Institutions remain bullish on Cardano and Ether while BTC outflows persist

August 31, 2021 Coin Telegraph

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Ethereum and Cardano continue to dominate inflows to institutional crypto investment products while demand for BTC weakens.

Institutional inflows to altcoin investment products have continued to increase this past week, but the same cannot be said for Bitcoin.

In its Digital Asset Fund Flows Weekly report on Aug. 30, institutional asset manager CoinShares identified overall inflows of $24 million to altcoin-based investment products. The capital flows mark the second consecutive week of inflows to altcoin funds, with investments into altcoin products increasing by 14.3% compared to last week’s $21 million.

Ether was the favored asset among institutional investors, with ETH-based products posting a weekly inflow of $17.2 million. The report noted that products tracking Ethereum and other altcoins now represent 32% of the sector’s total assets under management (AUM) — just 3% shy of mid-May’s record of 35%.

Cardano-based institutional funds posted record weekly inflows with $10.1 million, representing 32% of the week’s total altcoin inflows. Cardano-based instruments now hold 0.15% of the capital locked in crypto investment products combined.

The surge in Cardano inflows is attributed to anticipation for its Sept. 12 "Alonzo" upgrade which will see the project launch smart contract functionality for the first time.

Polkadot and Solana-based funds also saw inflows with $1.5 million and $2.7 million respectively. Solana has now surpassed Bitcoin Cash for assets under management in related funds with $16 million, ranking ninth in terms of AUM with BCH funds in tenth.

Despite the bullish momentum surrounding altcoins, the report noted that Bitcoin products continue to see outflows, with a loss of $3.8 million for the period. As such, Bitcoin products have posted outflows for 14 of the past 16 weeks.”

CoinShares estimates that institutional asset managers currently represent an AUM of $56.8 billion combined — attributing the slight week-over-week drop in sector-wide AUM to persistent outflows from Bitcoin-based products.

Looking at the performance of fund issuers, CoinShares’ own Bitcoin fund saw the heaviest losses this past week with an outflow of $14.5 million. ETC Issuance saw the largest inflow at $14.1 million.

US Global Investors bought crypto exposure through Grayscale funds

August 30, 2021 Coin Telegraph

Business

The investment firm already has significant exposure to gold, minerals, precious metals, petroleum, and other natural resources.

Texas-based investment manager U.S. Global Investors, which reported $4.6 billion in assets under management as of Q1 2021, has bought exposure to Bitcoin.

According to Aug. 30 filings from the U.S. Securities and Exchange Commission, U.S. Global Investors added more than $566,389 worth of shares of Grayscale Bitcoin (BTC) Trust, or GBTC, to three of its eight mutual funds as of June 30. The filings show the company invested $302,899 GBTC in its Gold and Precious Metals Fund, $222,532 in its World Precious Minerals Fund, and $40,958 in its Global Resources Fund.

The Bitcoin exposure represents up to 0.19% of the net assets in the funds given the Gold and Precious Metals Fund alone has roughly $158 million in assets under management. However, it is a seemingly surprising investment from a firm that has significant exposure to gold, minerals, precious metals, petroleum, and other natural resources. U.S. Global Investors also classified the GBTC as common equity.

"This is not a surprise nor does it indicate a shift in the way other gold equity managers view crypto or Bitcoin," said gold bug Peter Schiff, who noted that the CEO of U.S. Global Investors, Frank Holmes, is also the executive chair of crypto mining firm Hive Blockchain.

Holmes, a gold bug like Schiff, has previously predicted that the prices of Bitcoin and Ether (ETH) could reach $80,000 and $3,000, respectively, in 2021. Though Bitcoin hit an all-time high price of $64,899 in April, the price of ETH went well above the CEO’s prediction, reaching an all-time high of $4,384 in May.

For whatever reason — hedging bets on inflation, responding to investor interest — other major investment firms have purchased GBTC. Morgan Stanley’s Insight Fund owns roughly 928,000 shares of Grayscale’s Bitcoin Trust, and SEC filings show Edge Wealth Management, JPMorgan Chase, Ark Invest, and Rothschild Investment Corporation also have exposure to BTC through Grayscale.

