Market Outlook
This past week, the price of Bitcoin has mainly sustained above the $30K mark despite a brief trip to $28K due to continued uncertainty in the Chinese market. The fall below the $30K led to panic selling across the board, and liquidations exacerbated the selling pressure by setting a new record in terms of losses for traders of $3.4 billion. This amount has surpassed the previous record high of $2.6 billion in the May 2021 sell-off. The restrictions from China have also manifested signs of a disrupted network.
The last block of transactions on the bitcoin blockchain was found and settled more than 40 minutes ago as of writing. It generally takes 10 minutes for settlements to occur, but the crackdown on Bitcoin mining in China has pushed miners to shut down operations. It's reported that the majority, [60%](https://u10068342.ct.sendgrid.net/ls/click?upn=c7riRqhfexRyaQmWj4xmkV7hdAQPuxiI2c2mHaKtRGCg9HYT253Ts4kM-2FFJI7-2BysXtM1PZ3DAl-2Fk3HLwQiTG-2BsKu9hzXE9UDptqzXXoejSE-3Do5lB_YL4KYgAmCA4NxopfTjz-2BcMdIa9oMEnjUPbLc1D0aIJqQLrLPr3qIt2nZ04w1qqMapUGorHaeSAT3EgVQVwDF2oyCRk5DN2cHMyQmg-2F7mnmV8GCLXYlVrmxZxFCE5grk8r1s-2Bxy6Q94ayzPXRwtjXLfSVB0JE7IJeIGa58okISCKZFTNv9Oe3HrsaSZvAC3rikfNhbSet580lOhWI6VbmrMRp8-2FvRkeLFRyjs9oipwh5WZUsP-2FtlE-2BfEIBkf9j-2FvsNWBwBA1Mnt13gYg6Kw52g1FEexam8S0wu-2BLxeEmLQPL52oRDXVkzbreugXAW9gD2-2FZE9K33vVmOjGwgrvyVo3MH-2BsqL7t9xKbT7dJ09z1C-2BW2Qb3YmSjOI23tPWZ0QToUZAoVGh7y8KcEtPr6VtsKQabPSKPF8kodAufD-2BRZWVP8YtYIesWz9l0SIQ8y9FEVFylgk9O18OVRWajtZ8NFvdeT0r8mPYu51pgsVqsYV-2BVzjUDiYqL7Ba-2BmvPUB5NnlwI7KteNhfxXVRXnznDGCBL-2BeRo4Y8LGizgy-2FjSfLMhCdQAhSikD5mmxS6Q9BKFZb0oFP3q5eIjtkhdQcXj6BQ6HJlniXt-2BH0TsU4DVyjtPd-2FDjK97BRxHuaaCBWc7bQcfIRuwjPq-2FU9Zr3CNkNLETlRaOkPXq9f043REILSbahAGy2O1UxVAv7INv3yMvV4PYEjFZpN9nMaGVP01iFxBqwaiA3UsyAWeeCg4DSfPFZdL-2BsRN6FOqkhA6UliT6Vi6okK265ABYk6W8FuYY1SyAr0ToG1bgsfJrIQ9G3TJMTtFQMcqMfQZQx9vnwO-2BpmR4-2B2b2oMs5gOayNRyUjNcLsYQzDYVT5lpMoyobrulht-2BHA0v8BfPtLPLENWlO3Nondy6fgWqHxX1ztLOhahGi8Ya9GEK4iNT29SwzB6TU67-2Be23h7R-2BQ9NWfViWTsSx4GC7f0a-2BZOccFBaQ2JLcPvR54bu61tPkYubct8RU9fthtluXiclyORxw0stowdNAds-2B '<span style="font-size:11pt;font-family:Roboto,sans-serif;color:#4a6ee0;background-color:transparent;font-weight:400;font-style:normal;font-variant:normal;text-decoration:underline;-webkit-text-decoration-skip:none;text-decoration-skip-ink:none;vertical-align:baseline;white-space:pre;white-space:pre-wrap;">~60%</span>'), of Chinese miners went offline due to these unprecedented circumstances.
