21Shares Research Newsletter - Issue 94

Bitcoin jumped to a record price of over $48,000 as Tesla invested $1.5 billion as stated in the Form 10-K — an annual report required by the U.S. Securities and Exchange Commission (SEC) that gives a comprehensive summary of a company's financial performance submitted by Tesla:

“*As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future. Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term. Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.*”

The news drove to the largest candle in Bitcoin history of $8,871, with the price rising from $38,058 to $46,929 — almost ten years after Bitcoin traded for the first time over $1 on February 9, 2011.

The rise of Bitcoin’s price also led to large short liquidations yesterday for traders betting on the fall of the cryptoasset. For example, $57 million shorts were liquidated on the Malta-based cryptocurrency exchange, OKEx.

We believe there’s a significant amount of room for growth. Indeed, given the fact that the proportion of investment portfolios invested in cryptoassets for high net worth individuals worth over $30 million represents only 1% according to the Wealth Report Attitudes survey. This figure is a testament to the fact that we are still early innings in the adoption cycle of Bitcoin and the rest of the crypto market with 100 million users, which account for less than 3% of the Internet population of over 4 billion people.

At 21Shares, we expect continued corporate and institutional Bitcoin adoption going forward, as stated in our year-end review, which will eventually reflect in the price appreciation of Bitcoin that could reach over $100,000 per coin if this bull market behaves like previous ones (in the chart below, the red dot is where we are at the moment). In fact, given the level of adoption of the crypto asset, with its historically reputational damage for illicit use cases that account for less than 0.4% now, we believe we have entered a new adoption era for the crypto market to reach over 1 billion users.

For instance, yesterday, the Federal Reserve of St Louis published a paper on Decentralized Finance, stating that DeFi may contribute to a more robust and transparent financial infrastructure. In the same vein, Miami is considering allowing city employees to get their salaries paid in bitcoin alongside paying their local fees and taxes. Finally, the city’s treasury might place some of its investment capital into bitcoin which would be a first for major cities in the United States and perhaps in the world.

The returns of the top five cryptoassets over the last week were as follows — BTC (29.57%), ETH (14.39%), DOT (33.92%), XRP (20.81%), and ADA (59.51%).

The performance of our line of ETPs over the last 30 days is as follows: ABTC (48.6%), AETH (83.6%), ABCH (16.9%), AXRP (70.9%), ABNB (133.3%), AXTZ (43.1%), HODL (68.9%), ABBA (54%), KEYS (51.7%), and SBTC (-45.1%).

Learn more about our products here.

Our Managing Director, Laurent Kssis, has been invited tomorrow on February 10 by the Crypto Valley Association to discuss the state of the cryptoasset industry regarding the adoption of institutional-grade products like ours. Sign up here to attend. You don't want to miss this high-level deep dive!

Our Research Associates — Lanre Ige and Eliezer Ndinga featured in Trending Topics where they gave our investment case for Ethereum and commented on its recent price appreciation. You can read the full article here.

"There are three main reasons for this: The increasing popularity of Ethereum in decentralised finance, courageous institutional capital inflows and increasing awareness of crypto assets, driven by the importance of Web 3.0 and new niche markets such as digital art."

Our monthly review for January featured in Crypto Valley Journal. The first month of the year 2021 was filled with unforgettable events, which set the tone for the remainder of the year. Give it a read here.

Our Managing Director of Southern Europe, Massimo Siano, featured in La Stampa explaining the adoption cycle of Bitcoin and Ethereum as the main settlement layer for decentralised applications. You can read more about it here.

What Happened?

With more than $500 million in assets under management, 21Shares is part of global ETPs’ exclusive club.

**Why Does It Matter?**

In the span of less than two years with the listing 12 crypto ETPs on stock exchanges, serving all European investors, we have finally joined the exclusive and prestigious club of global ETFs/ETPs with over US$500 million in assets under management. Since November 2018, we have quickly established our brand as a pioneer of Exchange Traded Products (ETPs), starting with listing HODL, the world's first ETP backed by a crypto basket.

By closely listening to investor demand and quickly adapting to the burgeoning crypto asset market, we offer an innovative and unique platform with ETPs listed on the largest regulated exchanges in several European countries to satisfy any investor type. Indeed, with an extended range of 12 cryptos ETPs under our wing, we enable anyone to invest in individual ETPs for Bitcoin and Ethereum with ABTC or AETH, but also in crypto baskets with HODL or KEYS and finally even in an inverse ETP called SBTC that tracks the daily inverse performance of Bitcoin for any adventurous investor who wants to possibly profit in the short term from the fall of Bitcoin's price. As a result, 21Shares is growing at a tremendous annual rate, with capital movements coming mainly from recognized financial institutions.

Innovation and a sense of urgency are at the very heart of our culture at 21Shares, as our mission is to enable any type of investor to access in a regulated, secure and straightforward way the US$1 trillion+ crypto-asset industry. Our fine structure and wide range of ETPs provide institutional and retail investors with the most secure and convenient access and liquid exposure to this new asset class, which has been the fastest-growing over the past decade. Despite competition from new market entrants that largely replicate 21Shares' existing structures, we have continued to spearhead innovation in this area. 21Shares aims to continually bring new and innovative products to market, making investing in cryptoassets easier than ever. For example, last week we launched the world's first Polkadot (ADOT) tracker on the SIX Swiss stock exchange, which currently has over $6M in AUM.

This disruptive industry that is revolutionising both traditional finance and the tech sector is a global movement. With its expensive experience in these areas, our team is a pillar in meeting the market demand. We have more than half a dozen nationalities in our workforce, each of which is fluent in at least two or even three languages.

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.