Invesco is the latest investment management firm to apply for crypto-based exchange traded funds (ETFs), adding to the pile of ETFs the Securities and Exchange Commission (SEC) still needs to decide on.
According to the filing sent to the SEC, Invesco – which holds US$1.5 trillion in assets – has applied for two ETFs that are crypto-linked equities like Square and Microstrategy. These are the Galaxy Blockchain Economy and Invesco Galaxy Crypto Economy ETFs, where nearly 85 percent of the funds will sit. The rest of the portfolio will be put in other trusts and funds that hold cryptocurrencies.
Invesco with a filing for the Galaxy Crypto Economy ETF which will hold miners etc as well as up to 10% in bitcoin futures pic.twitter.com/7V2bNKTVpR
A queue of companies waiting to hear about their Bitcoin (BTC) ETFs has already formed. There are at least 12 issuers, including Fidelity Investments, Grayscale Investments and WisdomTree Investments, which are currently chasing Bitcoin ETFs, and the SEC has acknowledged at least six applications. This means it has a limited amount of time to make decisions about approval.
The logic is that since the SEC doesn’t seem to have a favourable view of Bitcoin, Invesco’s funds may be able to sidestep the SEC’s Bitcoin ETF blockades by only investing indirectly in cryptocurrencies.
Other companies have tried a similar route, such as an application for the Volt Bitcoin Revolution ETF filed recently that would also target companies exposed to Bitcoin. Or Bitwise Crypto Industry Innovators ETF, which tracks companies such as crypto miners and payment firms, launched in May.
Marc Lasry, a famous American hedge fund manager and co-owner of the NBA’s Milwaukee Bucks basketball team, has regretted not buying enough Bitcoin (BTC) in the past few years.
"The probability as more and more people keep using #bitcoin it is going to keep moving up. It's happened a little bit quicker than I thought it would. I should have bought a lot more," says Marc Lasry. #btcpic.twitter.com/qICVIzs61R
In an interview on CNBC’s Squawk Box, Lasry said he was surprised by how fast BTC surged in price over recent months, mainly due to institutional demand and widespread adoption.
I think the probability, as more and more people start using Bitcoin, is that it’s going to keep going up. It’s happened a lot quicker than I thought it would. I should have bought a lot more. That was my mistake.
Marc Lasry
This isn’t the first time Lasry regrets not buying BTC. In July 2018, he told CNBC he lamented not buying Bitcoin when it was valued at US$300, also predicting a price target of US$40,000 and that mainstream adoption would expand the cryptocurrency to better markets.
The reason I like Bitcoin is because it’s the one everybody is going to come to.
Marc Lasry
Going Down or Up, Bitcoin is Here to Stay
When asked about the current market status for BTC, Lasry said there are strong arguments for both sides, bearish or bullish. He maintains relatively bullish on Bitcoin. Whether it goes down to US$20,000 or up to $100,000 the market is “already here”, he said, adding it’s unlikely to go to zero.
I honestly don’t know where it is going to go but you’ve got that market, it’s there. I could make you an argument it could go to $100,000. I could make you an argument it could go to $20,000.
Marc Lasry
Lasry is a co-founder and CEO of Avenue Capital Group, a global investment firm founded in 1995. He has been a crypto advocate since he first heard about Bitcoin, making an undisclosed investment in the crypto hedge fund BlockTower Capital a few months ago.
MicroStrategy has announced offering US$400 million worth of Senior Secured Notes due in 2028 and using the funds to buy Bitcoin (BTC).
On June 7, the company said the secure notes will be available to qualified investors. This will be the first time a corporation issues a junk bond sale to buy cryptoassets.
MicroStrategy Announces Proposed Private Offering of $400 Million of Senior Secured Notes to acquire additional #bitcoin. $MSTRhttps://t.co/ilhUt1M73j
MicroStrategy reported an overall operating loss of US$183.2 million, led by a $194.1 million impairment in the last quarter. MicroStrategy’s MSTR stock has been down more than 60 percent since February 2021 – added to a massive debt and over-leveraged exposure to BTC.