Morgan Stanley Owns Over One Million Grayscale Bitcoin Shares

August 26, 2021 The Crypto Briefing

Grayscale Bitcoin Trust FUD is now over as the last GBTC unlock totals just 58 BTC

August 26, 2021 Coin Telegraph

Bitcoin

What was once a major bearish narrative exits via the tradesman's entrance after failing to have any impact on Bitcoin markets.

Bitcoin (BTC) investment vehicle the Grayscale Bitcoin Trust (GBTC) completed its share unlockings this week, ending a major talking point both inside and outside crypto.

Data from monitoring resource Bybt confirms that as of Aug. 26, no more unlockings are scheduled.

Bitcoin shrugs off another FUD narrative

Unlocking events at GBTC have continued throughout 2021, and at one point formed the focal point for bearish BTC price predictions.

With the equivalent of tens of thousands of BTC released at a time, some feared that selling pressure would explode, sending sentiment tumbling.

This never occurred, and as Cointelegraph reported, there was little logic in the fear from the outset, as Grayscale itself does not allow clients to cash in shares for Bitcoin.

Wednesday, the final unlocking date, involved the equivalent of just 58 BTC. The largest single date, July 18, by contrast, involved 16,240 BTC.

As such, the bearish narrative around Grayscale died out with a whimper rather than a bang. The next series of unlockings is not scheduled until 2022.

"Remember when all the traditional analysts said the Grayscale unlock would unleash billions in selling this last week? Yeah, no," statistician Willy Woo said last month when it was already clear that the market was not being moved by the events.

Morgan Stanley bets big on GBTC

The culmination comes as data reveals that traditional banking giant Morgan Stanley has joined those with a considerable GBTC investment.

In filings with the United States Securities and Exchange Commission (SEC) this week, the bank reported over 928,000 GBTC shares were owned by its Insight Fund alone.

It joins fellow bank JPMorgan Chase, along with the famously pro-Bitcoin ARK Invest as recent buyers. GBTC continues to trade at a discount to Bitcoin spot price, with its shares 13.3% cheaper as of Thursday.

*GBTC holdings, premium and marker price chart. Source: Bybt*

Institutional investors bet big on Solana while BTC outflows persist

August 24, 2021 Coin Telegraph

Coin Telegraph

Solana represented one-third of total inflows to institutional crypto investment products this past week.

Institutional investors are loading up on Solana (SOL), with one-third of inflows to crypto investment products being invested in instruments tracking Solana this past week.

According to CoinShares’ Aug. 23 Digital Asset Fund Flows Weekly report, $7.1 million flowed into Solana investment products between Aug. 15 and Aug. 20.

While the price of SOL gained a megre 1.4% on the spot markets over the same period, SOL has gained 110% from $35.58 since the start of August to trade for $75 as of this writing.

CoinShares’ report notes that institutional crypto investment products bucked a six-week trend of outflows, with roughly $21 million flowing into the sector this past week.

Products tracking Cardano (ADA) were the second-most popular for the week with inflows totaling $6.4 million. Institutions also poured $3.2 million into products tracking Ethereum (ETH), $1.8 million into Litecoin (LTC), and $1.1 million into Polkadot (DOT).

Institutional BTC products saw outflows of $2.8 million for the week — marking the seventh consecutive week of outflows for Bitcoin. BTC shed 6% over the same period.

The report noted that the value of assets under management (AUM) by crypto investment product issuers increased to $57.3 billion as the markets rallied this week — its largest level since peaking at around $66 billion during the heights of the 2021 bull market in mid-May.

Leading institutional asset manager Grayscale represents three-quarters of the sector’s AUM with $42.6 billion.

Flows across asset providers were mixed however, with the Coinshares XBT, ETC Issuance funds shedding $9.5 million and $9.4 million, while 21shares, CoinShares Physical and 3iQ posted inflows of $21.8 million, $14.7 million and $10.8 million respectively.

Wealth managers gain exposure to Bitcoin via Grayscale, according to new SEC filings

August 14, 2021 Coin Telegraph

Asset Management

The Grayscale Bitcoin Trust, which trades under the ticker symbol GBTC, is being snatched up by institutional managers looking for more traditional exposure to digital assets.

