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VanEck Makes the Case for Institutional Bitcoin Investment

VanEck has outlined the case for institutional Bitcoin (BTC) investment in a report published on Jan. 29. According to the investment management firm, even a small amount of BTC allocation could improve a portfolio’s upside.

As shown in the report, Bitcoin has a history of outperforming tradition asset classes as well as a track record of strong growth over longer three to five year periods. Bitcoin also enhances the diversity of a portfolio as its movements bear very little correlation to the broad market equity indices, bonds and gold.

Source: VanEck – The Investment Case for Bitcoin

As shown in the chart below, the report finds, “A small allocation to Bitcoin significantly enhanced the cumulative return of a 60% equity and 40% bonds portfolio allocation mix while only minimally impacting its volatility.”

Source: VanEck – The Investment Case for Bitcoin

Despite the evidence presented, VanEck’s report explains that the main deterrent for institutional adoption Bitcoin revolves around the lack of infrastructure to connect it to capital markets and its nature as a bearer asset.

VanEck explains that BTC is not quite a currency but still has the potential to become one. The report also suggests Bitcoin bears the necessary features that could see it become a digital gold, but its future monetary value hinges heavily on how people’s perceptions of its value develop.

BTC Exchange Traded Funds

The report highlighted the crypto industries momentum being carried into 2020, citing regulatory achievements in Colorado and Wyoming and the launch of physically settled BTC futures.

The reports also mention the Exchange Traded Funds(ETF)s that are under consideration and mention that the previously withdrawn VanEck-SolidX proposal is back in the race and slated to be reviewed next.

One BTC Exchange Traded Fund that we will not see in 2020, or anytime soon, is the highly anticipated Bitwise ETF.

On Jan. 14, Bitwise submitted a note to the US Securities and Exchange Commission (SEC) requesting the registration withdrawal. The cryptocurrency asset management firm cited the move as being consistent with “public interest” and “protection of investors.”

According to an article by The Block, Matt Hougan, Global Head of Research, Bitwise confirmed, “We did indeed withdraw the application. This is a procedural step, and we intend to refile our application at the appropriate time.”

Upon its initial filing, Bitwise received a 112-page response from the SEC and Hougan added that the firm is currently working this document but remains committed to the development of the Bitcoin ETF.

Image via Shutterstock

Wilshire Phoenix Files for Publicly Traded Bitcoin-Backed Fund Approval Seeking to Challenge Grayscale’s Dominance

Wilshire Phoenix investment firm has filed to launch a publicly-traded trust identified as Bitcoin Commodity Trust (BCT).

The New York-based investment company has filed the s-1 registration statement with the US Securities and Exchange Commission (SEC) for a publicly-traded Bitcoin fund in accordance with regulatory requirements.

The investment company said, “The shares will provide investors with exposure to Bitcoin in a manner that is accessible and cost-efficient without the uncertain and often complex requirements relating to acquiring or holding Bitcoin.”

Wilshire in a new hunting ground

The aim of Wilshire’s new BCT is to have its shares available for public investing and trading on OTC Markets. The filing said that once the shares of trust are issued, they can be bought and sold throughout the trading day just like any other publicly traded security.

The investment firm aims to raise $2 million from the sale that will be used to buy Bitcoin. The filing states that Wilshire Phoenix’s Bitcoin Commodity Trust would have no assets other than Bitcoin. Though it may hold US dollars for short periods of time for selling and buying Bitcoins, fees, and payment of redemptions.

Wilshire Phoenix has had a good relationship with Coinbase for several years. However, the new filing has given Fidelity Digital Assets the task of holding Wilshire Phoenix’s Bitcoin custody. The filing also says that while Bitcoin held would only be insured against theft above $100 million, cash would be covered under the Federal Deposit Insurance Corporation.

If Wilshire’s BTC approved, then it could place a direct competition with Grayscale’s Bitcoin Trust (GBTC), which at current market prices has 365,000 Bitcoin worth $3.35 billion under management.

