Crypto Market Soars as Smart Contracts Outperform

Market Outlook

Over the last week, the crypto asset market has largely recovered from the previous dip and, in general, surpassed all recent all-time-highs, especially when one looks at ETH, DOT, and BNB. Bitcoin has struggled to break through resistance at the $60K mark but remains at healthy levels nevertheless.

We are relatively optimistic for smart contract platforms as potential outperformers over the next few months — on the back of solid growth in scalability, use cases such as NFTs, and the continued emergence of decentralised finance. ETH, BNB, DOT, and ADA can all be considered smart contract platforms, and their Bitcoin-outperforming performance to date is a testament to the strong value proposition of such platforms.

Weekly Returns

The returns of the top five crypto assets over the last week were as follows — BTC (0.12%), ETH (14.05%), BNB (18.45%), DOT (34.69%), and ADA (-0.13%).

Monthly ETP Returns

The performance of our line of ETPs over the last 30 days is as follows: ABTC (20.5%), AETH (24.9%), ABCH (9.4%), AXRP (30.9%), ABNB (27.4%), AXTZ (36.2%), HODL (15.1%), ABBA (24%), KEYS (18.9%), SBTC (-20.3%), and ADOT (8.5%).

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Media Coverage

Our comments on the launch of Bitcoin micro-futures contracts by the CME featured in Milano Finanza, the most important financial newspaper in Italy after Il Sole 24 Ore. You can read the full article here.

Our CEO, Hany Rashwan, was featured in Fonds Professionell to discuss the burgeoning cryptoasset industry’s adoption. Give it a read here.

Our research note on valuing Bitcoin over the long term featured on BoerseOnline, here.

Crypto Valley Journal featured our monthly review for March. You can read it here.

News - Fidelity, Square, Coinbase Launch Bitcoin Trade Group | The Wall Street Journal

What Happened?

A consortium composed of asset management giant Fidelity, the US leading crypto exchange, Coinbase, and financial services company, Square has just launched the Crypto Council for Innovation (CCI). CCI is a global alliance with the mission of communicating the benefits of cryptoassets to policymakers, regulators, institutions, and people. In the pursuit of this purpose, the Crypto Council for Innovation will publish research to educate more broadly, demystify misconceptions and help push forward crypto-related policies and solutions that could unlock the transformational potential of the crypto industry.

"Fidelity Investments, Square Inc., and several other financial firms are forming a new trade group that aims to shape the way bitcoin and other cryptocurrencies are regulated." — The Wall Street Journal

Why Does It Matter?

The cryptoasset industry has reached new heights with an accelerated rate of adoption across the board. The entire industry is now valued at over $2 trillion, while in early January this year, it crossed the $1 trillion mark for the first time in history. In 3 months, the industry has doubled its entire value. To put things in perspective, it took Apple about two years from 2018 to 2020 to break the $2 trillion mark from $1 trillion in market value. Although the crypto industry is growing at a much greater pace, we are still in the early innings of the crypto-focused technologies’ adoption lifecycle, with only over 100 million crypto users out of 4 billion Internet users — around 2.5% of the Internet population.

For the industry to reach over 1 billion crypto users, it will also require regulatory clarity and sound policies showing a clear understanding of the value proposition of crypto-enabled applications, which by design are trustless, open-source and accessible anywhere with an Internet connection. Most importantly, these policies should benefit the involved stakeholders of such applications and use cases — and this is why CCI exists to educate and collaborate with policymakers around the world.

Traditional service providers are already embracing technologies coming from the crypto industry. For example, Visa will eventually enable its network of consumers, businesses, banks and governments to use USD Coin (USDC), the fastest-growing digital currency of which the value is pegged to the US dollar — while the transactions will settle over Ethereum. This endeavour is a testament to the fact that conventional finance seeks for tapping into the innovation behind the crypto infrastructure. Paypal will allow its user base to convert its cryptoassets into fiat currencies over its +29-million merchant network prior to making any purchase. Last week, on the final note, Her Majesty's Revenue and Customs (HMRC), the UK's tax, payments and customs authority, published a guideline on crypto-related tax treatment. HMRC concluded the guideline with an overly optimistic line on cryptoassets: "On its own, owning and using cryptoassets is not illegal in the UK and does not imply tax evasion or any other illegal activities."

As the industry matures, the CCI understands that due to the open-source nature of crypto use cases, it will ideally require a globally coordinated regulatory approach to treat crypto applications and protocols akin to the treatment of the Internet protocol suite. At 21Shares, we will closely monitor all the efforts being made and leave a positive mark on that front.

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