The past few months have welcomed several notable institutions and investors into the digital asset community. From Paul Tudor Jones to Square, PayPal and JPMorgan, the next wave of acceptance is reaching top tier asset managers.
This week, both Guggenheim and AllianceBernstein released statements declaring digital assets a legitimate asset class, with Guggenheim announcing a possible allocation of up to 10% of their $5.3 billion Macro Opportunities Fund into the Grayscale Bitcoin Trust (GBTC).
As one of the largest asset managers on Wall Street, Guggenheim is taking a leading role in recognizing the true use cases and profitability behind a decentralized financial infrastructure, and their impending asset allocation to GBTC is validation that this asset class is not going anywhere.
As the world becomes increasingly digitized and the pace of innovation is more cutthroat than ever, Guggenheim’s validation of Bitcoin is indicative of their foresight into the future of asset management. With their vision of a digital asset-backed financial future, Guggenheim is living up to their fiduciary commitment to drive future returns for their clients by allocating up to $530mm into the asset class of the future.
Alongside Guggenheim in their recognition of cryptocurrencies as an asset class is Wall Street giant AllianceBerstein. Earlier this week, Inigo Fraser Jenkins, Co-Head of Bernstein Research’s Portfolio Strategy team released a statement claiming that digital assets “do have a place in asset allocation.”
Coming back on his 2018 remarks that digital assets do not present a convincing use case because their historic volatility ruled them out as a means of transaction, Fraser Jenkins’ recent statement is credited to Bitcoin’s lower price volatility and therefore strengthened foundation as a store of value asset. On Bitcoin’s viability as a store of value, Fraser Jenkins told CoinDesk that Bitcoin’s downward trend of price volatility “makes it more attractive both as a store of value and as a medium of exchange.”
There is no denying that Bitcoin is earning the respect of Wall Street. Massive allocations from MicroStrategy, Square, and legendary investors like Paul Tudor Jones along with crypto integrations from PayPal and JPMorgan are delivering Bitcoin on a gold platter to the global investment community. The momentum from the past few months has made one thing clear: Bitcoin is not going anywhere, and as Bitcoin is here to stay, regulation will soon follow to project the world into a future of universal digital asset adoption.
By Liam McDonald
Weekly Analyst Thoughts
This week, I want to highlight the dangers of centralized finance (Cefi) and hot wallets (cryptocurrency wallets connected to the internet) by reflecting on the recent $150 million-dollar KuCoin hack. One of the major problems with Cefi exchanges like Coinbase, Kraken, Bittrex, and KuCoin is that the cryptocurrency user does not actually control the asset. The Cefi exchanges control the funds with private keys, making them a honeypot for hackers due to the large amount of money that is stored on these exchanges. There is a phrase in the cryptocurrency community to hammer home the point of Cefi exchanges: “Not your keys, not your coins.” If cryptocurrency users and investors continue to relinquish their private keys to these Cefi exchanges, these hacks will continue to occur. A nice middle ground is to set up a multi-signature wallet, which needs multiple keys, with a custodian, so if the custodian or the investor ever loses their key, they can easily access the wallet from utilizing additional keys. A good example of this multi-signature solution would be Casa, a provider of custodian storage solutions for digital wallets.
Although hot wallets are extremely convenient to use for buying, spending and selling crypto, there is a hardware wallet that rivals hot wallets: Ledger Nano X. Ledger Nano X improves upon its predecessor, Ledger Nano S, and its’ annoying USB cable and limited storage. The Ledger Nano X can hold up to 100 different cryptocurrency wallets with the help of Ledger Live and has a Bluetooth connection that enables investors to forgo connection via a USB cable.
In summary, KuCoin’s $150 million-dollar hack is a stark reminder of the dangers of centralized finance and hot wallets. Two solutions to Cefi and hot wallet hacking problems include using custodians like Casa to hold your private keys and using cold storage wallets like Ledger Nano X.
By Jacob Stelter
Weekly Analyst Thoughts
Cream Finance: New Crypto Exchange Rivaling Uniswap and Balancer
Introducing Cream Finance, a new Defi liquidity exchange that is as robust as competitors like Uniswap, Balancer, and Compound. Cream stands for “Crypto Rules Everything Around Me” and its token jumped 145% just last week. Cream Finance allows the borrowing and lending of multiple cryptocurrencies and offers better yields than Compound Finance, as pictured below.
Cream Finance also allows liquidity providers to yield farm Cream on Balancer and Uniswap pools, pictured below.
Finally, Cream Finance has its own Uniswap and Balancer exchange, “Cream Swap,” that delivers yield farming rewards for being a liquidity provider on their platform. One of their liquidity providing pools has a 200% APY just for depositing a different type of Ethereum into a pool, as seen below.
In summary, Cream Finance provides a platform to borrow and lend a multitude of cryptocurrencies, yield farm and become a liquidity provider on their Cream Swap exchange, and yield farm in Uniswap and Balancer Pools.
By Jacob Stelter