Cryptology Monthly Commentary – October

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Market Overview – October

October was another historic month for Bitcoin as we witnessed the approval and launch of the first-ever Bitcoin ETF in the United States.  

The ProShares Bitcoin Strategy ETF (BITO) provides traditional investors with a convenient way to gain exposure to the price of Bitcoin by holding CME Bitcoin futures as the underlying asset. The fact that the ETF is a Bitcoin futures-based ETF and not a “physical” Bitcoin ETF is what helped ProShares gain SEC approval for its fund. 

On October 19, the Bitcoin ETF began trading on the New York Stock Exchange and experienced so much demand that it became the fastest ETF in history to reach $1 billion in assets under management (AUM).

On the back of ProShares’ listing success, numerous Bitcoin futures-based ETFs are now emerging. For example, the Valkyrie Bitcoin Strategy ETF (BTF) became the second Bitcoin ETF to hit the market only three days after BITO. 

The journey to list a Bitcoin ETF started in 2014 when the Winklevoss brothers first sought approval for an ETF that tracks the price of Bitcoin. Now, seven years later, the first Bitcoin ETF finally launched on US soil. 

Boosted by the positive momentum created by the first-ever US Bitcoin ETF, the price of Bitcoin hit a new all-time high in October, peaking at around $67,000 on October 20. 

In light of Bitcoin’s positive price momentum coming into Q4/2021 combined with the high demand for Bitcoin ETF in the US, many Bitcoin experts believe we could see another move higher to hit a new all-time high before year-end. 

Crypto Asset Performance Review

Bitcoin hit a new all-time high of just under $67,000 on October 20 following the Bitcoin Futures ETF approval, continuing its positive price momentum since the start of the month to book a 45.00% month-on-month price increase. 

Boosted by the Bitcoin rally, the broader crypto market followed suit, resulting in substantial gains for Ethereum (ETH), Binance Coin (BNB), Solana (SOL), and Polkadot (DOT), which increased in value by 49.05%, 44.36%, 44.48%, and 56.75%, respectively. 

The biggest (and most surprising) gainer was the meme coin, Shiba Inu (SHIB), which climbed by 919.13% to become the ninth-largest cryptocurrency by market capitalization. The Dogecoin spin-off even managed to flip its meme coin predecessor Dogecoin, despite DOGE rallying 45.93% month-on-month. While a $39 billion total market value seems way too high for a meme coin based on a meme coin, the Shiba Inu rally highlights the growing power of memes in the crypto markets. 

Here are the performances of this month’s top crypto assets (from September 29 to October 29, 2021)

While the crypto markets experienced an impressive October rally driven by Bitcoin’s new all-time high, US stocks also set new record highs, with both the S&P 500 and Nasdaq reaching all the highs to close out the month. The S&P gained 5.43% month-on-month to hit $4,596 while Nasdaq climbed to $15,448, up 6.44% versus September. The global equity markets edged 5.06% higher in October, measured by the MSCI World Index. 

The value of gold (XAU) climbed by 3.46% in October, while US Treasuries closed the month a touch lower on the back of the risk-on rally in stocks, with the S&P US Government Bond Index closing the month 0.11% lower.

Institutional Interest in Crypto

With the first US Bitcoin ETF hitting the New York Stock Exchange, institutional interest for crypto has never been higher. As a result, Wall Street is gearing up to provide more crypto products and services to keep up with the growing customer appetite for crypto. 

To address the growing demand, Minneapolis-based US Bank announced that it has launched a crypto custodian service that allows fund managers to securely store their digital assets. Gunjan Kedia of the bank’s wealth management and investment services division said: “Our clients are getting very serious about the potential of cryptocurrency as a diversified asset class. I don’t believe there’s a single asset manager that isn’t thinking about it right now.”

CME Bitcoin futures trading volumes have skyrocketed, boosted by the launch of Bitcoin futures-backed ETFs. The Chicago Mercantile Exchange is now reportedly the largest Bitcoin futures exchange in the world, replacing Binance after the amount of funds locked in the CME Bitcoin futures contracts has tripled in October.

Bitcoin on Balance Sheets

PSV Eindhoven became the first European football club to hold Bitcoin on its balance sheet. 

In August, the Dutch football club announced that the Bitcoin exchange AnyCoin Direct had become an official club sponsor for two seasons. The sponsorship fee has been paid entirely in Bitcoin. A few weeks ago, an PSV Eindhoven club official confirmed that the club had retained some Bitcoin in self-custody, making them the first football club to hold Bitcoin in their treasury. 

The “Bitcoin nation” El Salvador, which made the cryptocurrency legal tender in September, has purchased an additional 420 BTC for its treasury, according to a tweet by President Nayib Bukele. The Central American nation has purchased a total of 1120 BTC since it has declared Bitcoin legal tender.

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. 

Chintai is a Singapore-based Fintech company that provides blockchain solutions for banks, financial institutions, and asset managers looking to leverage digital asset technology.

Offering a one-stop platform with a robust automated compliance engine powered by the company’s proprietary solution Sentinel-AI, Chintai enables traditional finance companies to create, issue, and trade compliant digital assets through the entire lifecycle. 

Additionally, Chintai provides automated compliance, reporting, data reconciliation, cap table management, automated corporate actions, liquidity, and instant settlement to provide a complete end-to-end solution.

In July 2021, Chintai launched its Institutional Beta in the US and Europe, garnering overwhelming participation from the world’s top investment banks and asset managers. Riding on this success, the Beta program will be extended to Asia from November 2021 onward, in line with the participation at the Singapore Fintech Festival.  

Chintai’s global ambition takes center stage with the opening of the Chintai Singapore office and a brand new office in Frankfurt in Q4 2021. The company’s presence in Singapore is strategically timed as part of its overall growth plan due to the openness of the country and robust Fintech Ecosystem. In Frankfurt, the Innovation and Technology team continues to grow to strengthen its product development capability.

Chintai is led by co-founders David Packham, Ryan Bethem, and Phillip Hamnett. 

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