MicroStrategy already owns 92,079 Bitcoins, which would account for roughly US$3 billion at press time. The firm said it needed to write down the value of its assets by approximately US$284.5 million in the next quarter due to BTC’s price plunge.
Many in the crypto community are considering this a risky move. But it seems the firm hasn’t given up on the father of all cryptos, and it’s showing it with this recent junk bond sale.
Circle, the company behind USDC (currently the second largest stablecoin) just beat the record for the investment round with the most capital received by a crypto-related company.
1/4 ANNOUNCEMENT: Circle has raised $440M in a strategic financing to accelerate our growth and market expansion. This comes on the heels of extraordinary growth in USDC adoption, and acceleration across our business. https://t.co/RbWg4O90B1
According to Forbes, the investment round garnered a total of $440 million USD from institutional and private investors alike. It is $18 million USD more than the prior record of $422 million USD raised in 2018 by Bitmain, a company that offers custom crypto mining solutions worldwide.
Aside from setting a new record in the crypto space, this investment is also in the top 10 private fintech investments of all time. Five of the largest crypto-investments in history have been in 2021.
Company
Amount raised (in USD)
Date
Circle
$440 million
28 May 2021
Bitmain
$422 million
7 August 2018
BlockFi
$350 million
11 March 2021
Dapper Labs
$305 million
30 March 2021
Blockchain.com
$300 million
24 March 2021
Bakkt
$300 million
16 March 2020
Coinbase
$300 million
30 October 2018
Bitmain
$292.7 million
19 June 2018
Bitso
$250 million
5 May 2021
Hangzhou Qulian Technology
$235 million
4 June 2018
Bithumb
$200 million
19 April 2019
Ripple Labs
$200 million
1 October 2020
In a public statement, Circle thanked everyone for their trust and reiterated their commitment to using stablecoins in order to improve the payments landscape.
The financing, among the top 10 in private fintech investments, fuels the company’s continued growth, organizational development and market expansion opportunities. We are grateful to our colleagues, customers, strategic partners, investors, regulators and other stakeholders who are continuing to work with us in making Circle’s vision a reality.
Overall, this has been an important year so far for institutional investments into crypto, with the public listing of Coinbase being one the highlights.
PayPal will soon allow users to withdraw their crypto funds, according to PayPal’s blockchain executive.
Speaking at Consensus 2021, Jose Fernandez da Ponte, VP at PayPal, said that a withdrawal function is on the way and will allow users to send their crypto to third-party wallets.
The withdrawal function comes after PayPal registered a tremendous interest in its crypto custodial service. “We want to make it as open as possible, and we want to give choice to our consumers,” he said.
PayPal’s Q1 results even surpassed the company’s expectations with over 6 billion in revenues in the first quarter of 2021 —a 31% record spot. Dan Schulman, the CEO, said the results were mainly thanks to their decision to integrate cryptocurrencies into Paypal.
Bitcoin for Paypal in Australia
Currently, PayPal does not support Bitcoin as a payment option for Australia. This services is currently only available in the USA (except Hawaii) for Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. Stay tuned, we will let you know once they enable this feature for us Aussies.
PayPal’s Own Stablecoin
After PayPal’s vice president Jonathan Auerbach reunited with central bankers worldwide, rumours circulated about a possible stablecoin issued by the payment giant. However, da Ponte said it is “too early to think about that.”
Sometimes we position the debate as CBDCs versus stablecoins, but it’s a bit of a fake debate. There is no trade-off. We think they will co-exist.
Jose Fernandez da Ponte, VP at PayPal
Speaking about stablecoins and CBDCs (Central Bank Digital Currency) —and whether one will overtake the other by global usage— da Ponte stated there is no debate against the two.
PayPal as the Gateway for CBDCs
While the payment processor is not currently working on its own stablecoin, da Ponte said financial institutions like PayPal can serve as a bridge for the distribution of CBDCs when the time comes.
To reinforce his view, he referred to how Americans had to go to a bank to cash their stimulus checks, in the midst of a pandemic. “I think we can do better than that” he added.