Similar to Grayscale’s Bitcoin Trust (GBTC), Wilshire’s BTC seeks to enable the retail investors to purchase Bitcoin through shares of stock on the mainstream market, with every share backed by Bitcoin and priced according to the going market rate of Bitcoin.

However, GBTC frequently bears a high premium, implying that customers pay mostly higher prices compared to purchasing actual Bitcoin on the crypto market. This basically includes a 2% annual fee for custody. Wilshire Phoenix’s new filing proposes a lower fee of 0.9%. Furthermore, while Wilshire Phoenix’s shares are redeemable, this option is unavailable for investors of Grayscale.

US SEC shoots down latest Bitcoin ETF

Wilshire Phoenix sought approval for a Bitcoin Exchange-Trade Fund (ETF), an application that was rejected by SEC in February 2020. The Exchange-Traded Fund proposed to hedge Bitcoin against US Treasury bills.

Wilshire Phoenix’s idea was that an ETF would assist retail investors in gaining Bitcoin exposure at a low cost. However, the SEC rejected Wilshire Phoenix’s proposal to develop the Bitcoin-backed ETF. The US regulator said that market manipulation and fraud were main concerns for the rejection.

The agency concluded that Wilshire had not presented adequate evidence that the Bitcoin market was resistant to illicit activities and market manipulation. The regulator has also rejected many applications for a Bitcoin ETF, including Gemini and Bitwise proposals, thus leaving no local options for US-based investors.

Bitcoin’s Parabolic Price Run Pushes the Cryptocurrency's Market Cap Above $1 Trillion

Bitcoin’s current bull run has served to push the world’s first and biggest cryptocurrency to a market capitalization of $1 trillion.

According to data from CoinMarketCap, the price of the digital currency has surged by over 8.8% in the past 24 hours, crossing a new all-time high (ATH) of $56,000.00 within that time frame.

Currently, the combined market capitalization of the global cryptocurrency market stands at $1.71 trillion. Bitcoin has proven to be a star digital asset in the crypto space, establishing itself as a unicorn responsible for more than 61% of the value of the entire cryptocurrencies. There are over 8,520 in all.

Institutional Buy-Ups Paid Off

The embrace of Bitcoin by institutional investors is paying off with a corresponding increase in price. A Bitcoin adoption cycle was notably kickstarted with a move from Jack Dorsey’s backed payment firm, Square Inc, and Michael Saylor’s business intelligence firm, MicroStrategy Inc. back in the second half of 2020.

Since these publicly-listed firms dabbled into the world of Bitcoin, it has led to other firms promptly following their lead. Today, many Wall Street firms are shoring up their balance sheets with Bitcoin, bemoaning the unattractiveness of the US dollar amid unrelenting money printing used for covid-19 stimulus packages.

Bitcoin, with a $1 trillion market cap milestone attained today, has further strengthened the appeal of the cryptocurrency industry as the inflow of funds may serve to make regulators rethink their position in the industry. Another step to gain more exposure to Bitcoin for corporate investors is through Exchange-Traded Fund products, and while other nations such as Canada have approved their first Bitcoin ETFs, the US has yet to approve any Bitcoin ETF application.

When this hurdle is crossed, Bitcoin is bound to see a wave of money inflow and the cryptocurrency will gain an even bigger market capitalization in the near future.

Brazil Becomes the First Latin American Country to Get Its First Bitcoin ETF

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The Brazil Securities and Exchange Commission (CVM) has approved the first Bitcoin exchange-traded fund (ETF) in the Latin American region.

This follows after QR Capital cryptocurrency investment company’s application for a Bitcoin exchange-traded fund has been accepted in Brazil, which is the largest economy in Latin America. The investment fund will trade under the QBTC11 ticker on Brazil’s main stock exchange B3.

