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Bitcoin Monthly Report | October

 

Key Takeaways

  • Institutional interest in Bitcoin is accelerating rapidly as Nasdaq-listed MicroStrategy announces allocation of $425million of treasury funds to Bitcoin;
  • Regardless of the outcome of the US elections, more COVID-19 related stimulus packages are expected to counteract the faltering US economy;
  • Bitcoin is increasingly viewed by the investment community as a “safe haven” asset in worrying times – similar to gold.

 

Performance Review

  • The Bitcoin price ranged between a max of $12,022.35 on 1st September to a min of $10,016.81 on 8th September, a difference of 20%. Month over month, the Bitcoin price dropped by 8.3% from $11,678.60 on 31st of August to $10,706.95 on 30th of September.[1]  
  • At the end of September, our Bitcoin ETC stands at just over $56m of assets under management. AUM in USD terms grew by 5.3% in September despite the 8.3% drop in the USD price of Bitcoin.

 

Bitcoin Monthly Performance

September*

12 Month**

-8.32%

29.92%

Past performance is no guarantee of future performance.

Source: Bloomberg, HANetf Performance based off XBT price *September figures based on 31.08.20 – 30.09.20 **12 Month figures based on 30.09.19 -30.09.20

 

In the past few months, we have seen our Bitcoin ETC firmly establish itself as a dominant Bitcoin ETP in Europe. BTCE not only solves one of the biggest issues in digital-assets – the concept of counterparty credit risk for institutional enterprises – but also provides the investment community with a secure and efficient way to gain exposure to the price of Bitcoin.

BTCE removes most of the headaches associated with Bitcoin. Investors don’t have to worry about trading on unregulated exchanges and don’t need to engage with all the challenges associated with storing Bitcoin.

 

Bitcoin and BTCE Performance - 1 Year (30.09.19 – 30.09.20)

 

 

 

1M

 

3M

 

6M

 

YTD

 

12M

Since Inception

 

Bitcoin Exchange Traded Crypto – BTCE*

 

-8.47%

16.47%

-

9.66%

-

9.66%

 

Bitcoin**

 

-8.32%

17.05%

65.20%

10.35%

29.92%

10.35%

*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 30/09/20

 

Industry News

September witnessed the biggest correction of the post-Covid rally in markets since the lows of March. The hitherto parabolic ascent of the Nasdaq and US tech titans bore the brunt of the sell-off. Not only did the price-action within asset classes challenge asset managers, so too did the cross-asset correlations between asset classes with few of the traditional ‘safe havens’ and hedges performing as expected. Whilst the US Dollar rallied sharply from a crowded short-positioning against EM currencies, there were little commensurate declines in longer maturity US Treasury yields, and whilst risk assets fell, so too did gold. As has usually been the case since the GFC, market inflection points have been sparked by a confluence of events. In tech, news that Tesla, having gained 74% in the last 3 weeks of August[2], was selling some treasury stock sparked profit taking from a leading UK asset manager. This coincided with scrutiny of the options market in the US tech names.  Japan’s SoftBank was cited as the ‘Options Whale’ but it transpired that the bigger force at work, once again, was the ‘Retail Options Megalodon[3]’. Once again, the magnitude of the retail force blind-sided institutional observers. US election polls provided volatility with Trump initially gaining on Biden, falling behind again, and then signalling a feared ‘third outcome’ of a contested result protracting uncertainty in markets - reminiscent of the Bush-Gore scenario in 2000 which also witnessed toppy tech-valuations and presaged the collapse of the first great bull-market in the S&P in modern times. Resurgent Covid19 around the world added to concerns as the weaponised US fiscal stimulus package continued to prove elusive. By the end of the month, however, asset prices had begun their recovery.  ITI saw institutional interest in Bitcoin via our Bitcoin ETC accelerate rapidly into month-end as Nasdaq-listed MicroStrategy announced they had allocated $425mm of treasury funds to Bitcoin.[4]

 

Outlook

Price action recovered towards the end of September but the ensuing tactical and strategic asset allocation debates have increased the focus on the need for an allocation to Bitcoin within multi-asset portfolios. The post-GFC investment environment led to a reassessment of the dynamics that drive markets. As bond yields collapsed during the Zero Interest Rate Policy, bonds traded on expectations of capital appreciation leading to investors turning to ‘quality’ equities for ‘safe’ income – an inversion of the traditional axioms of asset allocation. The rise of passive investment vehicles and rules-based funds like Risk Parity and smart-beta strategies have diluted the self-governing risk management mechanism of the previous generation when asset managers would have ‘de-risked’ into cash as valuation multiples expanded. The post-Great Corona Recession (GCR) has amplified and accelerated the change in market dynamics and forces. The major US endowments that pioneered the application of Modern Portfolio Theory began investing in digital assets two years ago for the (low) correlation benefits to other asset classes together with the upside potential from an unleveraged instrument. Following the GCR, the return of inflation has accelerated the demand for scarcity assets like Bitcoin which BTCE GY provides access to for traditional equity and multi-asset mandates – via fractional ownership for retail and block trades via ITI Capital for institutions.  Regardless of who wins the US election, more monetary and fiscal stimulus can be expected to continue to drive Bitcoin and BTCE higher.

 

"With the unprecedented expansion in the money supply of the US, UK and the Eurozone associated with COVID-19 stimulus packages, investors are increasingly realising that allocating some of their investment portfolio to bitcoin makes complete sense for the purposes of diversification. Because BTCE is listed on XETRA – a major exchange, has ample liquidity and tight spreads, has unrivalled investor protections, and is 100% backed by bitcoin, is has become the go-to product for serious investors looking for exposure to bitcoin.”  – 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 

Click here to download our Bitcoin Monthly Report.

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