The third annual Global Crypto Hedge Fund report, released on Monday, aims to provide an overview of the global crypto hedge fund landscape. With the majority of the report looking quite bullish for the crypto space, it appears institutions are warming up to crypto.
Crypto hedge funds have heavily increased their Assets under Management (AuM) in the past year. The 39 surveyed funds are currently at $180 billion USD AuM and according to the report, 86% of them are intending to add more capital into the asset class by the end of 2021. This is a massive 4,600% increase from $3.8 billion USD AuM in 2020. The average AuM for this year’s surveyed funds increased from $12.8 million USD to $42.8 million USD.
Some major topicsdiscussed in the report:
Decentralised Exchanges Usage By Hedge Funds
Fund Manager Bitcoin Predictions
Future Fund Intentions
Reasons and Obstacles to Investing
Decentralised Exchanges Usage By Hedge Funds
DeFi protocols aim to deliver peer-to-peer financial services, which allow cryptocurrency trading, loans, interest accounts without the use of banks or traditional finance intermediaries.
Between April 2020 and April 2021, the trading volume on these platforms grew more than 90-fold, with Uniswap making up for half of the DeFi market volume in April 2021.
3rd Annual Global Crypto Hedge Fund Report
Whilst they may be still far from using decentralized applications, many financial institutions are trying to be more educated and try to understand the potential impact that DeFi may have on the future of financial services.
Henri Arslanian, Global Crypto Leader at PwC
Fund Manager Bitcoin Predictions
Data shows that managers remain bullish on Bitcoin, with the median predicted price being estimated at $100,000 USD. In fact, the majority of predictions were in the $50,000 to $100,000 USD range (65%), with another 21% predicting prices would be between $100,000 and $150,000 USD.
Market cap predictions are also optimistic, with the majority of fund managers estimating the total crypto market capitalisation will be between $2 and $5 trillion USD. Meaning that they see there is still lots of investing to be done in the space before the end of the year.
3rd Annual Global Crypto Hedge Fund Report
Future Fund Intentions
The decentralised finance (DeFi) space has gotten a lot of attention in the past year with traditional finance looking at new technologies and adding them to their portfolio. The oracle service Chainlink (LINK) was included in 30% of hedge fund investments, with blockchain interoperability protocol Polkadot (DOT) and liquidity protocol Aave (AAVE) making up 28% and 27%, respectively.
The survey highlights that around a fifth of survey hedge funds are currently investing in digital assets. And when asked what investment strategies (fundamental, trading, arbitrage, venture, pre/post ICO, passive, other) best describe hedge funds exposure to digital assets, the majority responded with fundamental (57%) and trading (57%).
Reasons and Obstacles to Investing
Reasons given by hedge fund managers for including digital assets in their portfolio are ‘general diversification’ – as per 57% of respondents. Of the remainder, 29% stated ‘exposure to a new value creation ecosystem’ as the primary reason to invest while 14% suggested that it made for a good inflation hedge.
The main obstacles to investing, regulatory uncertainty is by far the greatest barrier (82%). Even those who do invest in digital assets cite it as a major challenge (50%). Client reaction/reputational risk is high (77%) as well as digital assets being outside the scope of current investment mandates (68%).
3rd Annual Global Crypto Hedge Fund Report
Around two thirds of Traditional Hedge Funds said that if the main barriers were to be removed they would either actively accelerate investment in digital assets or potentially change their approach and become more involved (64%).
From the findings in this report it’s evident that hedge fund allocations to digital assets continue to gain traction. Diversification and exposure to a new value creation ecosystem are cited as key drivers for investing in digital assets. This is unsurprising given that hedge funds tend to be early adopters, at the forefront of innovation whilst remaining committed to achieving the best performance possible. Further education, regulatory clarity and the evolution of service providers and related market infrastructure could lead to the acceleration of increased investment and further institutionalisation of the industry.
Ray Dalio, founder of Bridgewater Associates (one of the world’s largest hedge funds), has revealed that he holds some Bitcoin (BTC).