QR Capital describes itself as the largest crypto asset manager in Latin America. The QR team believes that the launch of the first Bitcoin ETF in Latin America is important as it would enable locals to have easier and more direct exposure to the primary cryptocurrency without worrying about managing and storing the assets. Such listing of the Bitcoin ETF on the traditional market stock exchange rather than cryptocurrency exchanges would simplify the process of investing in Bitcoin. For example, listing Bitcoin alongside other stocks such as Facebook stocks, Apple stocks, and many more would provide local investors with the opportunity to mitigate risks and diversify their portfolios.

QR Capital crypto firm said on Friday yesterday that the Bitcoin ETF would follow the performance of the BTC futures contracts traded and operated by the Chicago Mercantile Exchange (CME). The company said: “The QBTC11 will have as reference the CME Group index of bitcoin futures contracts.”

Bitcoin ETFs gain traction

QR Capital’s Bitcoin investment fund is the fourth approval of a Bitcoin ETF in the Western Hemisphere, following three funds of a similar nature recently launched in Canada’s Toronto Stock Exchange (TSX) in February and March. The Ontario Securities Commission (OSC) approved the first-ever Bitcoin ETF (the Purpose Bitcoin ETF) from Purpose Investments Inc. in February this year and a few days later approved the second-ever ETF from Evolve Funds. In March, Canada’s securities regulator approved the third one, CI Galaxy Bitcoin ETF, which started trading on the Toronto stock exchange during that month.

The decision by Canada’s regulators to approve Bitcoin ETFs could represent a tipping point for US money managers to approve their own Bitcoin funds through a regulatory process.

QR Capital has stated that the approval of the QBTC11 could speed up the approval of a Bitcoin ETF in the US because the Brazil Securities and Exchange Commission (CVM) and the US Securities and Exchange Commission (SEC) are affiliated members of the International Organization of Securities Commissions.

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Scaramucci's SkyBridge Capital Applies for Bitcoin ETF as Institutional Sentiment Remains Bullish for BTC

After soaring to a new all-time high of over $61,500 on March 13, Bitcoin has since pulled back to the $57K level.

Currently, the mainstream cryptocurrency appears to be consolidating around $57,000. In the short-term, Bitcoin’s support level is pinpointed at $56,000. Should it fail to uphold above this support level, Bitcoin may potentially fall to lows of $52,000, according to market experts.

Institutions want a piece of Bitcoin

Despite the temporary setback, Bitcoin continues to gain traction. Recently, many companies and exchanges have filed for Bitcoin ETFs. Although one has yet to be approved in the US, there are currently three newly launched Bitcoin ETFs in Canada. The first was launched by Purpose, the second by Evolve, and the third by CI Galaxy. The Bitcoin ETFs were a success, as Purpose’s Bitcoin exchange-traded fund gained $421 million in assets under management in just the first two days of launch.

The approval of Canadian-based Bitcoin ETFs has led many to wonder when the United States Securities and Exchange Commission (SEC) will approve one of its own. Currently, Anthony Scaramucci’s hedge fund, SkyBridge Capital, has tried its luck by filing a request with the SEC for a Bitcoin ETF.

Should SkyBridge receive the Securities and Exchange Commission’s blessing, its Bitcoin ETF will become the first of its kind to be approved in the United States and pave the way for future Bitcoin ETF applications.

The addition will expand the list of Bitcoin products SkyBridge currently has to offer. Currently, the hedge fund founded by former White House Communications Direction Scaramucci has a Bitcoin Fund, which demands a buy-in of at least $50,000. The Bitcoin Fund grew rapidly to a size of $370 million within weeks of its launch in December 2020.

Bitcoin to the moon – $100,000

With institutional support washing into Bitcoin continuously, the cryptocurrency is expected by market experts to appreciate considerably. SkyBridge Capital founder Scaramucci figures among the array of Bitcoin pioneers. In an interview with CNBC previously, he boldly predicted that Bitcoin could reach $100,000 by the end of 2021.

