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Bitcoin Monthly Report | September

  • On August 17th ETC Group announced that the total inflow of investor money to our Bitcoin ETC for the first time amounted to a total of $50 million in assets under management; 
  • With current Nasdaq and big-tech stock price-action analogous to Bitcoin in 2017, more tech-investors are looking at Bitcoin now; 
  • BTCE as a product used for equity financing for bitcoin holders solves one of the biggest issues in digital-assets – the concept of counterparty credit risk for institutional enterprises.

Performance Review

  • The Bitcoin price ranged between $11,345.65 on 31st of July and $11,678.60 on 31st of August, increasing 2.80%[1]
  • At the end of August, the Bitcoin Exchange Traded Crypto ETC stands at just under $54m of assets under management as of 31st August. AUM in USD terms grew by 21.50% in August.

August*  12 Month** 
2.93%  21.32% 

Past performance is no guarantee of future performance. Source: Bloomberg, HANetf *August figures based on 02.08.20 – 31.08.20 **12 Month figures based on 31.08.19 -31.08.20

 

What Has Driven This Performance?

Whilst ostensibly the performance of bitcoin was subdued, it belied the ongoing macro dynamics behind the demand for scarcity assets. Gold consolidated its hitherto rapid ascent to new all-time highs post the GFC and Euro-crisis of 2012 and the access to retail investors is a largely irreversible new force driving capital markets as information and online access accelerate.  Bitcoin is the world’s first investment mega-trend where retail has led institutional investors and increased demand is expected from both segments as the macro uncertainty prevails through the US election and beyond.

The popularity of our Bitcoin ETC is gaining amongst the digital-asset ecosystem as for example ITI Capital, the FCA-regulated Prime Broker can use it to provide significantly more attractive equity financing for bitcoin holders. This solves one of the biggest issues in digital-assets – the concept of counterparty credit risk for institutional enterprises.

 

Bitcoin and BTCE Performance- 1 Year (31.08.19 - 31.08.20)

Total Return NAV to Date (up to 31/08/2020)

  1M 3M 6M YTD  12M  Since Inception 
Bitcoin Exchange Traded Crypto - BTCE*  2.76%  19.81%  19.81% 
Bitcoin** 2.93%  24.03%  34.68%  20.36%  21.32%  20.36% 

*BTCE inception was on 08/06/2020 ** Bitcoin price is based off XBT daily performance from Bloomberg

Performance before inception is based on XBT daily performance from Bloomberg. Past performance of XBT does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for XBT is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. It is provided for illustrative purposes only. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in these products. Source: Bloomberg / HANetf. Data as of 31/08/20

 

Industry News 

August was a strong month for ‘risk’ assets as equities rallied on the acceptance of a ‘K-shaped recovery’ summarising divergent fortunes across resurgent markets despite bearish forward expectations for many sectors of the global ‘real economy’. Economic data continued to improve across developed and emerging markets; hopes for a Covid-19 vaccine gained traction with expectations firming up for early next year. Q2 earnings blew out albeit ‘kitchen-sinked’ expectations; technology and cloud stocks pushed up ‘into thin air’ as investors sought to position for the ‘new normal’ after the Great Corona Recession. Many of the quantitative and smart-beta investment funds and vehicles bought back into the equity market having liquidated during the exodus in March.

The annual Jackson Hole summit, online this year, marked another significant checkpoint for markets as Fed chairman Powell announced earlier than expected to shift policy to target average inflation of 2%[2]. This led the US Yield curve to steepen to its widest gap in recent months between 5 year and 30 year Treasury Bonds. The Fed is likely to hold short-term rates very low for a very long time as it targets inflation in the longer-end of the curve. This dovish stance from the Fed was taken as a clear message that the US Dollar would resume its downward trajectory versus other major currencies. This ‘next leg lower’ provided fresh impetus to Bitcoin and commodities. Gold spent much of August consolidating gains after its dramatic price action since March.  Bitcoin continued to attract new marginal buyers seeking to protect portfolios.

 

Outlook 

ITI Capital, an Authorised Participant of the Bitcoin ETC, observes that there is little choice for policy-makers but to continue with aggressive fiscal policy and monetary easing given the state of the broad economy after the pandemic. This will likely remain the motive force supporting the rally in financial assets for the foreseeable future. However, there is growing scrutiny of technology stock valuations with the S&P 500 average at 26x earnings - whilst 12m trailing earnings of the big-tech titans are truly ‘off the charts’ (Tesla 1100x, Amazon 130x and ‘Quality’ Apple 38x) [3]. Rising inflation expectations challenge the terminal valuations of these and other growth stocks more sensitive to future earnings. Bitcoin’s parabolic price action in 2017 and subsequent correction was followed by nearly three years of consolidation. With current Nasdaq and big-tech stock price-action analogous to Bitcoin in 2017, more tech-investors are looking at Bitcoin now. BTCE gives access to more people via the familiar equity route to 1/1000th of a Bitcoin (Less fees). The access to Bitcoin for multi-asset investors is attractive because their equity mandates can accommodate BTCE rather than crypto. As multi-asset investors get ‘back to school’, Bitcoin and BTCE are expected to benefit further from the prevailing macro conditions.

"The launch of BTCE on XETRA is a significant milestone for the cryptocurrency community and investors alike. With BTCE, we are bringing Bitcoin into the fold of mainstream, regulated financial markets, giving investors the benefits of trading and owning Bitcoin through a regulated security, while having the optionality of redeeming physical Bitcoin if they choose.” – Bradley Duke, Co-Founder & CEO of ETC Group

 

Product Details

BTCetcBitcoin Exchange Traded Crypto (Ticker: BTCE) is an exchange traded cryptocurrency (ETC), Bitcoin ETP that tracks the price of Bitcoin. 

The ETC is 100% physically backed by Bitcoin, it trades on Deutsche Börse´s XETRA, and is centrally cleared providing investors with one of the safest and most liquid ways to gain exposure to Bitcoin. Each unit of BTCE gives the holder a claim on a predefined amount of Bitcoin. 

BTCE is issued by ETC Group and marketed and distributed by HANetf.  

Please remember that the value of your investment may go down as well as up and past performance is no indication of future performance.

Exchange BB Code  RIC  ISIN  Currency  Income 
Xetra BTCE BTCE.DE DE000A27Z304 EUR Acc 

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