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 |
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