Crypto assets are arriving 13 years after the birth of bitcoin
if not at majority, yes at adolescence. Regulators are striving not to miss the boat and to approve regulations for this sector, while investors, large and small, show their interest in an asset that has managed to rise in 2021 as one of the favorite values in the face of runaway inflation.
The crypto-assets market has reached a valuation of 2.2 trillion dollars and the virtual currency par excellence, bitcoin, accumulates an average annual revaluation in the last eight years of 67%, compared to 6.8% of the MSCI World Index . A profitability with enormous doses of volatility: bitcoin started the year below $ 30,000, exceeded 63,000 in April and lost again 30,000 in July. It closes the year on the 47,000 dollars.
Seven out of ten institutional investors expect to buy or invest in digital assets in the future, and more than 90% of those interested in digital assets are confident of including them in their clients’ portfolios in the next five years, according to a survey conducted by Fidelity. Digital Asset, a specialized division of the US management company. Crypto assets thus already have the interest of investors, large and small, and of asset management professionals, who are asked several questions: what allocation to give them within portfolios and how and in what to invest specifically .
In the case of bitcoin, Robeco points out that “without a solid vision of its evolution, an allocation of up to 2% would seem reasonable from the point of view of portfolio risk.” Of course, they add that the high energy consumption that mining entails – it uses more electricity than a country like Norway – does not make it viable for a sustainable investor.
If deciding what percentage of the portfolio should go to crypto assets is still more complex to decide how to make it possible. Today, and without a regulation in sight in the short term, the asset management industry in the euro zone cannot directly buy bitcoins or ethers. There is hardly any offer of investment funds or exchange-traded funds –ETF or ETP– specific on this subject, which have the passport to be marketed in the EU, the UCITS casing. At the moment, there are only a handful of exchange-traded funds on crypto assets that have managed to be traded in Spain by some brokers, either among specialized investors or among small savers. In Europe, according to Morningstar figures, assets linked to ETFs with exposure to crypto assets have exceeded 10.5 billion euros.
Meanwhile, the large asset management firms are already working to operate in this segment. Fidelity has had a specific division for digital assets for a few years and UBS, Goldman Sachs and Morgan Stanley are already working on an approach to this type of assets for the wealthiest clients. In Spain, Santander plans to launch an ETP linked to cryptocurrencies in mid-2022. And the Swiss subsidiary of BBVA has a crypto-asset custody and sale service.
The solution, for those interested, can then be to invest in companies related to crypto assets and blockchain technology, securities that also have high doses of volatility.
Among those values, HIVE Blockchain Technologies stands out, scoring 45% in 2021. It was the first Canadian crypto-asset miner to debut on the stock market and its market value rises to 1,000 million dollars. The company has crept into the top positions of the Alcalá Multigestión Oricalco fund, which has appreciated 67% in the year, and which also has other companies related to blockchain and crypto assets in its portfolio such as Argo Blockchain, Galaxy Digital Holdings, Bitfarms or the European ETP provider of crypto assets ETC Group.
For a few months it has also been possible to invest in platforms that operate digital assets. Coinbase debuted on the Nasdaq in April and reached a market value of $ 100 billion – which has fallen to the current $ 55.6 billion. The platform thus surpassed by capitalization ICE (Intercontinental Exchange), owner of the New York Stock Exchange, and the Nasdaq. In the coming months, the arrival of another platform, eToro, is expected to make its debut on Wall Street through its merger with a SPAC.
Europe. The European Commission is working on the development of the MiCA regulation (acronym for markets in crypto-assets) but far from the speed at which the market for crypto-assets is growing. The latest draft delays its implementation for digital assets until well into 2024, as countries like Germany, France and Luxembourg scramble to move forward with their own regulations. A year before, the adoption of this regulation will come for digital currencies referenced to assets (stablecoins) and those for electronic money tokens or e-money tokens. The latter market has seen strong growth this year, from $ 24 billion to $ 141 billion, according to Bank of America. The analysis firm bets on Mastercard, Signature, Visa and Western Union as some of the values that will benefit the most.
Global regulation. The IMF has recently called for a global regulatory framework on crypto assets to avoid systemic risks to the financial stability of some countries. In the United States, Congress is analyzing future regulation while the SEC is delaying the approval of several exchange-traded funds linked to bitcoin.