The entrepreneur and fund manager, who has previously expressed concern about the possibility of heavy regulation of Bitcoin, now seems to have acquired some.
Bitcoin Over Bonds
Both Dalio and Stanley Druckenmiller, also a billionaire hedge fund manager, have pessimistic views of the dollar and have taken positions in Bitcoin.
The elephant in the room is inflation. It may become so obvious that the Fed has to move, and the longer they wait to move, the bigger the bubble will be and the bigger the reaction.
Stanley Druckenmiller
With views like these pervading the air, many people are looking for an alternative to the dollar. Dalio mentioned during an interview with CoinDesk that retailers might prefer buying bitcoin over bonds due to inflation. This poses a risk to government and since “it goes into bitcoin, and it doesn’t go into credit, then [governments] lose control of that.”
Dalio also mentioned that Bitcoin’s “greatest risk is its success” such that governments, fearing competition from Bitcoin to state monetary systems, could crack down on its owners.
One of the great things, I think, as a worry is the government having the capacity to control almost any of them, including bitcoin, or the digital currencies,
Ray Dalio
An Asset To Combat Inflation
One of the perceived uses of Bitcoin is that it could act as an asset that fights inflation, and in an inflationary future where “cash is trash” Bitcoin might catch on as a store of wealth. Due to the ongoing printing of money and harsh economic position due to the COVID-19 pandemic and various other factors, the power of the dollar has decreased.
You need to borrow money? You have to print that. You need more money? So, taxes go up and that produces a dynamic. Now I can keep going on about what happens in that dynamic. It may be capital controls. … I painfully learned in 1971 that it causes stocks to go up. It causes… gold, bitcoin, real estate, everything to go up, because it’s really going down in dollars. And that’s the part of the cycle we’re in.
Ray Dalio
In countries like Argentina, Bitcoin has seen a major increase in use due to the devaluation of the Argentine Peso (ARS), causing a major reduction in the buying power of people in the country. For them Bitcoin is a solution to store their wealth. If someone had 100 ARS in 2019 versus 100 ARS worth of BTC, that BTC investment would be considerably higher now. In the last 10 years the Argentine Peso has devaluated almost 95% against the US dollar.
Dalio also spoke at Consensus, a massive online blockchain seminar on Monday regarding money, monetary policy & Bitcoin. Being part of an event like this shows that there is an interest in the technology and a willingness to share information and knowledge with individuals in this space.
Whale's tail on water https://unsplash.com/photos/kkXDhAUnxYI
A Bitcoin billionaire has been buying the dips since early 2019 and this dip is no different. There was an additional 926 BTC added to the wallet yesterday for $3.9 million USD at $37,738 per bitcoin.
BTC Price and Wallet Balance [BitinfoCharts]
The wallet above has a balance of 105k bitcoin with an estimated market value of $4 billion USD. The largest address, according to bitinfocharts, currently holds 269,427 BTC worth $10 billion USD, which also bought 34,000 BTC last week.
In crypto talk, when stuff like this happens, people say it shakes out all of the weak hands and the people … who maybe bought because they saw it on the news,
Ethan Lou, author of “Once a Bitcoin Miner” [source]
Whales Loving The Dip
Institutions and long term HODLers have been accumulating bitcoin during this dip after the large sell-off inspired by various influences.
Bitcoin investor whales sold in May, reducing balances by 111k bitcoin from 1 May to 18 May, but then they added 53k bitcoin on 19 and 20 May. This is unlikely to have moved the market, but shows they took advantage of the opportunity. pic.twitter.com/FZjNrnxcyz
Institutions seem to be the forerunners in buying however, no one really knows who these massive wallets belong to. Some companies have been quite open about their crypto acquisitions, including Micro Strategy which recently bought additional bitcoin for $10 million USD. They hold more bitcoin than any other institution according to Bitcoin Treasuries. They currently hold 92,000 bitcoin with Tesla in second place holding 43,000 bitcoin.
On Thursday, U.S. President Joe Biden provided details on how the administration plans to generate an additional $700 billion USD in revenue from tax collection. Businesses will need to report on cryptocurrency transactions over $10,000.