Although Scaramucci has been bullish about Bitcoin, he does warn retail investors to be cautious as Bitcoin remains volatile. The hedge fund founder justified his Bitcoin prediction by pointing to supply and demand – Currently, Bitcoin faces heavy demand, but its supply is capped at 21 million.

Fidelity Investments Seeks Approval for a US Bitcoin ETF

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Fidelity Investments Inc. is seeking approval from the US Securities and Exchange Commission (SEC) to launch an exchange-traded Bitcoin fund.

A new filing of Form S-1 registration statement with the SEC shows that FD Funds Management, a subsidiary of Fidelity, aims to create an ETF that would serve as a custodian that gives investors the ability to access the fund through a traditional brokerage account without the potential barriers to entry or risk associated with transferring or holding Bitcoin directly.

The ETF would also track the daily performance of the cryptocurrency, using the Fidelity Bitcoin Index PR, an index derived from various price sources.

The Fidelity’s exchange-traded Bitcoin fund would be registered as the Wise Origin Bitcoin Trust, which would hold Bitcoin and value its shares based on prices from major crypto exchanges, including Bitstamp and Coinbase, as per the preliminary filing with the SEC.

Similar to other proposed Bitcoin EFTs, the Fidelity Trust intends to offer more institutional opportunities to invest in crypto assets. The EFT would allow retail investors to bet on the price of the leading cryptocurrency without the need to purchase and store the crypto-assets themselves.

This proposed ETF is not Fidelity’s first investment into the crypto world as the firm is expanding itself into the world of digital currencies. Fidelity Investments was one of the first major institutions to offer cryptocurrencies to clients. The firm started mining Bitcoin and Ethereum in 2014 and introduced Fidelity Digital assets in 2018, a subsidiary that since then has deployed its crypto trade execution and custody operations.

Optimism Abounds on ETFs

Speculation about a Bitcoin exchange-traded fund in the US has been rampant since the historic Bitcoin bull market experienced in 2017. The SEC regulations have so far rejected all proposals to securitize Bitcoin in an ETF due to concerns associated with price manipulation and extreme volatility. However, proponents of the leading crypto asset believe that that uncertainty is set to change as Bitcoin matures as an asset class.

Fidelity Investments joins several US firms (including VanEck Associates Corp, NYDIG asset management firm, Valkyrie Digital Assets, WisdomTree Investments, and Anthony Scaramucci-led SkyBridge Capital firm) that are still awaiting approval from the US SEC to offer Bitcoin ETF. Market analysts have speculated that multiple Bitcoin ETF approvals in Canada may spur US regulators to give Bitcoin ETFs the green light in the country.

Crypto Is Entering the Early Stages of Mainstream Adoption, says Kraken CEO

The crypto market’s popularity continues to rise. Currently, its market cap stands at $1.66 trillion, according to CoinMarketCap.

Jesse Powell, the co-founder and CEO of leading American crypto exchange Kraken, believes that the sector is in its early stages of mainstream adoption. He explained:

“After 10 years in crypto, for the first time, it feels like we are entering the early stages of mainstream adoption. Am I relieved? No. I’m fearful because it marks the end of our ability to be ignored. Get ready to fight.”

Powell added that the days of the crypto market being ignored are long gone. His sentiments come at a time when Tesla CEO Elon Musk has revealed that customers can purchase Tesla vehicles using Bitcoin (BTC). Musk pointed out that the BTC payment capability will only be available to US residents. However, plans are underway for the payment option to be extended to customers outside the US later this year.

This news was received enthusiastically by the crypto community, as Bitcoin’s price jumped to $56,918. Market analyst Holger Zschaepitz said:

“#Bitcoin jumps as Elon Musk says Americans can now use it to buy a #Tesla. The move to now accept bitcoin payment and not convert it into fiat currency will ensure Tesla’s holding of the cryptocurrency increases.”

