Market Outlook
Bitcoin broke the $40K mark for the first time in 19 days on the back of two notable events. First, as anticipated, the cryptoasset had a historical day on June 9th. The majority of the Salvadoran Congress approved the Bitcoin law with 62 out of 84 votes. As such, Bitcoin has officially become legal tender alongside the US dollar in El Salvador. The country will also set up mining facilities solely using geothermal energy from volcanoes for committing to zero carbon emissions. Secondly, Elon Musk clarified that Tesla would resume bitcoin payments once the network shows a clear path towards mining excessively with clear energy, at least 50% of the mining activity, the entrepreneur specified.
As mentioned in last week’s investor letter, the next few weeks will be paramount to keep an eye on whether Bitcoin settles above the $40K mark or trades below $30K. The latter case could exacerbate the selling pressure from short-term investors, while the former case will boost market confidence.
Even though Bitcoin is on track for its first down quarter since Q1 2020 and still trades ~4% below its 200-day moving average price of $42.3K, the aforementioned news items have given a new breath of confidence for the market as the Binary CDD (Coin Days Destroyed) metric demonstrates. Binary CDD compares the average historical volume of bitcoins sold by long-term investors with the current volume to gauge the potential selling intensity. The result is either 1 or 0. On the other hand, the Coin Days Destroyed metric, evaluates the number of days it took an investor to sell their Bitcoin position.
As we can see on the chart below, long-term investors have been hoarding and even accumulating bitcoin as the Binary CDD metric indicates that there’s little spending from this cohort of investors. The indicator has even reached levels not seen since late October 2020 before the start of the 2020 bull run, which is a testament to the fact that fundamentals haven’t changed in the eyes of investors. In the same vein, legendary hedge fund manager, Paul Tudor Jones, who invested as much as 2% of his net worth in Bitcoin, recently told CNBC that he’d increase his position up to 5% to preserve his wealth over time. It is important to note that 54.1% of Bitcoin users are market participants with a long-term horizon who bought the cryptoasset more than a year ago.
The future of Bitcoin is bright with the increased use of clean energy for mining alongside the adoption of Bitcoin from emerging nations.
These nations need a greater internet penetration to access crypto and simplified educational content to fully understand Bitcoin ( for example, only 58% of Salvadorians have access to the Internet). But El Salvador paves the way for other countries to adopt bitcoin as a legal store of value. This milestone could help skeptics change their stance on the cryptoasset, such as India, which will likely consider bitcoin as an asset class going forward. The El Salvador movement is also showing the world that Bitcoin is not just digital gold, the bitcoin network could also be leveraged as a censorship-resistant payment rail to process zero-fee payments for remittance purposes with the application Strike. The latter use case is significant as El Salvador is heavily reliant on USD remittances representing ~ $6 billion or ~ 20% of its GDP.
We will closely follow how the near future will unfold, but at 21Shares, we believe that crypto innovation has barely scratched the surface yet to reach its full potential.
Weekly Returns
The returns of the top six crypto assets over the last week were as follows — BTC (20.85%), ETH (2.30%), BNB (4.70%), XRP (1.69%), and ADA (-0.70%).
Monthly ETP Returns
The performance of our line of ETPs over the last 30 days is as follows: ABTC (-32.16%), AETH (-20.73%), ABCH (-31.46%), AXRP (-31.67%), ABNB (-37.73%), AXTZ (-36.83%), HODL (-29.34%), ABBA (-30.09%), KEYS (-28.52%), SBTC (34.31%), ADOT (-30.68%), AXLM (-26.53%), AADA (31.36%).
Media Coverage
Crypto Valley Journal (CVJ) featured our monthly review for May. You can read it here.
Our Research Lead, Eliézer Ndinga, had the opportunity to present our company and products to 21 Millions of Capital France — the leading French-speaking crypto journal and newsletter. Give it a read here.
Yesterday on June 14th, our Managing Director, Laurent Kssis, appeared on national television in France as he was invited by B Smart TV to discuss the listing of our Bitcoin and Ethereum products in Paris.
Disclaimer
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