New filings with the United States Securities and Exchange Commission, or SEC, reveal that four wealth management companies have acquired shares of Grayscale’s Bitcoin Investment Trust, offering further evidence of institutional adoption of digital assets.

As first reported by MacroScope, a Twitter feed devoted to institutional trading and asset management, the firms disclosed their GBTC holdings in new filings for the period ending June 30, 2021.

Clear Perspective Advisors, an Illinois-based wealth manager, revealed direct ownership of 7,790 GBTC shares on Friday.

In an SEC filing today, Clear Perspective Advisors, a wealth management firm in Aurora, Illinois, reported owning 7,790 shares of Grayscale Bitcoin as of June 30.

Filing:https://t.co/PT21czzjvO pic.twitter.com/WZ7RYk1RBp
— MacroScope (@MacroScope17) August 13, 2021

Ohio-based Ancora Advisors scooped up 13,945 shares of GBTC as of June 30. While that’s a small position for the multi-billion-dollar asset manager, it reflects an important strategic move given that the company has a long-term investment perspective.

BTC institutional watch:

In a filing today, Ancora Advisors, based in Cleveland, reported 13,945 shares of Grayscale BTC as of June 30.

Tiny position for a big firm, but Ancora is a smart long-term shop. Worth watching in coming quarters.

Filing:https://t.co/QLtEbMq3Gd
— MacroScope (@MacroScope17) August 13, 2021

Meanwhile, two additional firms added to their GBTC holdings for the June 30 reporting period. Boston Private Wealth, which had previously reported 88,189 GBTC shares as of March 31, increased its exposure to 103,469 shares. Ohio-based manager Parkwood boosteits holdings to 125,000 shares from 93,000 at the end of March.

Major firms are finding new and diverse ways for gaining exposure to Bitcoin and other virtual assets. As Cointelegraph reported, tech giant Intel recently disclosed a sizable position in Coinbase stock, which provides direct exposure to the digital currency market.

Institutions are likely to increase their exposure to digital assets in the coming months — provided that the bullish narrative continues to play out. Many crypto observers subscribe to four-year cycle theory, which attempts to explain and forecast Bitcoin’s price from one cycle low to another. With the crypto asset class returning above $2 trillion this week — representing a $700 billion recovery from the local bottom — it appears that the next phase of the bull cycle is gaining traction.

3 reasons why Ethereum is unlikely to flip Bitcoin any time soon

August 7, 2021 Coin Telegraph

Bitcoin

For years analysts have predicted that ETH’s market capitalization will flip BTC’s but data shows it's still nothing more than a guessing game.

After a 13% rise in two days, Bitcoin's (BTC) market capitalization surpassed $800 billion to reach its highest value in 79 days. During the same timeframe, Ether (ETH) accumulated a 45% gain in two weeks, placing the network's market capitalization at $340 billion.

Positive expectations for the London hard fork and its potential deflationary effect undoubtedly played a role, but some investors continue to question how Ether's valuation stacks against Bitcoin. Some, including Pantera Capital CEO Dan Morehead, expect Ether to outpace Bitcoin as the largest cryptocurrency.

Market participants may have also been excited after Minneapolis Federal Reserve President Neel Kashkari suggested that the Fed may stick with the asset-purchase program a bit longer. The reason cited was the Delta variant's spread and its potential harm to the labor market.

Kashkari said:

"Delta could discourage people from returning to jobs that require in-person interaction and keep kids out of schools."

Extending the stimulus for longer raises the inflationary risk, which increases the attractiveness of scarce assets like real estate, commodities, stocks, and cryptocurrencies. However, the impact of these macroeconomic changes should equally impact Bitcoin and Ether.

Active addresses give Bitcoin a clear lead

Comparing some of Ethereum's metrics could shed some light on whether Ether's 58% discount is justified. The first step should be to measure the number of active addresses, excluding low amounts.

*Addresses with $1,000 or higher balances. Source: CoinMetrics*

As shown above, Bitcoin has 6 million addresses worth $1,000 or higher, and 3.67 million have been created since 2020. Meanwhile, Ether has less than half at 2.7 million addresses with $1,000. The altcoin's growth has also been slower, with 2.4 million of those created since 2020.

