weekly roundup – Investors and Institutions Come Out in Favour of Bitcoin
Last week the industry saw a number of renowned investors and institutions coming out in favour of bitcoin, as well as a lot of regulatory news, some of it bullish, some cloudy. We’ve rounded it up below, along with the other interesting big reads from the past seven days.
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BLACKROCK’S CHIEF INVESTMENT OFFICER SAYS BITCOIN COULD REPLACE GOLD TO A LARGE EXTENT
The chief decision maker for where BlackRock, the world’s largest asset manager, invests its funds, said bitcoin could take the place of gold to a large extent because crypto is “so much more functional than passing a bar of gold around.”
Speaking on CNBC’s Squawk Box on Friday, BlackRock CIO of Fixed Income Rick Rieder responded to a question asking if governments might try to regulate bitcoin if its price keeps rallying.
GRAYSCALE’S CRYPTO ASSETS UNDER MANAGEMENT BREAK $10 BILLION
In another sign of renewed exuberance in cryptocurrency markets, Grayscale Investments has broken above $10 billion in digital assets under management for the first time. Disclosed last Tuesday evening, the New York-based firm now oversees $10.4 billion in assets including bitcoin, bitcoin cash, ether, horizen, ethereum classic, litecoin, stellar, XRP and zcash. That’s up from $7.6 billion on 30th October, according to the firm’s November report.
Price appreciation in all cryptocurrencies this month is a factor behind the growth, but so are inflows: Grayscale took in $262.3 million last week alone, as Managing Director Michael Sonnenshein tweeted on Friday, and in an interview last week he said that bitcoin is the next step in the evolution of money and that growing involvement of major players in the financial services realm “really speaks to the staying power of the asset class and validates other people getting involved.”
SCARAMUCCI’S BILLION-DOLLAR MEGA HEDGE FUND SKYBRIDGE EYES INVESTMENT IN BITCOIN
In a filing registered with the U.S. Securities and Exchange Commission last week, the giant global investment firm Skybridge Capital explained that the fund Skybridge G II may invest in digital currencies like bitcoin. On 13th November, the New York-based company with $7.7 billion AUM told the U.S. regulator that Skybridge investment funds “may hold long and short positions in digital assets” and it “may seek exposure to digital assets.” It noted that by “digital assets,” the firm meant bitcoin – but this was not limited solely to bitcoin.
SkyBridge’s founder, Anthony Scaramucci, has said that he is a crypto fan “I am a fan and I believe that digital assets have a future and obviously that blockchain has a future.”
BITCOIN TO $500,000 – FUND MANAGER BELIEVES IT COULD HAPPEN
ARK Investment CEO Cathie Wood appeared at the virtual investing in tech seminar chaired by Barron’s where she discussed the rise of bitcoin. Wood told viewers the 160% year-to-date increase for the price of bitcoin could be just the beginning and said the decision by the Fed to keep interest rates low, bitcoin being a digital alternative to gold and an insurance policy against inflation, as reasons why bitcoin has increased in price.
The founder of ARK and a noted booster of disruptive technologies such as bitcoin and Tesla told attendees of Barron’s virtual Investing in Tech series that if more institutional investors like hedge funds were to take a greater interest in bitcoin, it could send prices even higher.
Wood said institutions have been bumping up their exposure to the cryptocurrency recently, drawing a comparison to “the early days of institutions moving into real estate and emerging markets,” when allocations started small, then grew. “They started out with a half a percent allocation, then 1%, and then 5% or thereabout seemed to be the right number.”
If all institutions were to assign a similar mid-single-digit allocation to bitcoin, the cryptocurrency could rise “to somewhere in the $400,000 to $500,000 range.”
CRYPTO HEDGE FUND PANTERA CAPITAL FILES FOR $134 MILLION RAISE
In a filing with the SEC last week, bitcoin hedge fund giant Pantera Capital announced an equity offering of up to $134 million – among the largest capital fundraising efforts in the seven year history of the firm. Formed in 2013 as the first-ever bitcoin fund in the United States, Pantera initially raised $13 million, and later $25 million.
While there has been no word as to whether this new raise will result in a new fund or simply expand the scope of Venture Fund III, Pantera’s latest investments and executive comments might offer hints at its forthcoming strategy.
In a recent interview, Pantera CEO Dan Morehead said he believes the growth of decentralised finance has the potential to outstrip bitcoin’s rise, and that the firm is focusing their new bets on the emerging financial vertical. Additionally, Pantera seems to have their eye on the expanding crypto asset derivatives market, as shown by a recent investment in derivatives platform Globe.
BITCOIN HAS A GREATER MARKET CAP THAN MASTERCARD
The total market capitalisation of bitcoin exceeded that of Mastercard’s last week. placing the cryptocurrency on the 16th spot among the world’s largest companies, according to tracking platform AssetDash.
Bitcoin’s market cap amounts to nearly $338 billion and according to AssetDash’s data, bitcoin’s capitalisation increased by 3% – enough to push Mastercard back to 17th place as its market cap lost 0.6%.
As the price of BTC keeps steadily climbing up, bitcoin could overtake others. The next on the list is Procter & Gamble with a market cap of roughly $346 billion – and bitcoin is now just $8 billion short. At the same time, $15 billion currently separates bitcoin from outpacing JPMorgan.
REGULATORY NEWS ROUNDUP
SEC chairman Jay Clayton is stepping down from his post at the end of this year, months ahead of his planned June 2021 departure. This news was mostly welcomed by those in the crypto space, with cognoscenti tweeting that this boded well for a long-awaited Bitcoin ETF. Then, on CNBC, Clayton also said the inefficiencies of existing payment systems have driven the rise of bitcoin.
Acting Comptroller of the Currency Brian Brooks has been nominated to a full 5-year term leading the national bank regulator. While the nomination itself is positive for crypto, CoinDesk’s Nikhilesh De tweeted why “Brooks’ path forward is murky,” citing an upcoming shakeup in the Senate Banking Committee.
Sian Jones, who has been a major player in crypto anti-money laundering regulations, speaking at the second annual V20 Virtual Asset Service Providers Summit, said the Financial Action Task Force needs to take a wholly new approach to how it polices crypto. She said that the FATF is trying to graft existing AML regulations onto crypto intermediaries when the core of crypto is to transact without intermediaries. She suggested the regulators look more closely at DeFi.
On Friday, the Office of the Comptroller of the Currency proposed regulatory changes that would give cryptocurrency businesses more access to banking services. The proposed rule change would limit national banks’ ability to deny financial services services to money services businesses such as cryptocurrency firms – or any other category of business – unless they fail to meet certain quantitative, risk-based criteria. Marco Santori, Chief Legal Officer for cryptocurrency exchange Kraken, tweeted to his public account that this effectively includes crypto companies, although worth noting the article doesn’t mention crypto.
Finally, Custodian Anchorage confirmed it is seeking a national charter from US Bank regulator OCC. According to a notice dated 9th November the startup’s trust company unit, based in South Dakota, has applied to the OCC to convert to a national bank and posted to the federal regulator’s website.
PODCAST: CRYPTO BANKING, DEFI AND CBDCs
BCB Group’s Ben Sebley joined the Coinpass podcast to discuss crypto banking and the landscape for businesses operating in the crypto space, DeFi yield and its attractiveness to institutional investors and central bank digital currencies.
Watch the full video here.
BCB publishes a weekly recap of the top crypto news stories and a monthly regulatory recap. To sign up, please visit: https://www.bcbgroup.com/contact-us/