21Shares Research Newsletter – Issue 105
Following a difficult week and weekend within the cryptoasset market, Bitcoin and other large caps have largely recovered. Ethereum especially showed notable strength based on the back of user anticipation of scalability solutions and Ethereum’s planned economic upgrade which would turn it into a deflationary commodity.
The strong performance of assets such as Ethereum, BNB, and DOT especially comes in the wake of news of Tesla selling $272M worth of Bitcoin whilst reaffirming long-term commitment to the asset. Tesla, Elon Musk’s electric vehicle manufacturer, had bought $1.5B worth of Bitcoin in January whilst allowing customers to use the cryptoasset to pay for its products.
The fact that the cryptoasset market was able to sustain a large amount of selling pressure, and the news of Tesla reducing its position, is a signal of the strong underlying bid for Bitcoin and the overall resilience of the market. News of JP Morgan launching an actively managed product for their clients adds credence to this thesis.
For the record, 71.4% of the traders that bought Bitcoin between 1 week ago and 6 months sold their positions during this market drawdown from $64K down to $48K. On the chart below, over 33% of that cohort bought BTC between 1 month and 3 months ago. Included in this portion of the market are long leveraged traders that got liquidated on unregulated venues where they can trade the underlying asset for over 100x. But there's also certainly active funds that perform rebalancing on a quarterly basis (ie, hedge funds).
As the number of small bitcoin holders (less than 1 BTC per address) has been on the rise since late December last year, it shouldn't come out as a surprise that some of these sellers are part of the retail cohort. Indeed, the price of Bitcoin is up 3x from $19,000 which triggers profit-taking across the board as we have seen in the case of Tesla.
The returns of the top five crypto assets over the last week were as follows — BTC (-4.48%), ETH (8.48%), BNB (-8.56%), DOT (-5.68%), and ADA (-2.28%).
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%).
You can learn more about our products here.
Did you get the chance to read our Cardano and Stellar primers? These 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 analyse the immediate risks associated with investing in Cardano and Stellar. You can find the reports in our research portal here.
Our research associates, Eliézer Ndinga and Lanre Ige featured in Trending Topics to discuss the potential consequences of Coinbase’s direct listing for the rest of the crypto industry. Have a read here. They also featured in Die Presse here.
Fonds Professionell featured our products amongst the list of institutional-grade products listed in regulated venues in Germany such as Xetra. Give it a read here.
Should business owners and corporate treasuries invest in Bitcoin? Frankfurt School Blockchain Center is organising a panel discussion with renowned experts including our very own Head of Switzerland, Sina Meier, to recap the developments of the past months in fintech and provide an outlook for the future of #Bitcoin investments on Thursday, April 29, from 17:00 - 18:00 (CEST). Register here.
Bluerating featured our stock splits. You can have access to the article here
What Happened?
We are excited to launch the first Stellar (AXLM) and Cardano (AADA) ETPs in the world! Learn more about both ETPs on our website here. Have a read of our latest Stellar and Cardano research primers in our research portal as well!
Why Does It Matter?
The Cardano ADA ETP (AADA SW; DADA GS) and Stellar XLM ETP (AXLM SW; XLME GS) have listed on SIX Swiss Exchange in US dollars and on Boerse Stuttgart in euros.
Cardano is a smart contract platform enabling developers to build decentralized applications. Unlike other leading smart contract platforms such as Ethereum, Cardano powers its transaction settlement using a proof-of-stake algorithm, a structure considered less risky in terms of the potential for miners to attack the network. Cardano was developed by ethereum co-founder Charles Hoskinson and conducted its first settlements in 2017. Its native token, ADA, is currently ranked as the sixth-largest cryptocurrency globally with a total market cap exceeding $38 billion.
Stellar, meanwhile, is a purpose-built blockchain enabling the transfer of any assets and allowing developers to build low-cost financial services on the platform. Stellar was founded in 2014 by Jeb McCaleb, co-founder of Ripple, and has since processed more than 450 million operations made by over 4 million users. Its native token, lumen (XLM), a utility token for the payment of the platform’s transaction fees, is currently ranked as the seventeenth-largest cryptocurrency globally with a market cap of around $10.5bn.
The ETPs offer institutional investors easy access to ADA and XLM through liquid, regulated vehicles without the technical challenges of setting up private keys or crypto wallets. The ETPs use full direct, so-called ‘physical’ replication with each share being 100% collateralized by a corresponding investment in ADA or XLM. Each unit of the Cardano and Stellar ETPs will be backed by approximately 16 ADA and 40 XLM, respectively, at launch.
Physical (in a digital sense) tokens are stored using institutional-grade custody solutions with Kingdom Trust and Coinbase providing custody services for ADA and XLM respectively. Both ETPs come with management fees of 2.50%.
Learn more here.
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