According to a recent report released by the Biden administration, the U.S. will upgrade the capabilities of the IRS in effectively stifling tax evasion and bring some standardisation to the laws regarding cryptocurrency reporting for businesses.
As the crypto market reached $2 trillion USD earlier this year, which seems to be turning some heads until the recent crash, more attention has been given to crypto.
*BIDEN IRS PLAN WOULD DOUBLE AGENCY STAFFING, TARGET CRYPTO
*TREASURY CALLS FOR CRYPTO TRANSFERS OVER $10K REPORTED TO IRS
Some proposed measures are aimed at cryptocurrency, including a requirement that crypto exchanges report gross receipts and purchases. It also calls for businesses receiving crypto to report on transactions larger than $10,000 from 2023 — a standard that already exists for cash transactions.
This is good news in a bad week for crypto. The U.S. government essentially just admitted crypto is here to stay, and now they are making policies and laws to help with the regulation thereof.
More Power To The IRS
The IRS will be provided with additional resources in order to combat advanced methods of tax evasion, since “Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion,”. The IRS will also be allowed to access more information through “Financial institutions would add information about total account outflows and inflows to existing reporting on bank accounts” and “The reporting regime would also cover foreign financial institutions and crypto asset exchanges and custodians.”
The IRS still relies on Individualand Business File Systems that date back to the 1960s—the oldest in the federal government. The result is decades upon decades of tax administration built upon a system that is written in a programming language that is no longer taught, and where new functions are added in a patchwork rather than integrated manner
The American Families Plan Tax Compliance Agenda
The Biden administration wants to give the I.R.S. $80 billion over the next decade for technological upgrades and to increase staff with specialised expertise in the required areas. The report also states that the IRS’s outdated technology currently combats around 1.4 billion cyberattacks yearly and is in need of dire upgrades. These upgrades aren’t just for catching the baddies, this work can also “help avoid unnecessary, costly and burdensome audits of compliant taxpayers.”
Standards For CBDC’s
The Fed admits that Distributed Ledger Technology (DLT) and crypto are changing the world, and it is important to understand and be ready for these changes in the financial system. They have also acknowledged they are experimenting with a Central Bank Digital Currency (CBDC), but it will not replace current forms of settlement.
While Bitcoin (BTC) price struggles below $45,000 USD, MicroStrategy is stacking up more coins in the dip. On Tuesday, the publicly traded business intelligence company announced it purchased additional Bitcoin, worth about $10 million USD.
MicroStrategy Now Holds Over 92k Bitcoin in Reserve
On Tuesday, MicroStrategy purchased an additional 229 Bitcoin at an average value of $43,663 USD per coin, according to the tweet by the CEO, Michael Saylor.
MicroStrategy has purchased an additional 229 bitcoins for $10.0 million in cash at an average price of ~$43,663 per #bitcoin. As of 5/18/2021, we #hodl ~92,079 bitcoins acquired for ~$2.251 billion at an average price of ~24,450 per bitcoin. $MSTRhttps://t.co/fU6LN4WbKI
Following this recent purchase, MicroStrategy currently holds 92,078 BTC in its reserve, remaining one of the largest corporate Bitcoin investors. Just last week, the company acquired 271 BTC for $15 million USD, at an average of $55,387 per Bitcoin. This follows Tesla’s announcement that it has suspended accepting Bitcoin payments for its vehicles over environmental concerns.
The massive correction in the price of Bitcoin, however, didn’t deter MicroStrategy from buying the dip. This goes to show how confident the company is regarding Bitcoin.
BTC Dominance Drops to 40%
For the past few days, Bitcoin has been struggling below $50,000 USD, as people panic-sold their holding. The cryptocurrency was trading at $43,644 USD on CoinMarketCap, during the time of writing. Its market capitalization has dropped down below $1 trillion amid the massive price decline. BTC shaded about 22.61 percent in value over the past seven days.
Meanwhile, Bitcoin’s dominance has also dropped to 40 percent. On the other hand, there has been a rise of altcoins.
