September 10 – 16, 2019 | Booming Institutional Interest, Valuation of Bitcoin, and More

3iQ Research Group consolidates the top five cryptoasset stories of interest
to investment advisors and our investors.


Booming Institutional Crypto Interest Means Regulations Need to Catch Up

 

 

 

 

 

 

 

 

 

 

 

September 11 – Institutional interest for cryptoassets has been growing this past year, largely in part due to advancements in secure infrastructure and custodial solutions being tailored for institutional investments. Traditional financial companies have also begun to pursue their own initiatives to cater to the needs of existing clients who have interest in the sector. Until recently, one of the major barriers for new institutions in the sector has been custody and how these institutions can hold or manage cryptoassets on behalf of clients. However, the secure holding of clients’ cryptoassets isn’t the only issue holding institutions back. “Having your private key locked in a mountain vault is all well and good, but it doesn’t help you execute a variety of trading strategies,” said Bohrer-Bilowitzki, the head of sales for the digital assets custody and portfolio management firm Copper Technologies. “The safeguarding and trading infrastructure was developed specifically to marry the worlds of ‘hodlers’ and those that need constant, quick and secure access for trading purposes.” Regulatory oversight in relation to passive or actively managed strategies that involve the movement of cryptoassets in custody still remains unclear, and regulations need to address the needs of institutions and their clients. “I think the technology is there, but what is still lacking is an understanding at a regulatory/industry level about what custody means for digital assets,” said Bohrer-Bilowitzki. “The regulatory landscape still needs to improve. The lack of agreement among national/regional bodies is still discouraging to some. But this too is changing rapidly for the better.”

Read the full article from Bitcoin Magazine here.


Analyst: What Bitcoin’s Valuation Says About its Volatility

September 16 – Investment advisors may be reluctant to invest in bitcoin for several reasons, but issues surrounding its volatility and valuation could be exaggerated. Bitcoin, like gold, is one of the few remaining “real assets” still traded in today’s markets, meaning its value is not derived from any other asset. Gold is in a similar situation, in that it is also a “real asset” with no income stream and a market value largely driven by sentiment. With no income stream, and just 10 years of existence, bitcoin has proved to be a difficult asset to value using traditional cash flow models. The main driver for the current valuation of bitcoin can be stemmed from sentiment, and what other investors are going to think it’s going to be worth in the future. As it stands, the fundamentals of bitcoin appear to be its narrative, and any uncertainties relating to its story imply that volatility in its market price will continue. However, why has the volatility of bitcoin declined dramatically against other assets classes over the last several years? It could be that the story of bitcoin is starting to become more well-established than in years past. “This matters for its eventual use case: will it always be too volatile to be used as a payment token, store of value, etc.? This in turn impacts its narrative, which affects its valuation and volatility, which affects its eventual use case. The self-perpetuating loop will eventually be broken as the sector matures and bitcoin’s role as an alternative asset class becomes more firmly consolidated – when uncertainty diminishes and its “intrinsic value” becomes easier to quantify,” said Noelle Acheson, the director of research at CoinDesk.

Read the full article from CoinDesk here.


Fundstrat: Bitcoin will be a “Risk On” Asset After S&P 500 Breaks Out

 

 

 

 

 

 

 

 

 

 

 

 

 

September 15 – The famed bitcoin bull and Fundstrat co-founder Tom Lee has noted in a recent interview on CNBC Fast Money that there is a correlation between US equities markets and the market price of bitcoin. Lee believes that bitcoin could become a “risk-on” asset after US equities print a decisive breakout. Based on a past Fundstrat analysis, bitcoin often performs best when the S&P 500 index is up more than 15% YTD. Lee notes that three out of the four best years for the S&P 500 index over the last decade has also coincided with the strongest performing years for bitcoin. “I think that there have been tailwinds building for bitcoin. One has been institutional money potentially coming through things like Bakkt and programs like Libra and the technicals have been better. But I think bitcoin has kinda stalled recently because the macro outlook has stalled. In a world without trend, bitcoin doesn’t go up. So I think the next big catalyst is a decisive breakout in the equity markets because once equities reach an all-time high, bitcoin becomes a risk-on asset,” said Lee.

Read the full article from CNBC here.


Bitfarms Expands Bitcoin Mining Operations in Québec

 

 

 

 

 

 

 

 

 

 

 

 

 

September 10 – With a cool climate and seemingly endless supplies of hydroelectric power, Québec is quickly shaping up to be a thriving cryptocurrency mining hub. Hydro-Québec has recently announced that it provided 668 megawatts (MW) of power to bitcoin miners alone. The crown corporation also announced that it is taking proposals for 300 MW more, which would make cryptocurrency mining one of the biggest power consumers in the province. Bitfarms (TSXV:BITF), which is headquartered in Toronto, also recently announced that installation of new mining hardware has begun, and once completed, will add another 210 petahashes per second (PH/s) of computing power to its existing mining operations. “In partnership with Hydro-Sherbrooke, Bitfarms has commenced operations at its fifth modern data centre, utilizing surplus hydroelectricity to power blockchain infrastructure facilitating the Bitcoin network,” said Pierre-Luc Quimper, the president and founder of Bitfarms. While Bitfarms continues to expand in Québec, the future of cryptocurrency mining in the province still remains uncertain, largely due to political factors and frameworks established by The Energy Board of Québec. “The political crisis created by the former provincial government (defeated in October 2018) that forced Hydro-Québec to [turn] 180 degrees on its ‘blockchain industry’ offering gave a cold shower to any investors willing to develop the industry here … There are much better jurisdictions across Canada who are currently offering energy at a price similar if not lower and without the political risk,” said Jonathan Hamel, the founder of academiebitcoin.com.

Read the full article from Bitcoin Magazine here.


Deutsche Bank Joins JPMorgan’s Ethereum-Based Crypto Payments Network

 

 

 

 

 

 

 

 

 

 

 

 

 

September 16 – Deutsche Bank has now joined JPMorgan’s crypto payments network, bringing the total number of banks part of the Interbank Information Network (IIN) to 320. The IIN, which was originally announced back in October 2017, is built on Quorum, which is an Ethereum-based blockchain network created by JP Morgan. The network utilizes a stablecoin, which is commonly dubbed as the “JPM Coin” to work as a remittance payment method. Takis Georgakopoulos, a managing director of treasury services at JPMorgan, noted that the IIN would have “very big natural limitations” if its members were only part of the bank’s existing client pool, so the inclusion of Deutsche Bank “is going to help us drive towards ubiquity.” The IIN is expected to have 400 members by the end of the year, and more major banking members will likely be announced soon.

Read the full article from CoinDesk here.


3iQ Bitcoin Trust (Class A) : NAV as at September 13, 2019

Underlying cryptoasset prices sourced from Bloomberg.View charts and more fund data at https://www.theglobeandmail.com/investing/markets/funds/FBCBT.CF/performance/


3iQ Global Cryptoasset Fund (Class A): NAV as at September 13, 2019

Underlying cryptoasset prices sourced from Bloomberg.View charts and more fund data at https://www.theglobeandmail.com/investing/markets/funds/TIQ101.CF/performance/

3iQ Corp. (“3iQ”) is the first Canadian investment fund manager to agree to terms and conditions with the Canadian securities regulatory authorities which permit 3iQ to manage a multi-cryptoasset investment fund available to Canadian accredited investors. 3iQ provides accredited investors with exposure to bitcoin, ether, and litecoin through its 3iQ Global Cryptoasset Fund.

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2019-09-25T12:11:40-05:00 September 16th, 2019|