Bitcoin continued to show a low correlation with other benchmarks over the period. Its 12-month correlation was closest to Ethereum’s daily returns at 67.2%, followed by the S&P 500 asset at a much lower correlation of 14.1%, according to the data. Coinbase noted that many large ETF issuers believe the US SEC could give the crypto ETFS the “green light” in 2021 or 2022.
The first half of 2021 was one of the busiest times on record for crypto, Brian Foster, member of the Institutional Sales, Commerce and Core Services team at Coinbase and Coinbase Ventures, said in the report. review H1 2021 of the company.
The first six months saw new all-time highs in asset prices, user adoption and trader activity, Foster said.
“Crypto has seen continued price volatility – the total market cap started the year at $ 769 billion, peaked at $ 2.4 trillion in May and ended the period at $ 1.4 trillion, recording a net gain of 86% since the start of the year, ”he added.
By the end of the first half of the year, bitcoin was storing $ 657 billion in global wealth, with institutional investors, such as traditional hedge funds, endowments, and corporations, increasing their exposure over the period. Compared to other asset classes, bitcoin has risen 280% in the past 12 months, even after falling from mid-April highs of around $ 64,000, according to the report.
As other assets rose at lower percentages as well, bitcoin continued to show a low correlation with other benchmarks over the period. Its 12-month correlation was closest to Ethereum’s daily returns at 67.2%, followed by the S&P 500 asset at a much lower correlation of 14.1%, according to the data.
Ethereum surpasses
In general, ethereum outperformed benchmark assets including bitcoin in the first half of the year, with the crypto asset appreciating 895% in the 12 month period compared to bitcoin’s appreciation of 280%. Ethereum rose about 210% in the 6-month period ending June 30, according to the data.
A handful of factors contributed to Ethereum’s outperformance, primarily an increased use of decentralized financial protocols built on Ethereum, which validated the network’s value as a global financial utility and platform for developers, the report writes. .
Additionally, investor optimism has grown with Ethereum’s transition to ETH 2.0, which will introduce a new proof-of-stake consensus to turn Ethereum into a productive asset, and the launch of EIP-1559, which should reduce Ethereum’s supply by burning its gas royalties as the network is used.
Overall, the first half of 2021 brought Ethereum’s five-year total return to 17.962% for the period. Many of Coinbase’s large institutional clients – including hedge funds, endowments, and corporations – have increased or added early exposure to Ethereum during this time because they believe the asset has long-term power. equivalent to bitcoins, just in a differentiated way in their wallets. , It said.
ETF Outlook
Numerous new ETF applications have been filed with the United States Securities and Exchange Commission in recent months by companies such as Global X, Ark Investment Management, VanEck and investment banking firm Goldman Sachs.
Over a dozen bitcoin ETF listing applications have been rejected by the US SEC in the past based on trading rules “designed to prevent fraudulent and manipulative acts and practices, to protect investors and the public interest, ”the report says.
But, Coinbase’s institutional practice has monitored developments in the crypto exchange-traded fund market and said it expects possible approval from the US crypto ETF, but did not specify when. He also noted that many large ETF issuers believe the SEC could give the crypto ETFS the “green light” in 2021 or 2022.
“There are a number of factors behind this optimism,” the report says.
The new SEC chairman, Gary Gensler, is seen as a knowledgeable person in the crypto space and more likely than previous chairmen to allow a crypto ETF to list. Additionally, the desire for cryptocurrencies has recently exploded among institutional and retail investors, with increasing demand for exposure without the need to buy, hold or sell underlying assets directly.
As the market is constantly changing, the Coinbase report indicates that a growing base of well-known institutions have started to engage in crypto and that the regulated bitcoin futures market has grown significantly over the years. time, giving the industry more credibility. On the growth front, CME’s monthly notional trading volumes have grown from $ 6 billion in June 2020 to over $ 34 billion in June 2021, up more than 466% year on year.
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