The Week In Crypto - October 21 Edition
In this issue, we examine the benefits of diversification in crypto and look at:
* Why investors are turning bullish on XRP, the third-largest asset in the Bitwise 10
* Fidelity's rollout of bitcoin trading and custody to all qualified investors
* Libra's pivot and its pathway to launch
Enjoy!
Bitwise Asset Management The Week In Crypto: October 21, 2019
The Week In Crypto: October 21, 2019
www.bitwiseinvestments.com
A Mixed Week For Crypto As Bitcoin And Ether Fall, XRP and Monero Surge
The Bitwise 10 Large Cap Crypto Index fell 2.2% last week, pulled down by a difficult
week for the index’s top two
assets, bitcoin and ether,
which fell 2.4% and 4.1%,
respectively.
Other constituents
experienced strong returns,
however: XRP, the third
largest position in the index,
rose 3.6% for the week;
while Monero, the largest
privacy coin in the index,
rose 5.8%.
The disparate returns were a
reminder of the benefits of
diversification in crypto.
THE BITWISE THREE
The three most important developments impacting crypto last week.
Story 1: Investors Turn Bullish On XRP As Supply Inflation Falls
The price of XRP surged last week following the publication of the “
Q3 XRP Markets
Report
” by XRP’s parent company, Ripple. The report showed that Ripple’s sales of
XRP fell 73.7% quarter over quarter, dropping from $251.5 million in Q2 to just $66.2
million in Q3.
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Bitwise Asset Management The Week In Crypto: October 21, 2019
XRP is unique among large cap cryptoassets in that a majority of its supply is held by
Ripple, and Ripple publicly and transparently sells its XRP holdings to the marketplace.
Most of that XRP supply is locked up in long-term escrow contracts, but Ripple has the
ability to sell a fraction of its holdings each quarter.
The company has come under pressure recently for its aggressive sales, which many
see as weighing on the price of XRP. These critics note that XRP is down 48% over the
past year, while bitcoin is up 22%.
The fact that the company dialed back sales aggressively in Q3 shows that it may be
listening to its critics. Ripple took pains to note in its Q3 report that its recent sales
puts XRP’s inflation rate “[lower than] ETH and LTC, and similar to BTC.”
If Ripple can stick to a lower pace of sales going forward, this could mark a turning
point for XRP.
Story 2: Fidelity Digital Assets Opens To All Qualified Investors
Fidelity Digital Assets will roll out its bitcoin trading and custody solution to all qualified
investors in Q4, according to a
rare Financial Times interview with Fidelity CEO Abigail
Johnson
.
The company piloted the program with a select group of clients (including Bitwise) in
Q1 of this year.
Johnson notes in the interview that Fidelity’s size and established relationships makes
its entry into the space significant.
“
[Coinbase] is still a company that most people have never heard of
, and they don’t
have the existing relationships with the independent advisers” Johnson said,
comparing Fidelity to the largest stand-alone crypto company in the world.
Fidelity’s entry into the cryptomarkets in Q1 was widely heralded in the media, with
some predicting it would lead to a surge of institutional investment in the space. Last
week’s announcement that Fidelity is just now rolling out its platform to most investors
is a reminder that that surge may still be coming.
Story 3: Libra Pivots; May Have Pathway Forward
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Bitwise Asset Management The Week In Crypto: October 21, 2019
David Marcus, head of Facebook’s Libra cryptocurrency efforts, told a group of
bankers last week that Facebook could pivot its plans for Libra to make it more
palatable to regulators.
Facebook initially said that Libra would be a synthetic asset backed by a basket of
sovereign currencies. According to a Reuters report, however, Marcus told bankers
that they could do things differently: “
Instead of having a synthetic unit ... we could
have a series of stablecoins, a dollar stablecoin, a euro stablecoin, a sterling pound
stable coin, etc.
”
Individual currency stablecoins should be easier for regulators to support. After all,
their biggest concern about Libra is that it could represent a challenge to sovereign
currencies. Linking Libra to individual currencies would mute that challenge,
positioning Libra more as a payments tool than a challenger currency.
We continue to believe that Facebook will find some way to launch a limited version of
Libra in 2020 or 2021. We also believe it will roll out its cryptocurrency wallet
solution—Calibra—within the next year. Both events should be broadly positive for the
space.
ABOUT BITWISE ASSET MANAGEMENT
Bitwise Asset Management is the leading provider of index and beta funds for the
cryptoasset space. The firm created the world’s first and largest cryptoasset index
fund in 2017, and today manages multiple funds serving high net worth individuals,
financial advisors, family offices, multifamily offices, investment managers, and
institutions. Its indexes serve as the benchmark for dozens of financial institutions and
crypto funds. Based in San Francisco, Bitwise’s team combines expertise in
technology with decades of experience in traditional asset management and
indexing—coming from firms including Facebook, Google, Wealthfront, BlackRock,
J.P. Morgan, Goldman Sachs, IndexIQ, and ETF.com. Bitwise is backed by leading
institutional investors and is a frequent commentator on crypto in the press, and has
been profiled in Institutional Investor, CNBC, Barron's, Bloomberg, The Wall Street
Journal, The New York Times, and many other leading publications. The firm exists to
be a trusted partner to investors as they navigate the cryptomarket. For more
information, visi
t
www.bitwiseinvestments.com
.
DISCLOSURES
Bitwise Asset Management, Inc. and its affiliates (collectively, the “Manager”) have produced and
distributes this Presentation for informational purposes only and in relation to a potential opportunity to
subscribe for limited liability company interests (“Interests”) in any of several Funds offered only to
certain Accredited Investors by the Manager, including the Bitwise 10 Private Index Fund, LLC; the
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Bitwise Asset Management The Week In Crypto: October 21, 2019
Bitwise Bitcoin Fund, LLC; and the Bitwise Ethereum Fund, LLC. Any offer to sell or the solicitation of an
offer to buy Interests in those Funds will solely and exclusively be made through definitive offering
documents, identified as such, in respect of each Fund and in compliance with the terms of all
applicable securities and other laws. Such definitive offering documents, if any, will describe risks
related to an investment in the Funds (including loss of the entire investment) and will qualify in their
entirety the information set forth in this Presentation.
Prior to making any investment decision with respect to any Fund, each investor must undertake its own
independent examination and investigation of the Fund, including the merits and risks involved in an
investment in the Interests, and must base its investment decision—including a determination whether
Interests would be a suitable investment for the investor—on such examination and investigation, and
must not rely on the Manager or the Fund in making such investment decision. Prospective investors
must not construe the contents of this Presentation as legal, tax, investment, or other advice. Each
prospective investor is urged to consult with his or her own advisors with respect to legal, tax,
regulatory, financial, accounting, and similar consequences of investing in the Fund, the suitability of the
investment for such investor, and other relevant matters concerning an investment in the Fund. The
summary set forth in this Presentation does not purport to be complete and is qualified in its entirety by
reference to the definitive offering documents relating to the Fund. Do not place undue reliance on this
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of any Fund may vary substantially from the performance provided in this presentation.
Backward-looking performance cannot predict how any investment strategy will perform in the future.
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securities laws of any state, or the securities laws of any other jurisdiction, nor is such registration
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