This metric is 55% lower for Ether, and this corroborates the market capitalization gap. However, this analysis does not include how much large clients have invested. Although there is no good way to estimate this number, measuring cryptocurrency exchange-traded products could be a good proxy.

Ether lags on exchange-traded products

*Publicly traded crypto products. Source: Bloomberg and Investing.com*

After aggregating data from multiple exchange-traded instruments, the result is telling. Bitcoin dominates with $32.3 billion in assets under management, while Ether totals $11.7 billion. Grayscale GBTC plays a vital role in this discrepancy because its product was launched in September 2013.

Meanwhile, Ether's first exchange-traded product came in October 2017, when the XBT Provider Ether Tracker was launched. This difference partially explains why Ether's total is 64% lower than Bitcoin's.

Futures open interest justifies the price gap

Lastly, one should compare the futures markets data. Open interest is the best metric of professional investors' actual positions because it measures market participants' total number of contracts.

An investor could have bought $50 million worth of futures and sold the entire position a couple of days later. This $100 million in traded volume does not currently represent any market exposure; therefore, it should be disregarded.

*Bitcoin futures aggregate open interest. Source: Bybt*

Bitcoin futures open interest currently amounts to $14.2 billion, down from a $27.7 billion peak on April 13. Binance exchange leads with $3.4 billion, followed by FTX with another $2.3 billion.

*Ether futures aggregate open interest. Source: Bybt*

On the other hand, the open interest on Ether futures peaked about a month later at $10.8 billion, and the indicator currently stands at $7.6 billion. Therefore, it is 46% lower than Bitcoin's, which further explains the valuation discount.

Other metrics like on-chain data and miner revenues show a more balanced situation, but both cryptocurrencies have different use cases. For example, 54% of the Bitcoin supply has remained untouched for longer than one year.

The truth is that any indicator has a downside, and there is no definitive valuation metric to determine whether a cryptocurrency is above or below its fair value. However, the three metrics analyzed suggest that Ether's upside, when priced in Bitcoin, does not signal a "flippening" anytime soon.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

JPMorgan now offers clients access to six crypto funds … but only if they ask

August 6, 2021 Coin Telegraph

Coin Telegraph

JPMorgan now offers access to six different crypto funds from GrayScale, Osprey Funds and NYDIG.

JPMorgan Chase quietly opened up access to six crypto funds over the past three weeks as it looks to offer crypto exposure to a variety of clients.

In the latest move, the bank’s private clients will now have access to a new Bitcoin fund created by crypto investment firm New York Digital Investment Group (NYDIG).

NYDIG is owned by Stone Ridge Asset Management and the “Stone Ridge Bitcoin Strategy Fund” offers exposure to Bitcoin via futures markets.

The NYDIG fund is in addition to five crypto funds that the bank opened access to last month: Grayscale Investments’ Grayscale Bitcoin Trust, Bitcoin Cash Trust, Ethereum Trust and Ethereum Classic Trust, as well as the Osprey Bitcoin Trust.

While the traditional financial institution has taken a big leap by offering crypto exposure via six different funds, it is reportedly taking a cautious approach to how it offers its new digital-asset services.

According to unnamed sources quoted by Business Insider, JPMorgan advisors are not allowed to overtly promote the crypto funds, and can only conduct the transactions upon the client's request.

The Grayscale and Osprey Funds are open to all users of its various wealth management platforms including its self-directed Chase trading app, while the NYDIG fund is only open to private banking clients.

Related: US megabank JPMorgan to hire more blockchain talent

The investment banking giant has a complicated history with cryptocurrency, after CEO Jamie Dimon described Bitcoin as fraud back in 2017.

Analysts at Goldman Sachs appear to be working through some of the same issues, despite the firm actively working to offer exposure to the sector.

In June, Jeff Currie, the global head of commodities research at Goldman Sachs described Bitcoin as a “risk-on” asset similar to copper. In the same month, analysts from the bank released a crypto report which concluded that Bitcoin is not “a long-term store of value or an investable asset class”.

Goldman Sachs currently provides crypto services through a derivatives trading desk and a Bitcoin futures trading platform that was rolled out last month. The firm has also filed for a sort-of DeFi-based ETF in late July.