Bitcoin ETF applications on the rise

Powell’s suggestion that the crypto market is entering the early stages of mainstream adoption can be supported by the rise in Bitcoin ETF applications. For instance, Fidelity Investments Inc. is seeking approval from the US Securities and Exchange Commission (SEC) to launch an exchange-traded Bitcoin fund.

Digital asset firm Bloqport also disclosed that at least 6 US Bitcoin ETF applications from Wisdom Tree, VanEck, NYDIG Asset Management, Valkyrie Digital Assets, Skybridge and First Trust, and Fidelity Investments are currently awaiting approval.

Bitcoin ETFs are exchange-traded funds that track the value of Bitcoin and traded on traditional market exchanges rather than crypto exchanges. Therefore, investors are given the opportunity to invest in Bitcoin without going through a crypto exchange and at the same time being offered leverage to its price.

Gary Gensler Confirmed as Chairman of the SEC, What This Means for Crypto

Gary Gensler has been confirmed to the role of chairman of the Securities and Exchange Commission.

The long-awaited confirmation of Gary Gensler as chairman of the US Securities and Exchange Commission (SEC) has finally been concluded. Gensler is to head the SEC and will oversee the compliance of investments made by brokers and corporations to US federal securities law.

Gensler’s appointment to the role of chairman is significant for the cryptocurrency and blockchain industry, as the Biden-nominated chairman has a demonstrated background in blockchain, having previously served as a blockchain and crypto professor at MIT.

Ripple lawsuit

Many, including Ripple CEO Brad Garlinghouse, are hoping that this will mean clearer regulatory policies for crypto and a re-evaluation of the $1.3 billion lawsuit against Ripple brought upon by the SEC. The lawsuit has been criticized for its lack of fair notice, having been handed a day before former SEC chairman Jay Clayton concluded his tenure at the agency.

“I’m hopeful with Gary Gensler and the new chair likely to be confirmed in a couple of weeks. There’s an opportunity to have a conversation with that new leadership as he brings his team in,” said Garlinghouse.

Gensler, who was once a former chairman of the Commodities and Futures Commission under Barack Obama’s presidency, is known for being forward-thinking with cryptocurrencies, once calling Bitcoin a “catalyst for change.”

US struggles to release Bitcoin ETF

Under his guidance, the US’ agenda for releasing a Bitcoin ETF may be fast-tracked. Currently, in addition to being criticized for lacking a clear regulatory framework for cryptocurrencies, many have also questioned why the US has not yet jumped on the opportunity to approve a Bitcoin ETF. Amid Bitcoin ETF approvals in Canada, American institutions have appealed to the SEC with applications for a Bitcoin ETF, including former House communications director Anthony Scaramucci’s Skybridge firm, Fidelity, and Galaxy Digital, to name a few.

A Bitcoin ETF will provide institutional investors indirect exposure to the nascent cryptocurrency.

Coinbase goes public on Nasdaq

Currently, amid Gensler’s confirmation, Coinbase has also made its official debut on Nasdaq stock exchange, marking a historic moment for crypto. Coinbase, the biggest US cryptocurrency exchange, is the first crypto firm to go public. Its valuation is estimated to be around $68 billion, in comparison with $5.8 billion in September 2020.

“Coinbase has an ambitious mission: to increase economic freedom in the world. Everyone deserves access to financial services that can help them build a better life for themselves and their families,” said Coinbase CEO Brian Armstrong.

Institutional XRP Inflows Surge to Hit $33 Million, Almost Doubling Its AUM

Despite tumbling slightly in price, XRP’s institutional inflows have been ramping up.

According to CoinShares’ weekly digital asset inflows report, XRP has been the most popular investment among digital asset products currently offered, with its weekly inflows totalling $33 million. This has resulted in XRP nearly doubling its asset under management (AUM), or investment products, to hit $83 million.

