weekly roundup – Citi: Bitcoin at Tipping Point | Square | Microstrategy | JPMorgan
Perhaps the biggest story in a week of big stories was the news about Coinbase publicising its S-1 on Thursday. After reading the filing, Bloomberg columnist Matt Levine said that “running a crypto exchange is at least 60 times more lucrative than running a stock exchange.”
Citi and Ruffer are predicting it’s the breakout moment for bitcoin, Cathie Wood thinks bitcoin could replace bonds and JPMorgan told their clients to allocate funds to bitcoin. We’ve rounded up the latest big reads and insights from investors below.
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SQUARE’S $50M BITCOIN BUY IS NOW WORTH $253M
Payments giant Square has purchased an additional 3,318 BTC for $170 million, bringing its holding up to 8,027 BTC. It also revealed that its allocation of 4,709 BTC to its treasury holdings in October 2020 cost approximately $50 million. That holding is now worth over $250 million. This highlights the growing trend for treasury allocations to bitcoin among innovative companies worried about the impact of fiat debasement.
Square wasn’t the only company adding to its BTC holdings this week. MicroStrategy just revealed the addition of $15 Million in bitcoin at an average price of $45,710, after announcing last Wednesday the purchase of another 19,452 BTC for $1.026 billion in bitcoin.
JPMORGAN SAYS INVESTORS COULD MAKE BITCOIN 1% OF PORTFOLIOS
JPMorgan is the latest Wall Street firm floating the idea of investors using bitcoin as a way to diversify their portfolios. Rather than making any big bets on bitcoin, the bank’s strategists recommended a relatively small allocation which wouldn’t take too much of a hit even if the price goes down substantially. “In a multi-asset portfolio, investors can likely add up to 1% of their allocation to cryptocurrencies in order to achieve any efficiency gain in the overall risk-adjusted returns of the portfolio,” strategists including Joyce Chang and Amy Ho wrote in the research note.
COINBASE REVEALS BITCOIN INVESTMENT AHEAD OF PUBLIC LISTING
On Thursday, Coinbase’s S-1 Form was made public, revealing key details before Coinbase stock hits the market. According to the filing, Coinbase netted revenue of $1.14 billion in 2020, up from $483 million the previous year. The company also reported net income of $322 million for the year after posting a loss in 2019.
The same day, the exchange also revealed on its blog that it holds bitcoin and other cryptoassets as an investment on its balance sheet. “Since our founding in 2012, Coinbase has held bitcoin and other crypto assets on our balance sheet, and we plan to maintain an investment in crypto assets as we believe strongly in the long-term potential of the crypto economy,” wrote Brett Tejpaul, Coinbase’s Head of Institutional Sales, Trading, Custody, and Prime Brokerage.
Source: The Coinbase Blog
CITI: BITCOIN AT ‘TIPPING POINT’ AS INSTITUTIONS COME ON BOARD
US banking giant Citi has released a new report which suggests bitcoin could become “an international trade currency” as it evolves. The report, entitled “Bitcoin: At the Tipping Point“, charts the evolution of bitcoin from a form of payment to its current status as a store of value.
The authors forecast that bitcoin’s core properties combined with its global reach and neutrality could see it morph into the “currency of choice” for international trade in around seven years. “Perceptions about what makes bitcoin important continue to evolve and create new opportunities while increasing its perception towards becoming mainstream,” the report states. In addition: “A focus on global reach and neutrality could see bitcoin become an international trade currency. This would take advantage of bitcoin’s decentralised and borderless design, its lack of foreign exchange exposure, its speed and cost advantage in moving money, the security of its payments, and its traceability.”
COINSHARES RELEASES DEFI INDEX TOKEN FOR INSTITUTIONAL INVESTORS AND PHYSICALLY BACKED ETHEREUM ETP WITH $75M IN AUM
Asset manager CoinShares has launched a physically backed Ethereum ETP on the Swiss SIX exchange with the ticker “ETHE,” and follows on the heels of CoinShares’ bitcoin ETP launch in January and underscores the growing investor interest in ETH.
Coinshares also announced the CoinShares Gold and Cryptoassets Index Lite (CGI), a DeFi token designed for institutional investors. The token’s value is based on two equally weighted “wrapped” crypto assets – wrapped bitcoin (WBTC) and wrapped ether (WETH) – and the firm’s wrapped gold token, wDGLD, and provides a relatively convenient on-ramp for investors considering exposure to DeFi and forms part of the institutional interest in DeFi we’re seeing.
WHY CATHIE WOOD THINKS BITCOIN COULD REPLACE BONDS
The ARK Investment founder discussed bitcoin’s opportunity to act as a replacement store of value at last week’s Bloomberg Crypto Summit. Cathie Wood specifically focused in on why bonds aren’t performing anymore and why bitcoin could fill the gap in investor’s portfolios when she was on the panel with Grayscale CEO Mike Sonenshein discussing the surge in institutional demand, what hurdles need to be removed and what infrastructure needs to be put in place for mainstream investors to embrace cryptocurrencies in a significant way.
“You think about the traditional 60/40 stock-bond portfolio, but look what’s happening to bonds right now. If we are ending a 40-year secular decline in interest rates, that asset class has done its thing. What’s next? We think crypto could be the solution,” Wood stated. “We know there’s a concern given all the quantitative easing and the no-rules based monetary policy out there. Fixed income has done 40 years of really hard work,” Wood said. “If Bitcoin represents a new asset class, why not invest in it?”
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