21Shares Research Newsletter - Issue 87

Market Outlook

The big event from this week has been the news that the US Securities and Exchange Commission (SEC) is preparing to sue Ripple Labs, the creator of one of the world's most popular cryptoasset — XRP.

According to Fortune, the lawsuit is due to be filed soon wherein the SEC will investigate Ripple Labs’ sales of the XRP cryptoasset, under the suspicion of them being unregistered securities sales. Ripple Labs’ co-founder Brad Garlinghouse was quoted as saying: “It’s an attack on the entire crypto industry and American innovation.” XRP, which has performed exceptionally well over the last two months, has fallen nearly 9% in reaction to the news.

This comes off the back of Bitcoin once again breaking all-time-highs during the week, reaching new highs of $24K. Given Bitcoin's sustained performance over the last year and its increasing institutional adoption, it is likely that 2021 will be an overwhelmingly positive year for the cryptoasset.

Weekly Returns

The returns of the top five cryptoassets over the last week were as follows — BTC (18.04%), ETH (4%), XRP (10.83%), LTC (29.64%), and BCH (9.60%).

Monthly ETP Returns

The performance of our line of ETPs over the last month is as follows: ABTC (5.9%), AETH (-3.4%), ABCH (-3.7%), AXRP (-12.8%), ABNB (-3.7%), AXTZ (-13.3%), HODL (-1.7%), ABBA (1.9%), KEYS (3.4%), and SBTC (-7.1%).

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Media Coverage

Our Managing Director, Laurent Kssis, was interviewed by Fonds Online where he gave his insights into the growing interest in cryptoassets investments within the German and Austrian markets. Read the full interview here.

Our Head of Southern Europe, Massimo Siano, featured in Focus Risparmio discussing the recent uptick in interest of Bitcoin among Italian investors. Read the full article here.

We appeared in the renowned Italian journal L’economia where we discussed the patterns observed this year with regards to increased institutional adoption and what this would mean going forward as Bitcoin continues its unprecedented adoption as a superior alternative to gold. Read the full article here.

Bloomberg Intelligence published a report on Europe-focused crypto ETPs where our product suite was mentioned, as the total amount in AUM of all ETPs in the crypto market surpassed 1 billion euros. Read the full report here.

"Cryptocurrency-linked exchange-traded products in Europe have surpassed 1 billion euros in assets this year, a level that we believe cements the category as a serious driver of industry growth."

News - Hacked Ledger Database Dumped On Raidforums | Decrypt

What Happened? The leading French hardware wallet manufacturer, Ledger, was the victim of a considerable data breach of its e-commerce database earlier this year — of which the contained information became publicly available last week on December 20th. The hackers were able to get their hands on over 1 million email addresses alongside having access to more than 250,000 names, physical addresses and phone numbers. Although the funds of these customers are safe, the attackers took on the opportunity to start selling over 69% of the full leak on the data-breach marketplace, Raidforums, in recent days.

Why Does It Matter? Alas, this data leak has resulted in various attacks targeted at Leger’s customers who for some have received ransomwares and a significant amount of convincing phishing attacks. The wider crypto community has expressed concerns over potential physical attacks down the line, especially due to the fact that Bitcoin has started to become accepted as an alternative to gold among financial institutions — transpiring into its continued uptrend in price.

In 2017, whe Bitcoin broke its previous all-time high of $1K, the price surged to over 17x. If this is the case, at the time being, the asset could eclipse the $100K mark going forward, especially due to the fact that since September — according to the market intelligence firm Chainalysis — new investors holding at least $20 million of bitcoin each have in total acquired half a million bitcoin, currently worth $11.5 billion. The most recent public case is One River Asset Management which invested over $600 million in Bitcoin.

Although the ethos of “Be Your Own Bank”, or the self-custody of cryptoassets, is appealing to the more tech-savvy demographics of this industry there are risks associated with handling the security and custody of one’s own private keys (analogous to secret codes to a safe) for their Bitcoin and not just sophisticated attacks but also natural disasters, and theft. Another example similar to the Ledger news is an incident associated with Shapeshift which publicly reported a fake version of their KeepKey app — a cryptoasset hardware wallet — asking users for their 12-word seed phrase providing authority over who can spend the cryptoassets in the wallet.

Three years ago, 21Shares’ founders began the mission of launching a suite of fully physically-backed ETPs such as ABTC as a solution to their frustrations with the lack of safe and user-friendly services for their families and other investors to invest in and safely store Bitcoin. As such, making cryptoassets as easy to buy as stocks — which therefore facilitates easy and safe exposure to the growth and maturation of the burgeoning crypto market is our number one priority.

At 21Shares, we believe that the most crucial problems to work on are often the ones almost nobody else even tries to solve. As the industry matures, and the stakes are getting higher, we anticipate a continued rise in sophisticated hacks, which will undoubtedly result in a greater growth in institutional-grade products such as 21Shares’ ETPs for investors willing to grow and most importantly preserve their wealth through their bank and online brokers. At the moment ETPs represent only a mere 2% of the total crypto market value but we expect the share to augment over time.

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