January 7 – 13, 2019 | Canada’s Year in Review, Bitcoin as a Diversifier & More Crypto News
3iQ Research Group consolidates the top five cryptoasset stories of interest
to investment advisors and our investors.
Bill Miller: Bitcoin is Good for Diversification, Sees “No Correlation” With Market
January 7 – In a recent interview on CNBC, the famed value investor and Chief Investment Officer (CIO) Bill Miller of Miller Value Partners described Bitcoin as an “interesting technological experiment” that could have a bright future. Miller Value Partners was established in 1999, and provides financial services to investors who seek high-level investments across financial, healthcare, and technology sectors. Miller explained that investors who are seeking to invest in Bitcoin should not try and use the same indicators and strategies used in the traditional stock markets as there is “no correlation between the two”.
Miller was also cautious about sharing his long-term forecasts for the price of Bitcoin. Miller notes that while the future of bitcoin could be bright, investors need to be aware of the non-correlation between cryptocurrencies like bitcoin and the rest of the general market. “I like bitcoin because it’s not correlated with the traditional stock market. It does have the potential to be worth a lot, and the potential to be worth zero.”
Elections Canada Begins Consultation With Political Parties on Cryptocurrencies
January 9 – Elections Canada, which is the official elections agency in Canada, is seeking input on how to go about handling the usage of crypto donations when fundraising for political purposes. In a recent report published on iPolitics, Elections Canada has reportedly sent out formal invitations to political parties asking them to submit their views on matters relating to cryptocurrency donations in preparation for the upcoming Canadian election. The political parties are given a deadline of January 21st to have their views submitted relating to cryptocurrency donations.
In addition, Elections Canada has also released an explanation note that has aimed to provide guidance to political parties that have been accepting donations or conducting other transactions relating to cryptocurrencies. Political parties are free to accept cryptocurrency donations, but they would have to follow the same rules that apply to other non-monetary contributions. The donations would also be subject to nearly all the same rules and limitations as monetary contributions, which include the annual donation cap, but they still aren’t eligible for tax receipts.
January 11 – Bitbuy, a leading Canadian cryptocurrency exchange and trading platform, has provided an annual review of the Canadian cryptocurrency market and highlighted several other developments that have been taking place internationally over the past year. In their comprehensive yearly review, Bitbuy noted that Canadians were not solely purchasing bitcoin as an investment vehicle, as approximately half of Canadian Bitcoin owners were regularly using bitcoin to make purchases or to send money to other people either across Canada or around the rest of the world.
Bitbuy also notes in their review that Canada has become an attractive country to pursue a career in blockchain and the digital asset sector. Due to blockchain and digital assets being a relatively new industry for employment, it is still relatively unclear what particular set of skills or experience are required for the industry. According to the job-exploring website Indeed.com, salaries for positions within the blockchain and digital asset space in Canada remain high, with ranges mostly between $80,000 and $200,000 CAD. Some notable employers in Canada are Consensys, MLG Blockchain, Coinsquare, and Aion Network. “Our customers have shown a strong interest to learn more about how digital currencies work, and Canadians in general need to better understand why these technologies are so disruptive,” said Adam Goldman, the co-founder of Bitbuy.
Crypto Fund Manager Pantera Capital Releases Crypto Thesis
January 8 – In a recent Medium article, the leading blockchain and digital asset investment management firm Pantera Capital has provided a “crypto thesis” and has forecasted what to expect from the industry in the years ahead. The article is mostly comprised of a series of questions and guidelines in relation to crypto investments, which are either through the direct ownership of cryptoassets, or through private equity stakes in other crypto-related projects.
The article acts almost as an “instruction manual” for investing in cryptoasset sector. It has been stressed that most investments in this sector need to be on a longer-time horizon, as short-term, the crypto industry is largely dominated by speculation and is therefore quite volatile. The article concludes by noting that investors should take both private equity stakes in crypto-related companies and also own underlying cryptocurrencies such as Bitcoin to diversify risk. Notably, the article states that the “pricing” behind both private equity and underlying cryptocurrencies have largely been a “beauty contest” based around branding, and determining the right time and project to invest in is particularly difficult because predicting the “whims” of the crowd is not particularly easy.
January 8 – While cryptocurrencies suffered weak performances across the board in 2018, trading desks on Wall Street have continued to signal hopes for a turnaround as recent buying pressure on over-the-counter (OTC) trading desks has been noted. According to Cumberland, which is one of the largest OTC trading firms in cryptocurrencies, the imbalance between buyers and sellers had spiked to around 60% this past week. “Historically, our OTC trading is relatively balanced between buyers and sellers,” said Cumberland. “Over the last week, our OTC buy/sell ratio (by notional value) has increased approximately 60% towards counterparties buying.”
Cumberland was not the only crypto trading desk that noted an imbalance of buyers and sellers at the start of the new year. The CEO of Genesis Trading, Michael Moro, said that Genesis also had more buyside-bias on their OTC desk after tax-loss selling came to an end. “I’ll echo Cumberland’s sentiments,” said Moro. “Year-end saw quite a bit of selling for numerous reasons (e.g. tax loss selling and liquidation of crypto donations).” Moro continued, noting that “as the year turned, the selling pressure from such activities has subsided, and we have seen more buy-side interest pick up.”
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