Ethereum Surpasses $400B Mark: A New Crypto Era

Market Outlook

For the first time in history, ETH crossed the $400 billion mark in market value and is currently trading at over $3.5K. This is about 2.7 times its previous all-time high price reached in mid-January 2018 around $1.3K. Since the start of this year, Ethereum is up 377% while Bitcoin has a year-to-date performance of 103%.

While the institutionalization of the Bitcoin market as an emerging store of value has been all over the news, the institutional adoption of Ether (ETH) — Ethereum's cryptoasset is underestimated and has started since the end of Q4 last year. We are witnessing the early innings of the institutional adoption beyond Bitcoin with Ethereum. There's no other medium to find the truth than the Ethereum blockchain where at 21Shares, we identified the sharp rise in the number of wallets with at least 10K ETH (~$33 million) which is a testament to this trend. On the other hand, smaller wallets with between 10 and 1K ETH have significantly decreased as market participants took profits to invest in the long tail of decentralized-finance cryptoassets.

Professional investors have started to realize the value brought forth by Ethereum as the most dominant settlement layer processing over 1 million transactions daily and as the most engaged developer platform for building crypto-native financial services (DeFi). Like a stamp of approval, a few weeks ago, Rothschild Investment Corporation invested over $4 million in Ether. The innovation rate on top of Ethereum is also fast-paced and conventional finance recognizes the potential of this technology. For example, last week, the European Union's investment arm, the European Investment Bank, issued bond tokens on Ethereum by raising 100 million euros from fewer than ten investors. Goldman Sachs, Banco Santander, and Societe Generale handled the sale of the bonds.

“Blockchain technology and the tokenization of bonds is a game-changer for the industry. The settlement and clearing process is significantly easier and more efficient.” said Christoph Hock, head of multi-asset trading at Union Investment in Frankfurt, who participated in the issue.

Another reason for this spectacular rise is the fact that ESG (Environmental, social and corporate governance) and climate risks are dominant topics amongst asset managers, which Ethereum will undoubtedly benefit from.

Indeed, in July, Ethereum will experience a network upgrade called Ethereum Improvement Proposal (EIP) 1559. The latter will make Ether, to some extent, a scarce cryptoasset by reducing the circulating supply of Ethereum at each transaction by burning a base fee as ETH is required to pay transaction fees. Additionally, with the upcoming switch to Proof of Stake potentially happening sometime in Q4 this year, which by design consumes less energy than Proof of Work systems, there's a growing narrative around Ethereum as a scarce ESG-compliant digital commodity. Not necessarily analogous to gold, akin to Bitcoin, but defining Ethereum as the fuel or energy asset to the Ethereum economy composed mainly of crypto-native financial services (DeFi) and digital media and art (NFTs).

Weekly Returns

The returns of the top five crypto assets over the last week were as follows — BTC (-2.09%), ETH (0.28%), BNB (0.57%), XRP (-5.61%), and ADA (-1.89%).

Monthly ETP Returns

The performance of our line of ETPs over the last 30 days is as follows: ABTC (0.17%), AETH (51.15%), ABCH (67.27%), AXRP (122.23%), ABNB (114.86%), AXTZ (22.57%), HODL (8.26%), ABBA (5.43%), KEYS (9.42%), SBTC (-4.47%), and ADOT (2.55%).

Media Coverage

Did you get the chance to read our Cardano and Stellar primers?

Those reports will explain what Cardano and Stellar do and what their main use cases are. Also, we will explain the primary methods by which to value these cryptoassets and analyze the immediate risks associated with investing in Cardano and Stellar. You can find the reports in our research portal. In the same vein, the financial journal, Onvista mentioned our Stellar and Cardano products in their recent article here.

Our research associates, Eliézer Ndinga and Lanre Ige featured in Trending Topics to discuss the outlook of the crypto market after Telsa sold a single-digit portion of their positions.

Crypto Valley Journal (CVJ) featured our monthly review for April. You can read it here.

Beverly Chandler of ETF Express featured the comments of our Global Head of ETP, Laurent Kssis on the outstanding growth of our Binance ETP alongside the addition of new 21Shares ETPs. Read the full article here.

News - S&P Dow Jones Indices Launches Cryptocurrency Index Series Including S&P Bitcoin Index | S&P Global

What Happened?

The world’s leading index provider, S&P Dow Jones Indices (S&P DJI), a joint venture between S&P Global, the CME Group, and News Corp, has officially launched the S&P Digital Market Indices. The latter is a new series of three digital asset benchmarks, later this year S&P DJI will launch more broad-based indices to meet investors' demand.

• The S&P Bitcoin Index measures the performance of Bitcoin. The S&P Ethereum Index measures the performance of Ethereum. The S&P Crypto Mega Cap Index measures the performance of Bitcoin and Ethereum.

Why Does It Matter?

The S&P Digital Market Indices are the first crypto indices launched by the company behind the world’s best-known indices — the S&P 500 and the Dow Jones Industrial Average (DJIA), which were created in 1957 and 1896, respectively.

This is an important milestone for the professionalization of the cryptoasset market as conventional finance has started to gradually invest an aggregated amount of over a billion dollars in Bitcoin and also more recently in Ethereum. These two assets will serve as the benchmarks for pension funds, money managers, and the more active investors that will compare their performance against Bitcoin, Ethereum, and some more specific investment themes in the future with the rise of Decentralized Finance and other sectors dubbed as the web 3.0.

"As cryptocurrency becomes more mainstream, investors now have access to reliable and transparent benchmarks backed by institutional quality pricing data. We look forward to further expanding our new family of Digital Market Indices and bringing much needed transparency to this exciting market." — Peter Roffman, Global Head of Innovation and Strategy at S&P Dow Jones Indices.

Learn more here.