36% Hedge Funds and 32% Managers with $10B in AUM Expect to Increase Crypto Exposure

36% Hedge Funds and 32% Managers with $10 Billion in AUM Expect to Increase Crypto Exposure: EY Survey

As the industry better understands the asset class, “the alpha-generating opportunities will certainly create more incentive for alternative fund managers to participate in this strategy.”

Only 1 in 10 managers currently have exposure to cryptocurrencies, according to a survey published on Monday by one of the big four accounting firms Ernst & Young. But the good thing is firms are planning to increase their exposure in the coming year.

While 10% of the hedge fund managers have exposure to crypto, a mere 4% of the private equity managers are currently reporting crypto allocations through diverse means such as crypto derivatives, listing funds, and crypto companies. AUM dedicated to crypto also remains small, at 1%-2% for hedge fund managers.

But in the next one to two years, more than 20% of institutional investors and 25% of hedge fund managers said they expect to increase their exposure to cryptocurrencies.

Among these investors, the largest managers are most likely to increase their exposure, with 36% of hedge fund managers that have over $10 billion in AUM and 32% of managers with $2 billion – $10 billion in AUM reporting that they expect to increase their crypto AUM, as per the report.

image1

When it comes to barriers to investing in crypto, the number one was that crypto does not align with their investment strategy, followed by volatility, regulatory uncertainty, lack of understanding of crypto, and immature market infrastructure.

Tax implications, lack of suitable investment opportunities, crypto not being ESG-friendly, and crypto being a bubble were the lowest factors preventing them from investing in crypto assets.

Greenwich Associates conducted the survey from July to September 2021 that polled 264 alternative institutional investors collectively holding about $5 trillion.

“2021 appears to be an inflection point where this asset class is gaining the attention of all institutional alternative fund managers,” notes the study. It further adds that alternative fund managers have become more active participants in crypto assets, drawn by uncorrelated returns and continued investment in institutional-grade infrastructure to support the space.

“As the industry and regulators continue to better understand this asset class, the alpha-generating opportunities will certainly create more incentive for alternative fund managers to participate in this strategy.”

Read Original/a>
Author: AnTy

$3.5 Billion In Crypto Accounted for 93% of All Assets Seized by IRS in 2021: Report

$3.5 Billion In Crypto Accounted for 93% of All Assets Seized by IRS in 2021: Report

The agency expects to seize billions of dollars worth of crypto in the coming year after getting more ability to surveil crypto transactions in the infrastructure package, to counter which a comprehensive bipartisan bill has been introduced in the House.

The Internal Revenue Service (IRS) seized $3.5 billion worth of cryptocurrencies during the 2021 fiscal year, according to an IRS criminal investigation annual report published this week.

This figure accounted for 93% of all the assets seized by tax enforcement using this period.

Now, the IRS is expecting to seize crypto valued at billions of dollars linked to tax fraud and other crimes in the coming year as well, as per the agency’s head of criminal investigations.

“I expect a trend of crypto seizures to continue as we move forward into fiscal year ‘22,” IRS Criminal Investigation Chief Jim Lee said on a call with reporters. “We’re seeing crypto involved in a number of our crimes as we move forward.”

In its annual report, the IRS said cybercrimes affecting the US financial systems are seeing “exponential growth” and added that it is now prioritizing training on criminal schemes related to crypto.

Recently, Congress granted the IRS more ability to surveil crypto transactions in the infrastructure package President Joe Biden signed into law on Monday. The law contains the overreaching definition of crypto ‘broker’ to have them track and porter transactions to the IRS.

This week, a comprehensive bipartisan bill has been introduced in the House to clarify the definition of a broker and for other purposes.

This bill will “fix EVERYTHING wrong with the infrastructure bill’s crypto tax provision–including the unconstitutional §6050I individual reporting mandate,” said Jerry Brito, executive director of CoinCenter.

He noted that it would replace the overly broad definition of “broker” with one that is reasonably limited to exchanges that buy and sell crypto for customers, will only cover reporting information voluntarily provided by customers and held for legitimate business purposes, and will strike the expanded reporting requirement for digital assets.

“Blockchains, cryptocurrencies, & decentralized finance may still be new & evolving, but Congress must recognize these technologies are some of the most important innovations to come along in a generation,” said Congressman Tim Ryan, along with Patric McHenry, who introduced this legislation.

Congressman Ryan said a balance between consumer protections and reasonable oversight needs to strike while simultaneously providing these technologies with the space to grow, which is essential to taking advantage of this opportunity.

Read Original/a>
Author: AnTy

ETH’s Net Annual Inflation Now under 1%, Ethereum Foundation Selling Ether

Since the implementation of EIP-1559, almost 860,000 ETH worth $3.2 billion have been burnt, which is about 40% of the ETH issued in that period.

