21Shares Research Newsletter - Issue 67

Market Outlook

Today it was reported that publicly-traded business intelligence firm MicroStrategy had purchased 21,454 bitcoin, effectively pouring all $250 million of its planned inflation-hedging funds into the cryptoasset. While unexpected, we should expect this to be the start of a growing trend of corporations and large investment funds allocating significant amounts of capital to Bitcoin as an inflation hedge. Investors are increasingly comfortable with making large investments in Bitcoin given its performance during its toughest test since the March 12 flash crash where it has returned 139.36% — greatly outperforming the leading Big Tech stocks and even Gold.

Since Paul Tudor Jones’ comments on Bitcoin as “the fastest horse” and the revelation of his 1-2% position in the asset, it is no longer unusual for asset managers to make allocations to the asset. Due to the heating up of the crypto market due to the growth of Decentralized Finance (DeFi) and the current macroeconomic climate, now presents a promising opportunity for asset managers to stand out by adding Bitcoin to their portfolio.

Weekly Returns

The large cap cryptoassets performed as follows: BTC (5.96%), ETH (1.21%), XRP (-2.12%), BCH (4.64%), and BSV (-0.674%).

Media Coverage

Did you get the chance to read the latest edition of our State Of Crypto report?
Last week, we released Issue 3 of our State of Crypto report. In this report, the research team provides an overview of the crypto market over the last few months, a primer on Bitcoin, and a report explaining the main valuation techniques for Bitcoin. You can access the report on our website or on our LinkedIn page.

Send an email to [email protected] if you’d like to receive a physical edition of the report.

We just had our first edition of the State of Crypto webinar. Our 21Shares team offered an overview of both crypto and traditional markets, whilst explaining how this relates to our thesis for the continued growth for Bitcoin. In addition, the team gave a brief explanation of what Bitcoin is and how it works. Stay tuned for the recordings.

News - Hong Kong's Wealthy Move Gold Out of City on Security Law Fears | The Financial Times

What Happened?

According to the storage provider, J Rotbart & Co, more than 10% of gold stored in Hong Kong over the past 12 months has been moved out to democracy-friendly countries chiefly Singapore and Switzerland amidst the fear of heightened legal and political risk due to the passing of the national security law imposed by the Chinese government. This is a phenomenon that intensified this past week partly due to the lingering uncertainty brought up by COVID19 on the global economy in the midst of new caseloads, leading the price of gold hitting $2,000 per ounce.

Why Does It Matter?

In a similar vein, Bitcoin reached for the first time this year the $12,000 mark, returning around than 140% since the market crash on March 12, becoming the best performing asset compared to gold as the latter has returned less than 40% in the same time frame. The clear advantages of Bitcoin over gold are becoming more apparent, leading investors to lean towards Bitcoin to grow wealth. In fact, in an intensely digitalized world, Bitcoin’s storage method which is agnostic to human contact makes it appealing for global investors to move funds within seconds instead of up to 5 days with gold as indicated by the Royal Mint. While gold has the advantage of time under its belt, Bitcoin as a new asset class is leaving a hallmark in portfolio allocation strategy. This is a phenomenon that will keep growing over the next decade.

Learn more here.