21Shares Research Newsletter - Issue 66

Market Outlook

Over the last week, large cap cryptoassets saw a continued surge with Bitcoin (BTC) briefly hitting over $12K over the weekend, and Ether (ETH) surged past $400. In many ways, this recent market uptick can be argued to be driven by increasing demand for Ethereum-based Decentralized Finance (DeFi) assets and Ether itself, which plays an important role in the DeFi ecosystem. Over the last week, Ether was up 21.22% compared to 2.66% for Bitcoin.

In many ways, this bull run can be seen as Ether-driven given the fact that it was driven by an interest in Ethereum-based assets and due to the fact that the recent market has led to a drastic increase in trading volumes for Ether, whilst Bitcoin’s volume has been less responsive. The chart below compares the “Real Volume” (as measured by Messari) for both Bitcoin and Ethereum.

As you can see in the chart above, Ethereum’s volume compared to total Ethereum and Bitcoin volume rose from 27% in early July to 45% a month later. In a similar way to the last bull market in 2017, innovation on Ethereum seems to be the driver behind this potential new bull market even though it is still early days. Innovation on Ethereum coupled with the much more robust and developed market for both Bitcoin-based derivatives and institutional vehicles, such as our suite of ETPs, places the industry in a good position for a potential new inflow of capital in the coming months.

Weekly Returns

The performance of the top five cryptoassets was as follows: BTC (2.66%), ETH (21.22%), XRP (33.75%), BCH (1.77%), and BSV (5.32%).

Media Coverage

We're excited to release the latest edition of our State Of Crypto report! It's time for Plan B. The 21Shares team is excited to release 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're also excited to announce the launch of our new State of Crypto webinar. In the webinar, the 21Shares team will offer an overview of both crypto and traditional markets, whilst explaining the current state of the market relates to our thesis for the continued growth for Bitcoin. In addition, the team will give a brief explanation of what Bitcoin is and how it works. Sign-up at the links below to join our webinar on August 11 Tuesday which will be presented in English, French, and Italian:

21Shares State of Crypto Webinar (EN) — August 11, 12 PM CET Webinar sulle criptovalute di 21Shares (ITA) — August 11, 1 PM CET Le 21Shares Webinaire sur L'Etat des Crypto-actifs (FR) — August 11, 2 PM CET

News - U.S Economy Suffers Sharpest Postwar Contraction in Second Quarter | The Financial Times

What Happened?

The US economy contracted by the most in postwar history in the second quarter as unprecedented shutdowns closed businesses and left millions of Americans out of work during the pandemic.

Gross domestic product, or the value of all goods and services produced by the economy, shrank at an annualised rate of 32.9%, according to a preliminary estimate from the Bureau of Economic Analysis on Thursday. That was smaller than economists’ forecast for a 34.1% decline. The economy contracted 9.5% compared with the preceding three months, which is the metric used by other major economies. The data landed just a day before the expiry of supplemental jobless aid for the total 17M unemployed.

What Does It Matter?

The economic data presented by the Financial Times should be of little surprise given the difficulty with which the US has handled the coronavirus pandemic and the toil lockdowns have had on the economy. Markets have remained strong due to both the ability of incumbent internet monopolies to use the downturn to claim a larger share of the economy and the actions of the Federal Reserve — in the form of asset purchases and quantitative easing. However, the same optimism held for the market has not trickled down to the Real Economy in the slightest and there is little evidence to suggest that this will change.

A key economic point to track in the coming weeks is the impact of Congress’ failure to extend the $600 per week federal unemployment benefit and its moratorium on evictions. While Congress’ response to the crisis has been far from optimal, these two policies had been useful in staving off the worse effects of the recession.

Learn more here.