Bitcoin Monthly Report | November

• Institutions and corporate adopters seeking the benefit of Bitcoin’s Treasury Reserve Asset characteristics are gaining more widespread awareness as demand for a ‘scarcity asset’ accelerates
• BTCE, our Bitcoin ETF, AUM surpasses $100 million[1]  
• Bitcoin continues to make new highs versus a number of EM currencies and the ongoing debasement of DM currencies is seen as a driver of Bitcoin in USD and EUR

Performance Review

• The Bitcoin price ranged between a max of $13,850.10 on 31st October to a min of $10,547.70 on 2nd October 
• Month over month, the Bitcoin price increased from $10,706.96 on 30th of September to $13,850.10 on 31st of October.[2]
• As of 10th November, the Bitcoin Exchange Traded Crypto ETC stands at just over $106m of assets under management. AUM grew due to increased interest from the investment community, alongside a 27.39% increase in the USD price of Bitcoin.

Bitcoin Monthly Performance

Past performance is no guarantee of future performance.

Source: Bloomberg, HANetf Performance based off XBT price *12 Month figures based on 31.10.19 -31.10.20

What Has Driven This Performance?

As mentioned last month, the rapidly evolving correlations within and between traditional asset-classes, together with the ease-of Bitcoin access through Bitcoin ETFs and ETCs, is driving rapid adoption.  To date, BTCE is the fastest growing exchange traded product on Deutsche Borse.  Bitcoin has worked higher through successive bands of technical resistance and there is growing clamour for it to retest the highs of December 2017.

ESG is gaining traction with US investors, following Europe’s lead. The environmentally superior characteristics of bitcoin mining are attracting inflows to BTCE.

Bitcoin and BTCE Performance

Total Return NAV to Date (up to 31/10/2020)

 *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 31/10/20

Industry News

BTCE saw a powerful 27.39% rally driven by accelerating inflows as October brought a repeat of September’s confusing price-action across traditional asset classes.  The month began with a continuation of the rally from September’s correction- the second test of the impulsive rally in risk assets since the Covid-lows of March. Prevailing optimism about the release of a Covid vaccine kept concerns about the resurging case-numbers at bay and the Q3 earnings season in the US got off to a very strong start, with 86% of companies reporting they beat estimates in the first week[3].  The second half of October, however, saw markets lose upside momentum as the hitherto localised lock-downs from governments in Europe and the US started to give way to the harder measures seen in the first wave of the pandemic and the ensuing implications for a ‘Double Dip’ to the Great Corona Recession. 

Markets, historically bullish on a Republican election victory, had come to terms with the concept of a ‘Blue Sweep’ as influential strategists and economists, including Goldman Sachs’ Abby Cohen, suggested it might be ‘no bad thing’[4].  This quick ‘coming to terms’ with a Democrat victory scenario began to give way as markets looked deeper into the scenario analysis surrounding a mixed result with the Presidency and Senate controlled by different parties and hence less able to provide quick stimulus to markets.  Like September, there was a notable break-down in the expected correlations between asset classes.  Treasuries again failed to rally during the 8% drawdown in the S&P, with gold and ‘Quality’ stocks failing to perform.  Volatility picked up across asset classes.  The term-structure of implied volatility on the S&P rose from a relatively benign flat ‘curve’ on the 12th October, to being relatively steeply downward-sloping by the end of the month as demand for short-term downside protection displaced upside call demand as the S&P fell through successive retracement support levels[5].  Option prices also moved higher in US Treasuries despite the muted price-action of the bond-market as several large macro trades were put on to position for the return of inflation and yield curve control despite the Fed’s average inflation targeting policy.  This ongoing uncertainty about both the macro backdrop, as well as the efficacy of the instruments and strategies to navigate it, helped drive a powerful shift into Bitcoin via BTCE as both EM and Developed Market multi-asset investors seek to position portfolios through the US election and beyond.

Outlook

Corporate adopters seeking the benefit of Bitcoin’s Treasury Reserve Asset characteristics are gaining more widespread awareness as demand for a ‘scarcity asset’ accelerates.  A number of research studies are under way comparing the energy efficiency of ‘Digital Gold’ to its physical cousin.  Together with the absence of contaminants like Mercury in the mining process, the ESG aspects of Bitcoin will increasingly be in focus with institutional allocators as the US catches up with Europe in ethical investing.

ITI provides block-access to institutional investors via the liquidity of the underlying Bitcoin market and has also seen growing demand for BTCE from large Bitcoin holders who can finance their positions with FCA-regulated ITI Capital’s prime broker. This provides a more attractive counterparty credit risk for corporate Bitcoin holders requiring other traditional banking partners for their operations.  There has been a basis-change in the perceived career equity risk of asset allocators who now need to have an answer to one of the safest and most efficient ways to access Bitcoin. When you trade Bitcoin ETFs and ETCs your capital is at risk

"Bitcoin is increasingly being viewed as a safe haven asset, especially in times of unprecedent expansion of the money supply in major currencies like the US dollar and Euro in order to fund the massive stimulus packages being approved by governments to assist economies hit by COVID-19. Bitcoin is being correctly seen as hard currency with capped supply and BTCE gives investors exposure to Bitcoin on a regulated exchange without the headaches of needing to find and maintain secure storage for Bitcoin as BTCE securities are stored safely in the investors brokerage account.” – 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.

• BTCE Factsheet
• BTCE Video
• BTCE Whitepaper
• BTCE Fund Page
• Bitcoin ETF FAQs

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