weekly roundup – Institutions Pouring into Bitcoin
The wave of institutional interest in bitcoin keeps swelling. One week after JPMorgan revealed its bitcoin exposure basket of 11 stocks directly or indirectly tied to the cryptocurrency, it was reported that Morgan Stanley is providing high-net-worth clients with access to three funds that enable ownership of bitcoin, thus becoming the first Wall Street bank to make the direct leap. The following day, BNY Mellon was announced as a strategic investor in crypto custodian Fireblocks’ latest $133 million venture capital round. Fireblocks’ underlying technology will support BNY Mellon’s own digital assets platform, launched in February.
Here’s our roundup of the highlights from the past seven days.
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DEUTSCHE BANK REPORT: BITCOIN IS TOO IMPORTANT TO IGNORE
Bitcoin is now “too important to ignore” given its $1 trillion market capitalisation, according to a new report by Deutsche Bank, published last Wednesday, which states that the price of bitcoin could continue to rise as long as it continues to attract entry from asset managers and companies.
“Importantly, small changes in investors’ overall perceptions about bitcoin can have a large impact on its price, especially because relatively few bitcoins are in circulation. So, if several pension funds or large asset managers with trillions of dollars decide to allocate a few basis points of their portfolios in a cryptocurrency, it can have a very large impact.”
Source: Deutsche Bank
MORGAN STANLEY – FIRST BIG US BANK TO OFFER ITS WEALTH CLIENTS ACCESS TO BITCOIN FUNDS
In yet another sign that bitcoin is gaining wider acceptance, Morgan Stanley became the latest major player to make a serious move into crypto, with CNBC reporting last Wednesday that it is set to offer its wealth management clients access to bitcoin funds.
The investment bank, with $4 trillion in client assets, told its financial advisors in an internal memo that it is launching access to three funds that enable ownership – Bitcoin: FS NYDIG Select Bitcoin Fund, Galaxy Bitcoin Fund, and Galaxy Institutional Bitcoin Fund. For now, the bitcoin funds are only available to clients with accounts that have been active for at least six months and are worth over $2 million ($5 million for investment firms), and there is a limit of 2.5% of a client’s net worth.
This was followed by reports that the investment bank is also making a play for a stake in Bithumb, Korea’s largest digital assets exchange.
FIRST ADVISOR, SCARAMUCCI-LED SKYBRIDGE TEAM UP FILE FOR BITCOIN ETF ACCESS
First Trust Advisors and SkyBridge Capital, the hedge fund run by former White House Communications Director and recent bitcoin convert Anthony Scaramucci, have become the latest firms to seek to offer a bitcoin exchange-traded fund (ETF).
In an S-1 filing with U.S. Securities and Exchange Commission (SEC), the companies applied to be able to offer the ‘First Trust SkyBridge Bitcoin ETF Trust.’ First Advisor would be the advisor to the ETF while SkyBridge would serve as the sub-advisor. Shares would trade on NYSE Arca, the filing said.
The two companies are just the latest to file for an ETF. This bull run’s regulatory rush has seen WisdomTree file for a bitcoin ETF in March, NYDIG in February, Valkyrie in January, and VanEck in December of last year. So far, VanEck has been the only one to also file a Form 19b-4, kicking off the SEC’s regulatory review process, formally launching its 45-day window to make an initial decision on the proposal. If approved, the ETF would be the first open bitcoin exchange-traded product in the U.S.
SEC COMMISSIONER HESTER PEIRCE – REJECTION OF BITCOIN ETF FILINGS
SEC commissioner Hester Peirce gave a speech this week at the British Blockchain Association’s conference in which she discussed her view on the regulator’s inconsistent reasons for rejecting previous bitcoin ETF applications:
“Rather than applying the fairly straightforward standard that we have typically applied in approving other ETP filings—including for precious metals like palladium and platinum—we have insisted on increasingly sophisticated analyses of the relationship between the underlying spot market and the futures market to determine the susceptibility of these markets to fraud and manipulation. Not only is it unclear whether prior non-crypto ETP filings could have passed muster under this more rigorous approach, the ever-shifting goalposts are unfair to innovators who spend ever-increasing amounts of money on attorneys and quantitative experts only to find that they have failed to hit a target that has moved once again.”
She also pointed out that the SEC stance has heightened risk for retail investors, rather than protected them:
“The SEC’s reluctance to permit traditional investment vehicles to hold bitcoin or bitcoin futures has contributed to investors seeking more expensive, less convenient, or less direct substitutes, but it also has heightened the stakes of any regulatory approval for a mainstream retail product we might one day grant. By waiting we also have magnified the first-approved advantage in the bitcoin ETP or registered fund space. Moreover, because we have comported ourselves like merit regulators, investors might view any approvals as an official blessing by the Commission about the quality of the products we approve. That would be the wrong inference to draw.”
PANTERA’S MOREHEAD: BITCOIN IS COMING OF AGE, ON TRACK TO HIT $115,000 THIS YEAR
Citing his comment from this time last year, in his March 2021 investor letter, Pantera Capital’s Dan Morehead recalled his statement: “Bitcoin was born in a financial crisis. It will come of age in this one.” And on a Pantera conference call last week, he said that bitcoin has now come of age and that there is plenty of steam left in its rally.
“We thought bitcoin and other cryptocurrencies would explode because of this money printing, and it’s definitely happened,” said Morehead, founder, CEO and Co-CIO of Pantera, on the call. “The other big thing that’s happened in the last 12 months is corporate treasuries are now very engaged in cryptocurrencies, particularly bitcoin.”
Today’s rally differs from 2017 in many ways; increased institutional interest, operational decentralised finance protocols and a more positive investor sentiment, to name a few, but Morehead stressed that the current financial landscape is pushing investors into store of value assets.
He continues: “The US is now printing more money each month than it did in the first 200 years of its existence, the chairman of the Federal Reserve said, literally, unlimited money printing was on the table,” said Morehead. “When you have a limited quantity of paper money chasing things, which are fixed quantities, like gold, real estate, the S&P 500 or bitcoin, the price of those things goes up dramatically. The price of cryptocurrencies is skyrocketing.”
Source: Pantera Capital
THE CASE FOR PUTTING BITCOIN ON CORPORATE BALANCE SHEETS
As governments and central banks compete to debase their currencies on a global scale, corporations are seeking protection in the form of bitcoin. In this webinar, Microstrategy CEO Michael Saylor will speak about how he wrote the playbook, why companies are buying bitcoin, and how to hedge against an uncertain future.
Find out more about BCB Treasury, the complete solution that lets you buy, sell, store and manage your bitcoin treasury safely and securely.
LONDON TECH WATCH: CEO INTERVIEW
The London Tech Watch team caught up with our CEO and Founder Oliver von Landsberg-Sadie to learn more about the inspiration behind BCB Group, our future plans and all about our latest funding round.
Read the full interview here.
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