Daily net ETH issuance has now dipped below zero in 10 days, making the crypto asset deflationary. This has now significantly dropped ETH’s expected rate of net annual inflation. According to Coin Metrics, based on the 30-day moving average, ETH’s net annual inflation has now dropped under 1%.

This is despite the fact that the number of transactions implementing EIP-1559 type fees is still around 60%.

image1

The total supply of wrapped Bitcoin (WBTC) on Ethereum has also risen to 235,000, representing more than 1% of the total bitcoin supply. The fact that 90% of all average transfer size for WBTC has been greater than $1k in value likely suggests that WBTC is mainly used on Ethereum in DeFi protocols for trading and other financial activity.

Amidst this, Ether has also hit a new all-time high this week at $4,870, up 550% YTD. As of writing, ETH has been trading at $4,550.

As Ether hit new highs, Ethereum Foundation, a non-profit organization supporting the development of the second-largest cryptocurrency and its developers, has moved its ETH to cryptocurrency exchange with an intention to sell them.

On-chain data shows, Ethereum developer, sent 20,000 ETH worth about $95 million to Kraken.

In the past as well, Ethereum Foundation has sold its Ether stash to provide financial support to the ecosystem.

With Ether price surging and activity resuming on-chain, ETH gas fees are rising as well. Over the last week, the Ethereum transaction fee averaged $50, with a median of $26. As of writing, the average fee is still above $50.

Daily active addresses meanwhile have averaged $650,000 over the last week, the highest level since August this year. NFT activity, however, is currently not the main factor behind the jump in gas fees as daily ERC-721 transfers averaged $67k over the last week, down from a peak of $200k per day in early September.

“Activity that might be less cost-sensitive such as trading is likely the biggest contributing factor to the rise in fees,” noted Coin Metrics.

While high network usage means there is high demand for Ethereum block space from users, it also limits scalability on layer-1 Ethereum, pricing out smaller users.

This week, however, the L2 solution Optimism released one of its biggest upgrades to improve the developer experience building on layer 2. With this, Optimism is currently offering the cheapest experience at $0.01 ETH transfer cost, as per Cryptofees.

Read Original/a>
Author: AnTy

Michael Novogratz’s Galaxy Adds More than $3B in Assets This Year as Ether Picks Up Steam

Michael Novogratz’s Galaxy Adds More than $3 Billion in Assets This Year as Ether Picks Up Steam

Ether is going mainstream, much like Bitcoin did a year-and-a-half ago. Also, crypto is now becoming an asset class.

Crypto billionaire Michael Novogratz’s Galaxy Digital Holdings (GLXY) recorded its biggest ever cash influx as Bitcoin and Ether rallied to their all-time highs.

Currently trading just under $62,000, Bitcoin made its ATH at $67,000 on Oct. 20. Ether meanwhile hit a new peak on Wednesday at $4,675 and is currently consolidating around $4,500, up over 520% this year so far.

While Ether is inching closer to $5k, Goldman Sachs has estimated that the digital asset’s price is set to reach $8,000 by year-end because “it has tracked inflation markets particularly closely.” The lastest spike in inflation breakevens suggests more upside for the second-largest cryptocurrency.

Crypto Becoming An Asset Class

At the end of October, Galaxy had $3.2 billion in assets, an increase of 45% from the prior month, according to global asset management head Steve Kurz. At the beginning of the year, the asset manager had less than $1 billion under its management.

One of the main drivers of its growth is Ether-focused Canadian ETF. The CI Galaxy Ethereum ETF (ETHX) has amassed more than $1 billion since launching in April.

According to Kurz, this flood of cash will continue to build as Ether gains mainstream adoption.

“Crypto’s becoming an asset class, not just an asset.” “From a market infrastructure and development of the asset class perspective, Ether is picking up steam, probably the way Bitcoin did a year-and-a-half ago.”

GLXY shares have also jumped 13% in the first three days of November, following the 50% uptrend last month.

Bitcoin Facing Competition From Ethereum

The US has yet to see an Ether ETF though the first Bitcoin ETF started trading last month, but it was linked to futures contracts trading on the CME, and a spot crypto ETF is nowhere near being approved. Analysts expect Ether futures ETF to get the green light soon as well, even before the physically-backed Bitcoin fund gets approved.

Besides the potential to have its future ETF launching, CME has also announced that it is launching Micro Ethereum Futures early next month.

“It has become clear in the last six months that bitcoin faces competition as Ethereum and other Layer 1 assets become more innovative, with DeFi and NFT use cases, while bitcoin’s primary use case continues to be as a scarce, fungible digital asset,” said Chainalysis chief economist Philip Gradwell.

He pointed out how an additional 4 million ETH have flooded into DeFi in the last six months, bringing the total to 17.6 million Ethereum — 15% of Ether’s total supply.

