Dispatch #26: The Institutional Bitcoin Party Vol.2

In this patch of your weekly Dispatch:

• Is a new wave of institutional Bitcoin starting?
• Beeple’s NFT sale made him the third most expensive living artist
• Our $150K donation to Brink to support Bitcoin development

The Big Idea

The Next Wave Of Institutional Bitcoin

So you might be wondering why we’re not talking about Beeple’s massive $69M auction. It was, after all, not only the priciest NFT sale of all time, but the third biggest price tag for the work of a living artist ever.

The reality is….we’ve covered NFTs a lot lately and wanted to also talk about other really important things happening in the market. If you really want to read more about digital artworks (and Tweets), just scroll down.

Getting back to Bitcoin though, it was quietly another massive week in institutional Bitcoin. Here’s just a smattering of the events:

• NYDIG announced a $200M financing that included such small names as Morgan Stanley, Soros, and New York Life.
• Each of these companies is getting involved with Bitcoin on a level deeper than just investing, backing this up with the CEO of New York Life joining their board of directors.
• Historically crypto averse JP Morgan is launching a cryptocurrency exposure basket – a debt product composed of 11 public equities with exposure to crypto (see our Data Story for more).
• As per a Reuters report, John Waldron, the COO and president of Goldman Sachs says client demand for Bitcoin is rising.

These are some of the biggest institutions in the world changing their tune and getting on board. As the BTC price starts to catch up as well, it feels like we may be revving the engines for another round of institutional-driven growth.

The Latest In…

NFTs

We’re sure you’ve noticed a pick-up in NFT coverage over the past few weeks. Well, guess what? No sign of that stopping. Since we last wrote, not only did Jack Dorsey auction off his first tweet ever (for millions, by the way), but Taco Bell released a special NFT series. What’s more, NFTs now have their very own FUD narrative. The Bitcoin-boils-the-oceans critique has found its way to NFTs – powered largely by Ethereum’s own Proof-of-Work protocol – and has led to a significant backlash. Still, obviously this week the biggest news is Beeple’s $69M sale. If you think the debate before this was fierce, wait till you see how intense it gets now.

The Latest In…

DeFi

There has been so much going on around NFTs that DeFi, the other big crypto thing, has gotten much less air time than usual. This is certainly not for lack of activity, however. The total value locked in DeFi remains above $40B. Let’s remember this is up from under a billion last year. Meanwhile, investment firms like Ari Paul’s BlockTower capital are starting dedicated funds focused exclusively on DeFi. We wouldn’t be surprised to see another big push into this space from more traditional VCs this year.

The Latest In…

Bitcoin Open-Source Development

One of the most remarkable things about Bitcoin is that it is a network with nearly perfect historical uptime maintained entirely by volunteers. As a company whose creation was possible thanks to Bitcoin, we have taken the initiative to provide financial compensation for the hard work of developers who maintain the continued operation of the network. Yesterday, we announced our $150,000 donation to Brink, a non-profit focused on supporting independent Bitcoin development. Antoni had this to say about the partnership: “[T]he need to maintain the protocol grows proportionately to Bitcoin network use. It is our responsibility, as key actors in the crypto economy, to allocate time, effort and funds to its healthy and sustainable future.” Giving the flood of institutions entering the space food for thought, Antoni (quite innocently…) asked: “What if some of the public companies that recently started allocating billions to BTC also put a small percentage of that, say 0.25%, in support of Bitcoin development?”

The Latest In…

Regulations

There was a fair bit of crypto-related activity on the US government front this week. Binance hired a former Senator and US Ambassador to help them with government strategy. The Token Taxonomy Act was introduced for the third time in three years in the US Congress to try to provide some securities laws exemptions for certain cryptos and digital assets. Finally, a group of Congressmen introduced the Eliminate Barriers to Innovation act seeking to provide clarity on what parts of the crypto space should be regulated by the SEC vs the CFTC.

The Latest In…

CBDCs & Central Banks

The news on this front always feels a little under the radar, but there was a slew of it again this week.

• Jamaica will be piloting a CBDC later this year
• New Zealand has approved a regulated stablecoin
• A South Korean bank has built a platform for a potential CBDC

The Week’s Most Interesting Data Story

The ‘Cryptocurrency Exposure Basket’ Revealed!

In effect, JP Morgan’s new debt product that we mentioned above is a way for curious investors to get exposure to the cryptocurrency space without buying actual cryptocurrencies. It includes companies like Microstrategy and Square that hold Bitcoin on their balance sheets, as well as companies like Riot and Nvidia who actually have crypto-related product lines. Here’s the full overview.

Hot Topics

What the Community Is Discussing

A great explanation of the economic incentives that Bitcoin creates around clean energy.

An interesting take on the trajectory of DeFi.

This is one of the mainstay Bitcoin macro narratives. What do you think?

Our Take

@AntoniNexo & Nexo This Week

• In no time, it was (again) Bitcoin time. The mother of all cryptos is gaining momentum, approaching its ATH of $58,330 from 19 days ago “amid a broader risk-on rally in financial markets.” Commenting on this latest surge, Antoni told Bloomberg: “Bitcoin’s resilience is proving to be the stuff of legend. Every correction is an opportunity to reset and restart the move upwards.”
• Why does Ethereum’s rally seem to underperform compared to other assets’ ascent? Antoni is vigilant, bullish, and thorough: “In the current crypto bull run, Ethereum looks like it may be becoming a victim of its own success. The huge influx of users, developers, dapps, DeFi protocols, along with the growing NFT craze are storming the blockchain, making it heavily congested. We’ve seen the effects firsthand at Nexo – think extortionate gas fees and through-the-roof prices for Ethereum addresses that we’re covering for our clients. This is keeping users from going all in and is blocking ETH’s true potential. Ethereum is going through growth pains that are causing a temporary auto-cannibalization of sorts, but we’ll likely get a glimpse of that true bull run soon enough after the EIP 1559 release, with the real bulls’ hammer coming down with Ethereum 2.0.”
• Did you hear we launched the Nexo Exchange on the web version of our platform? It wasn’t long before the NEXO Token reached another ATH at $2.55, a YTD increase of 347%. See for yourself how easy it is to #tokenUp on $NEXO!

What to Watch for Next Week:

• Will NFTs start seeing an even bigger backlash post-Beeple?
• Can Bitcoin hit a new all-time high of $60K?
• Will DeFi reclaim some of the momentum?