The report indicates that last week, digital asset investment products have undergone the largest inflows since early March, and this increased interest in digital assets can be attributed “to a combination of increasing acceptance from institutional investors, fears for inflation and price momentum.”

Among new capital flowing into Bitcoin, Ethereum, Bitcoin Cash, Polkadot, Binance Coin, Tezos, and XRP, XRP came up as the top gainer and the “most popular” investment.

Meanwhile, other altcoins attracted renewed interest from investors, with $65 million allocated to Ethereum investment products, $3 million to Binance Coin, $4 million to Bitcoin Cash funds, and $5 million allocated to Polkadot.

Bitcoin makes up the larger portion of cryptocurrency products made available to institutions, representing 78% of institutional AUM with $50 billion, followed closely by Ether, which makes up 16.8% of crypto products.

Earlier this week, CoinShares revealed the launch of its Ripple ETP, which will be available for trade on the SIX Swiss Exchange.

Institutional interest in crypto escalates

Cryptocurrencies have been gaining traction and slowly entering mainstream adoption. Not only have institutions begun recognizing the value of storing Bitcoin, but an increased interest has also been directed at Ethereum. Last week, Canada’s securities regulator, the Ontario Securities Commission, approved three Ethereum ETFs (exchange-traded funds) in one day. CI Global Asset Management, Purpose Investment, and Evolve Fund Group were given the green light to launch Ethereum ETFs.

The Ether ETFs will be made available for trade on Toronto Stock Exchange, giving investors exposure to Ethereum without having to directly hold the underlying asset.

Evolve Fund and Purpose Investment have already released Bitcoin ETFs before proposing an Ethereum ETF. This has served to exert pressure on the US Securities and Exchange Commission (SEC), which have yet to approve a Bitcoin ETF in the United States. Currently, the SEC appears to be gaining criticism for failing to establish clear regulatory guidelines for crypto.

Bitcoin Has Spent 3 Months Bouncing Between $45,000 and $60,000

Bitcoin’s upward momentum has dried up because it has spent three months bouncing between $45k and $60k, as alluded to by market analyst Lark Davis.

BTC hit a new all-time high (ATH) above $64,500 in mid-April, but a correction to the $46-48k area has been imminent.

This has been triggered by speculations that the American administration will increase capital gain taxes, new market entrants triggering panic selling, and revelations about Tesla stopping Bitcoin transactions based on environmental factors.

BTC is hovering around the $49.2k price at the time of writing, according to CoinMarketCap. Davis believes that Bitcoin finds itself in a ranging market, which signifies an accumulation zone.

On the other hand, Santiment has acknowledged that BTC supply on crypto exchanges is back to high levels. The on-chain metrics provider explained:

“The supply of Bitcoin sitting on exchanges is currently back to its highest level since January 14th. The 4-month high is indicative of fear.”

Nevertheless, financial analyst William Clemente trusts that big money is buying the fear.

Bitcoin ETF is the next rocket fuel

According to Real Vision Group CEO Raoul Pal, Bitcoin ETF is the next rocket fuel in the market. He noted:

“The ETF is the next rocket fuel for this market. The Wall of Money keeps coming, but it takes time for everyone to get internal approvals. I have so many conversations helping hedge funds.”

Bitcoin Exchange Traded Fund (ETF) is a type of security that tracks the overall price of Bitcoin and enables investors to trade and purchase shares of it on traditional exchanges, circumventing crypto trading platforms.

In March, Jesse Powell, the co-founder and CEO of leading American crypto exchange Kraken, suggested that the crypto market was entering the early stages of mainstream adoption due to the rise in popularity of Bitcoin ETF.

For instance, at least 6 US Bitcoin ETF applications from Wisdom Tree, VanEck, NYDIG Asset Management, Valkyrie Digital Assets, Skybridge and First Trust, and Fidelity Investments are currently awaiting approval.