Cryptology Monthly Commentary – December

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Stay up to date with our monthly crypto overview:

  • The crypto markets consolidated in December.
  • Bitcoin and Ether dropped by 19.54% and 18.04%, respectively.
  • The top outperformers last month were Terra and Avalanche.
  • El Salvador and MicroStrategy added more Bitcoin to their treasury reserves.

Market Overview – December

Unfortunately, there was no Santa rally in the crypto markets to close out 2021. A few outliers aside, crypto assets ended the year a leg lower as the market consolidated during the holiday period.

The prices of Bitcoin (BTC) and Ether (ETH) dropped by 19.54% and 18.04% in December, closing the year at $46,005 and $3,649, respectively. Without a major catalyst to push prices higher, the two leading cryptocurrencies failed to climb back up to their November all-time highs.

However, that shouldn’t deter from the fact that the two largest crypto assets by total market value booked healthy gains of 56.48% and 399.87% in 2021.

Crypto Asset Performance Review

In December, the crypto markets were largely in the red, with only a handful of outperformers in the green.

Leading crypto assets, including Bitcoin (BTC), Ether (ETH), and Binance Coin (BNB), lost between 18% and 20% in value month-on-month, while the likes of Solana (SOL) and Dogecoin (DOGE) dropped by over 20%. The biggest loser among the top crypto assets was Polkadot (DOT), which dropped by over 30% in December.

The standout performer last month was Terra (LUNA), boosted by the protocol’s uptake in the burgeoning DeFi market. The price of LUNA increased by 45%, continuing its strong Q4/21 price rally.

Equities recovered from the Omicron scare in November, rallying into the New Year. The S&P 500 Index increased by 5.60% in December.

U.S. Treasuries, measured by the S&P U.S. Government Bond Index, closed December -0.68% lower versus the prior month. Conversely, gold (XAU) rallied by 2.70% in the last month of the year.

Institutional Interest in Crypto

According to research by The Block, crypto derivatives trading volumes skyrocketed in 2021. The combined trading volume of Bitcoin and Ether options increased 443% in 2021, totaling $387 billion. Bitcoin and Ether futures volumes have increased by 338% year-on-year, totaling over $32 trillion.

2021 was also a good year for crypto custodians. In the past twelve months, institutional crypto custodians reportedly managed to raise over $3 billion, highlighting the market’s belief that the demand for qualified custodians that can hold digital assets on behalf of institutional investors is going to increase.

Bitcoin on Balance Sheets

The Bitcoin nation El Salvador added more Bitcoin to its treasury in December, according to a tweet by President Nayib Bukele. Bukele stated that the central American country bought 21 BTC to mark the last 21st day of the year 21 of the 21st century. Additionally, he said that El Salvador’s landmass is 21,000 km2 in a tongue-in-cheek tweet thread, alluding to Bitcoin’s finite supply of 21 million coins. Currently, El Salvador holds 1,391 BTC.

Public-traded MicroStrategy (MSTR), led by outspoken Bitcoin advocate Michael Saylor, also bought more bitcoin as cash reserves in December, reportedly adding $94.2 million
Worth of BTC to its already sizable holding. As of year-end 2021, the technology company holds 124,391 BTC that were purchased at an average price of $30,159. This makes MicroStrategy one of the largest Bitcoin holdings in the world.

Featured Portfolio Company

At Cryptology, we invest in innovative blockchain companies that are building the future of business and finance. In this section of our monthly commentary, we feature portfolio companies that are building disruptive technology that bring the power of blockchain to life.

Iconic Funds, a global crypto asset management group, is the investor bridge for those seeking exposure to crypto assets in a traditional, regulated manner. Headquartered in Frankfurt, Germany, with teams in London and New York, Iconic Funds offers listed crypto asset ETPs, diversified crypto index funds, alpha-seeking strategies and venture investment opportunities for investors. Iconic Funds removes the technical risks of crypto investing by offering investors trusted and familiar means to invest in crypto at industry-leading low costs.

Having issued a physically-backed Bitcoin ETP earlier in the year, Iconic Funds launched the Iconic Physical Ethereum ETP (IETH) in December. The physically-backed Ethereum ETP enables investors in Europe to add ETH exposure to their portfolios through the purchase of a regulated, exchange-traded investment vehicle, listed on traditional European stock markets.

Armed with a newly-approved base prospectus, Iconic Funds intends to issue multiple new crypto asset ETPs in early 2022 as it continues to champion its mission of driving crypto adoption.

The prospectus for each respective product may be found at the corresponding page in the following link:

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