“These are all very positive developments for crypto, and I think its potential is now clearer than ever,” said Gradwell.

Read Original/a>
Author: AnTy

CRV Pumps to Lead DeFi as Curve Finance Hits $100 Billion in Overall Volume

CRV Pumps to Lead DeFi as Curve Finance Hits $100 Billion in Overall Volume

Total value locked (TVL) in Ethereum decentralized finance (DeFi) protocols has surpassed $160 billion to hit a new all-time high at $163.52 bln.

But while DeFi tokens haven’t got the memo as they continue to lag behind the rest of the market with L1s stealing all the limelight, Curve is one of the exceptions.

Curve is the dominant DeFi project on Ethereum, accounting for its 10.18% of TVL at $16.64 bln. The decentralized exchange, however, isn’t limited to Ethereum but has grown to cover Avalanche, where it has $648.8 mln of assets locked, Harmony ($13.92 mln), Polygon ($380.85 mln), Arbitrum ($321.55 mln), Fantom ($165.2 mln), and xDai ($5.86 mln).

In total, Curve Protocol’s TVL has also hit a new peak of $18.17 bln in continued growth, up from $1.4 billion at the beginning of the year.

Curve has also facilitated more than $100 billion of volume since launching in January 2020.

image1

This growth can also be seen in the price of CRV, which is up 84% in the past week to trade at $5.08, a level last seen in September 2020. CRV, however, is still down 90.5% from its all-time high of $54 in mid-August last year.

The token was launched in August 2020 with a very small float and rapid emissions, causing its price to collapse. While initially criticized, CRV’s token economics has since then proven that its token model works.

“Crv pump is a byproduct of market pricing in curve v2 / curve being deflationary the last 20d…” noted trader CryptoMessiah.

Yield farming is another factor as Liquidated Pools (LPs) on Curve get a boosted yield by locking their CRV tokens into veCRV. More than 47% of all circulating CRV tokens are currently locked in the protocol and continue to increase. In exchange for locking their CRV tokens, users receive cvxCRV — a liquid staking derivative of veCRV.

image2

Curve’s liquidity provision and token locking model is what has led to competition amongst farming products built on top of Curve.

The majority of the newly emitted CRV is locked within Convex, which has over 35% of veCRV supply. Besides Convex, Yearn offers attractive yields to users to lock their tokens in vaults for up to four years.

Read Original/a>
Author: AnTy

$5.5B AUM Pension Fund Buys Bitcoin and Ether Because They Can’t “Ignore” It Anymore

$5.5 Billion AUM Pension Fund Buys Bitcoin and Ether Because They Can’t “Ignore” It Anymore

Houston firefighters’ pension fund is the latest to join the cryptocurrency scene.

The Houston Firefighters’ Relief and Retirement Fund has announced that it has bought $25 million worth of Bitcoin and Ether for a defined-benefit plan’s portfolio with the help of NYDIG, a subsidiary of asset manager Stone Ridge.

The Fund’s chief investment officer Ajit Singh said the investment expressed their belief in “the disruptive potential” of cryptocurrencies.

“We are excited to take this first step forward into the world of digital assets.”

The fund with $5.5 billion in assets under management said that this crypto investment had been years in the making. This move also came as Bitcoin price hit a record high above $67,000 earlier in the week, and Ether nearly hit its $4,380 ATH following the debut of the first US Bitcoin exchange-traded fund (ETF).

However, the Houston Firefighters’ Relief and Retirement Fund prefers directly buying crypto assets than taking on the risk associated with futures-related investments.

“We didn’t want to get the synthetic exposure.” “We decided to go directly to the token. As more and more institutional adoptions happen, there will be more and more dynamics that develop for supply and demand. And having physical assets — actual tokens — gives us in the future the possibility of income generation potential.”

NYDIG’s global head of asset management, Nat Conrad, said in a statement that this investment “represents a watershed moment for bitcoin and its place in public pensions.”

Previously two Virginia pension funds bought crypto assets two years ago and recently said that they are planning to expand their investments by another $50 million.

“I see this as another tool to manage my risk.” “It has a positive expected return and it manages my risk. It has a low correlation to every other asset class.”

The fund handles retirement benefits for over 6,600 active and retired firefighters and family beneficiaries. For the past 17 years, active firefighters have contributed 9% of their salary to the fund, with the city of Houston contributing at least twice that amount.

“We have been studying this as an asset class to add to our investment portfolio for quite some time; we were watching it, we were analyzing it.” “It became an asset class we could not ignore anymore.”

Read Original/a>
Author: AnTy

Grayscale Kickstarts SEC Review of its Spot Bitcoin ETF (‘BTC’) Application

Grayscale Bitcoin Trust (GBTC) has more than $40 billion assets under management and is currently trading at a steep 16.56% discount.

