Bitcoin Monthly Report | January

When you trade a bitcoin ETF or ETP your capital is at risk. 

• BTCE rallied 38.9% in December amidst ongoing investor scramble to keep pace with asset-price inflation; 
• The rate of change of institutional investors publicly embracing Bitcoin accelerates;
• The biggest force in markets remains Monetary Policy, accelerating the debasement of DM currencies and creating demand for bitcoin and BTCE

Performance Review

• The Bitcoin price ranged between a max of $28,996 on 31st December to a min of $18,101 on 11th December, a growth of 60.19%.[1]
• At the end of December, the Bitcoin Exchange Traded Crypto ETC stands at $352m of assets under management. AUM in USD terms grew by 101.35% in December, alongside the 49.63% growth 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 *December figures based on 31.11.20 – 31.12.20 **12 Month figures based on 31.12.19 -31.12.20

This past year BTCE became the fastest growing Exchange Traded Product in the history of Deutsche Borse and was the highest traded product on Xetra’s ETN segment.[2] This is a powerful testament to the merits of the world’s first centrally cleared ETP on a digital asset. 

December saw a continuation of the public embrace of bitcoin from major institutions.  Guggenheim, Blackrock, Bridgewater, Massachusetts Mutual, Skybridge, Bernstein and other buy-side investment behemoths publicly restated their views towards adoption of bitcoin.  Sell-side firms like Citigroup mentioned potential  year-end 2021 Bitcoin price-targets in excess of $300k as the hitherto crypto language of ‘fiat debasement’ became mainstream analyst parlance.[3]

Bitcoin and BTCE Performance

Total Return NAV to Date (up to 31/12/2020)

*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 31/12/20

Industry News

Our bitcoin ETF saw another surge in December with a 49.06% rally following the 42.08% gain in November taking the 2020 YTD gain to 194.86% since its launch in mid-June 2020. Global markets remained in a firm risk-on mode following on from the US election and news of Covid vaccination deployments.  The UK became the first major developed market to begin vaccinations and the Great Rotation continued to evolve into a catch-up for cyclical and value stocks as well as technology and growth equities. The ‘Everything rally’ continued to reflect investors growing fears of missing out on the asset-price inflation sweeping across equities, commodities, pockets of real-estate and other perceived havens as the purchasing power of hard currencies continued to decline. ITI observes that this debasement of currency and erosion of wealth is a familiar EM dynamic that has now arrived firmly in Developed Markets. We have previously observed here that one of the biggest drivers of why Bitcoin is accelerating so strongly at this time is the basis-change in the absolute risk / reward for professional asset allocators and asset managers who now need to be able to point to the safest mechanism to access bitcoin – the rationale behind BTCE. However, on a relative basis, the risk / reward decision for Bitcoin is now much less of an outlier when considered against Tesla which rallied 8.2x in 2020 to achieve a market capitalisation in excess of the world’s seven biggest auto manufacturers, yet with a fraction of their revenues. 

SPACs, special purpose acquisition vehicles were another post-Great Corona Recession phenomenon where even empty shell companies traded up to staggering gains and perceived ‘disruptor’ IPOs such as Airbnb, DoorDash and OZON displayed Dotcom-era dynamics.  These frothy market conditions reminded many of the subsequent collapse of the nascent tech market in 2000-2001, again following a disputed US election (Bush-Gore). However, the analyst earnings outlooks for equities importantly managed to rise in Q4 2020 and conversely reduced some of the pressure on the lofty valuation multiples that developed over the northern-hemisphere summer. The Equity Risk Premium argument remains supportive of equities and the December Triple Witching options and futures expiry passed without any signs of the feared mutual fund reallocation out of equities. This price action in equities signals a continuation of the scramble for risk assets as the Dollar continues to decline.

Outlook

At current levels of c.$30k, Bitcoin represents c.5% of the value of gold above ground. As Bitcoin is ‘better at being gold than gold’ for many investors given the ease of accessibility and lower / zero cost of carry, analysts are pointing to that relative percentage increasing.  Furthermore, the demand for scarcity assets like gold, PGMs, agricultural land inter alia is expected to dramatically increase as the Federal Reserve, ECB and Banks of Japan and England are not expected to change tack any time soon from the extraordinary monetary policy measures. 

ITI expects 2021 to see an acceleration of the mainstream adoption of Bitcoin. Reports that investment trusts were acquiring bitcoins at a rate in excess of the miner supply helped Bitcoin rally from $20k to $30k. With a maximum finite supply of 21 million coins and a much-increased pool of demand chasing them, the outlook for BTCE remains bullish.

"BTCE enjoyed incredible growth in 2020, with the value of Bitcoin increasing by almost 300%. Our ETP brings to the world of Bitcoin the transparency and investor protection that regulators and institutional investors require, and we are confident that the rally in Bitcoin will continue, because its unique attributes are now more attractive than ever following the financial rescue packages rolled-out by governments in response to the Coronavirus crisis, and the implications of these.   Furthermore, unlike in 2017, the current rally in the price of Bitcoin is supported by both retail and institutional investors, and the infrastructure in place today is much stronger than it was three years ago.” - Bradley Duke, Co-Founder & CEO of ETC Group CEO of ETC Group

Product Details

BTCetcBitcoin Exchange Traded Crypto (Ticker: BTCE) is an exchange traded cryptocurrency (ETC) 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.

When trading a Bitcoin ETF or ETP your capital is at risk.

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