Dispatch #13: Guggenheim, BlackRock, and Other Institutions Propel Bitcoin to New ATH

In this patch of your weekly Dispatch:

• Another batch of institutional involvement drives Bitcoin to all-time highs
• ETH2.0’s beacon chain goes live with a significant amount of ETH staked
• The NEXO Token shoots for the moon as buyback details are revealed

The Big Idea

The Institutions Driving the Rally

Let’s not bury the lede: at the beginning of the week, Bitcoin hit a new all-time high – at least very briefly and depending on exactly which measure of ATH one uses.

What’s just as interesting – if not more – however, is the investor type driving the rally. Whereas 2017 was driven by prospectors, speculators, thrill-seekers, and degenerates of the firmly retail variety, this run-up has been all about the steady increase in institutional interest.

What started as a trickle of new voices, most notably hedge fund legend Paul Tudor Jones in May, has become a veritable stampede over the past few months. In the last week alone, we’ve seen: Guggenheim file to get up to $5B in exposure via Grayscale’s BTC trust; AllianceBernstein reverse their previous assessment; and even the CEO of BlackRock say that – hey, this Bitcoin thing might have legs. Perhaps it’s for this reason that some market commentators have called this the “respectability rally.” Our Co-Founder and Managing Partner Antoni Trenchev had plenty to say about this last week, all nicely recapped in issue #12 of yours truly.

Once the psychological barrier of $20,000 is breached, it may be that the horde of retail powers in and sucks the narrative juice again. But for now, this rally feels measured and anchored by a new class with longer time horizons and deep pockets.

Happy stacking!

The Latest In…

Ethereum

A follow up from last week’s newsletter. The very first phase of ETH 2.0, the launch of the beacon chain, has officially commenced. At present, more than 970,000 ETH are staked, nearly double the initial requirement. While the community may be at the first step of a long journey, it’s hard not to be excited about what might lie ahead.

The Latest In…

Nexonomics

The details about our very first Buyback program are hot off the press! It was made public yesterday that Nexo’s Board of Directors had approved the repurchase of up to $12M worth of our native NEXO Token on an open-market principle.

The announcement sent NEXO Tokens rising by 12% to $0.38 apiece as of 11:15 UTC on December 4. This latest price increase represents a whopping 162% growth in the value of the NEXO Token since the start of Nexonomics on October 27, of which the said buyback is a part. The repurchase seeks to reward NEXO Token holders for their investment and loyalty, and bolster the stability and growth potential of our native token.

The Latest In…

DeFi M&A

Crypto M&A was a big topic in 2017 and 2018 – especially as projects faced crashing prices and shrinking treasuries. But right now, the most interesting story in crypto M&A comes from the wild world of DeFi, where this week Yearn Finance joined up with SushiSwap in what is Andre Cronje and Yearn’s fifth DeFi acquisition in several weeks. Yearn had previously scooped up four other protocols: Akropolis, Cover, Cream, and Pickle. Yummy.

The Latest In…

Regulators

There has been a growing debate between Bitcoin Twitter and the macro community about how much freedom the industry is going to be allowed by the government. Interestingly, however, it seems like the first target in regulators’ crosshairs is private stablecoins. Christine Lagarde wrote about the threat they pose this week. Meanwhile, across the Atlantic, a group of Democrats in Congress introduced a new bill called the STABLE Act that would, effectively, force all stablecoin issuers to be licensed like banks. This will be a fight to watch.

The Latest In…

Stablecoins

In the meantime, however, private sector stablecoins keep chugging along as a key new piece of financial infrastructure. The latest news in that area comes from Visa, which announced that they would begin helping card issuers integrate the USDC stablecoin software into their platforms. In the long run, this could lead to some 60 million new merchants being able to interact with the digital asset.

The Week’s Most Interesting Data Story

BTC moves during US market hours reinforce the institutional narrative

As we discussed above, the narrative dominating this rally has to do with the true emergence of institutional buyers as a driving force. There is certainly good anecdotal evidence of that, too, as we can see from the lede graph below. But is there more data that would also suggest that Western institutional buyers are a big driver? Why yes, friends, yes there is. This data from CoinMetrics shows how almost all of the price increases over the last month happened during US working hours. Given that crypto is open 24-7 around the world, this is yet another proof that the key drivers of this price rally are based in the US and have pockets deep enough to move markets.

Hot Topics

What the Community Is Discussing

This pretty well sums up the diplomatic take on the STABLE Act.

Speaking of regulations, the crypto industry is up in arms about one thing: Thanksgiving was almost ruined by a rumored crackdown on self-custody.

Stats! Get your stats here! Put some additional numbers around the recent rally.

Our Take

@AntoniNexo This Week

• Our very own Antoni Trenchev once again stressed the importance of institutions being won over by Bitcoin, commenting to The Independent that a new ATH “will be a record not driven by frenzy, but by the big, forward-thinking, finance and technology-savvy institutions that will push crypto into the mainstream.”
• And this is what he told Bloomberg regarding the short-lived Bitcoin drop: “Last Thursday’s sell-off proved to be a Thanksgiving gift for Bitcoin bargain hunters.” Pointing out that Bitcoin has been written off many times over since after the 2017 peak, he warned: “Don’t expect history to repeat itself. Today, we have proper infrastructure, a growing institutional investor base, and the maturing of a unique alternative asset, a refuge from the excesses of a monetary system that’s doomed to destroy the value of the fiat in your pocket.”
• Shifting the topic to Bitcoin’s lead over gold, he told Decrypt: “[This year has been a game of rock, paper, scissors for many smart investors. Many geared up with their favorite anti-inflationary tool in their fists, i.e. gold, but missed the moment to revise their strategies and were left disappointed when their go-to hedge did not put them on par with Bitcoiners.] As I’ve said repeatedly: we should be thanking the other bunch of smart people in the room – the Druckenmillers of the world – for Bitcoin’s stellar performance in comparison with that of gold. Even the Ray Dalios, who have started to admit they might be missing something about BTC, have contributed. And to those who still have no skin in the game, I’ve got one thing to say: more for us.”

What to Watch for Next Week:

• Now that we’ve punched through all-time highs, will we be able to hold them?
• Will anti-crypto regulatory clamor continue as the Biden economic team gets established?
• Will Andre Cronje make another acquisition?