Every 2,016 blocks or every two weeks, there’s a mining difficulty adjustment to make mining a fair competition to find a block within 10 minutes. The upcoming difficulty adjustment is expected this Friday, and it is estimated that the difficulty will decline by more than 20%, down to computing levels not seen since June 2020. It is the sharpest drop in computing power in Bitcoin history. At 21Shares, we anticipate this adjustment to make mining more accessible to the least competitive miners for the upcoming weeks until the remainder of miners gets back online. After this point, the hash rate will effectively increase in tandem with difficulty.
As we emphasized in our previous investor letters, the mining industry is changing faces completely, but the fundamentals have not changed. Crypto will adapt and thrive in this new paradigm. As a testament to continued adoption, the inflows into 21Shares ETPs are a good indication of the institutional sentiment. This past week and month, more than $8 million and $50 million were poured into our exchange-traded products respectively.
Overseas, access to cryptoassets for the mainstream is still in work-in-progress mode. For example, over 600 US banks will offer crypto trading services to more than 20 million customers or 0.1% of the adults in the United States, while decentralized finance services find synergies with fintech applications. Compound, a blue-chip lending protocol, and application built on Ethereum, has just released its institutional-grade feature to let businesses offer a fixed-rate savings account of 4% APY.
In hindsight, we’ll look back at this correction and situation in China as one of many defining moments proving the robustness of the Bitcoin network. The decentralized nature of bitcoin is a crucial feature to keep the network running despite the current network latency. No other payment services more centralized by nature could be functional amid a crackdown, and this is a positive sign for the future of Bitcoin especially in times of crisis.
Weekly Returns
The returns of the top six crypto assets over the last week were as follows — BTC (6.11%), ETH (11.33%), BNB (11.27%), XRP (17.18%), and ADA (15.78%).
Monthly ETP Returns
The performance of our line of ETPs over the last 30 days is as follows: ABTC (-18.07%), AETH (-35.38%), ABCH (-38.93%), AXRP (-38.36%), ABNB (-26.25%), AXTZ (-32.60%), HODL (-28.65%), ABBA (-21.42%), KEYS (-24.72%), SBTC (12.28%), ADOT (-37.43%), AXLM (-42.60%), AADA (-24.98%).
Media Coverage
Bloomberg published an article on the ETF market in Europe as it’s nearing the $1.5 trillion mark. In this piece of research, they mentioned the adoption of crypto ETP in Europe and featured our Binance ETP as the top-performing ETP/ETF in Europe and the world — up more than 600% YTD. Read the full article here. For the German speakers amongst you, Finews wrote a shorter version of this article here.
Our Managing Director, Laurent Kssis, will be speaking today at the SRP France 2021 Conference, on the panel focused on crypto-focused structured products and debate whether they present the future of finance. Register here.
News – 21Shares Continues Its Listing Strategy With The Launch of Solana (SOL) ETP
What happened?
We are pleased to announce the listing of the world's first Solana ETP on the SIX Swiss Exchange. The ETP will offer additional yield through staking rewards by validating transactions on the Solana blockchain, dedicated to fostering active network participation (such as staking) in a secure, regulated and insured environment.
Why does it matter?
Solana strives to improve the user experience of both builders and end-users with its novel consensus mechanism called Proof of History (PoH). PoH helps reduce network congestion, which has been a plague for decentralized blockchain in times of high usage. As such, the Solana blockchain is processing 1,000+ transactions per second vs. ~15 TPS for Ethereum.
As a complement to Ethereum, Solana has one of the most vibrant communities and a noticeable developer activity with over 200 projects building decentralized financial services on its platform alongside hundreds of people participating in its Hackathons. The future is bright for the ecosystem as Solana will soon launch an incubation studio a la Y Combinator to boost developer adoption and fund crypto innovation.
The SOL ETP will allow clients to diversify and gain exposure to this inspiring blockchain technology to which its native coin is currently ranked 14 on the CoinMarketCap. The ETP structure is 100% physically collateralised, segregated, and replicates 1:1 the tracking of the crypto asset. Coinbase will assume custody and staking for SOL. Physical replication for ASOL aims to track the performance of SOL coin with each unit of the ETP backed by approx. 0.69 SOL at launch with a base fee of 2.5% p.a and will also be available on the Stuttgart and Dusseldorf MTFs.
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.
