be ETFs, but also notes with a strong exposure to cryptocurrency-related companies. The structurer’s objective is to satisfy the crypto appetite of some traditional funds despite their more restrictive investment mandate:
- The assets under management (AUM) of the largest Bitcoin fund, namely the Grayscale Bitcoin Trust (GBTC) reached a new high at $36.84bil yesterday. The fund now holds 655,000 BTCs (~3.5% of the circulating supply). The fund’s holdings are growing slowly this month. In time, this growth could be hampered by the competing ETFs released recently. In fact, Grayscale itself is reportedly looking to hire an ETF team as of this week in order to stay ahead of the curve. It is clearly betting on the SEC approval of US ETFs before the end of this year.
- After a strong market debut, the AUM growth (in BTC) of the Canadian purpose Bitcoin ETF (BTCC) slowed down. Only 1,330 BTCs were added to the fund since Friday. BTCC now holds a total of 12,677 BTCs. The AUM’s value will soon exceed a billion CADs.
- JP Morgan introduced this week “Insight Notes” that are linked to the “J.P Morgan Basket of Companies with Exposure to Cryptocurrency”. The note will be priced at the end of the month. Unsurprisingly, Microstrategy stocks and Square stocks have together a 38% weight in the J.P Morgan basket.
Crypto-friendly regulations would certainly favour the creation of investment vehicles. Hopes for a more crypto-friendly US regulation are supported this week by the third re-introduction of the “Token Taxonomy Bill” by Representative Warren Davidson. The press release urged that “without a workable federal regulatory structure, many (…) entrepreneurs are taking their businesses overseas where clearer and friendlier laws have established thriving blockchain economies.” If passed, the Bill would alleviate the tax treatment of gross income from cryptocurrency exchanges (Section 139G of the Bill). As Congress referred the bill to the House Financial Services and House Ways and Means committees, we will have a vote on it for the first time.
Week after week, cryptocurrencies are slowly breaking down barriers, enhancing inclusion, and working towards the ideals of financial freedom and equality. This week in particular, India is reconsidering its intention to ban private cryptocurrencies. The “Cryptocurrency and Regulation of Official Digital Currency Bill” caused an outcry, threatening to undermine jobs and the efforts of all the young startups of the sector. Finance Minister Nirmala Sitharaman said this week that he will eventually take a “very calibrated” position on the matter.
More on the equality front and in the context of the International Women’s Day last Monday, Robinhood reported this week on twitter that “The number of women actively trading Crypto has already grown 7x this year!”. “40% of Robinhood active women customers are crypto traders”. The recent boom in the crypto-economy has levelled the playing field, boosting adoption across genders.