The day the first Bitcoin ETF launched in the US, the largest digital asset manager Grayscale Investments announced that it had filed to convert the world’s biggest Bitcoin fund into a spot ETF.

The Grayscale Bitcoin Trust will trade under the ticker symbol ‘BTC.’

Unlike the ProShares Bitcoin Strategy ETF (BITO), whose debut was the second most traded ETF with more than $1 billion worth changing hands, Grayscale’s ETF will be backed by actual units of the leading cryptocurrency.

The filing by Grayscale along with the NYSE Arca has kickstarted a window for the Securities and Exchange Commission (SEC) to reject or delay the GBTC conversion application. The SEC has 75 days to review the application.

While the SEC has allowed the derivatives-based product to launch, Chair Gary Gensler has emphasized that it offered more investor protection. Physically-backed Bitcoin ETF was first filed by Winklevoss twins in 2013, and in the past eight years, the agency has rejected every single one of them.

Launched in 2013, Grayscale Bitcoin Trust has $41.7 billion assets under management and is currently trading at a steep 16.56% discount. GBTC holds roughly 3.44% of all Bitcoin in circulation. Michael Sonnenshein, chief executive officer, said,

“As we file to convert GBTC into an ETF, the natural next step in the product’s evolution, we recognize this as an important moment for our investors, our industry partners, and all those who realize the potential of digital currencies to transform our future.”

Sonnenshein shared on Twitter that GBTC is owned by investors in all 50 states, representing over 700K retail and institutional accounts. GBTC shares are locked up for six months; this means the holders are unable to trade in reaction to market movements.

Grayscale is committed to converting not only GBTC but also other 14 investment products into ETFs, he added.

Dave LaValle, Global Head of ETFs at Grayscale Investments, said,

“At Grayscale, we believe that if regulators are comfortable with ETFs that hold futures of a given asset, they should also be comfortable with ETFs that offer exposure to the spot price of that same asset.”

Read Original/a>
Author: AnTy

Australia’s Pension Fund Giant with $69 Billion AUM Is Open to Investing in Crypto

Australia’s Pension Fund Giant with $69 Billion AUM Is Open to Investing in Crypto

“As the (crypto) segment matures . . . there’s a likelihood that super funds seek out exposure,” said QIC’s head of currencies. Pension funds are still only interested in blockchain technology, with bitcoin “not an area of interest or focus.”

Queensland Investment Corporation (QIC), one of Australia’s largest pension funds, said it might make small investments in the cryptocurrency sector. The fund told the Financial Times that it is open to investing in cryptocurrencies in the future.

QIC manages A$92.4bn ($69 billion) of assets and is Australia’s fifth biggest pension fund.

According to the fund’s head of currencies, Stuart Simmons, early inflows into crypto are likely to be “more a trickle than a flood” due to uncertainty surrounding regulation.

“I don’t think there’s an inevitability about super funds and the institutional market investing in crypto, but as the segment matures . . . there’s a likelihood that super funds seek out exposure.”

Unlike family offices and private investor funds in the country, Australia’s “supers,” which pool together and manage people’s retirement savings, hasn’t entered the crypto market until now.

Not Interested in Crypto Assets

This is yet another sign that retirement funds are now taking an interest in the crypto asset space despite increasing regulatory scrutiny. Recently, Canada’s second-largest pension fund, Caisse de dépôt et placement du Québec (CDPQ), with $300 billion in assets, led crypto lender Celsius Network’s $400 million equity funding round.

CDPQ CTO and executive vice-president Alexandre Synnett said in an interview that their inaugural investment in the crypto sector shows their “conviction” in blockchain technology, which will “change the way the financial services are interacting.”

Synnett, however, said the fund is only focused on making “opportunistic” investments in “diamond in the rough” early-stage companies and that this is just a “small diversification play,” with “absolutely” no plan to allocate funds directly into Bitcoin or other cryptos.

Similarly, Andrew Fisher, the head of the asset allocation at Sunsuper, a Queensland-based pension fund manager with $63 bln in AUM, said it is only interested in blockchain technology, and that bitcoin and other cryptos are “not an area of interest or focus.”

Regulatory Requirements Need Clarity

According to Simmons of QIC, there are still a number of uncertainties around cryptocurrencies, and the “operational infrastructure for institutional investing remains immature,” as well.

The largest investors will want more certainty on the regulatory front and more protections around “unquantifiable risks” such as fraud and market manipulation, he added.

But once regulatory requirements become clear, conservative investors will feel more comfortable making investments into the sector.

The entry of large banks and other financial institutions “highlights the perceived opportunity from the enablement of crypto investing,” said Simmons.

“As the framework continues to develop, super funds may eventually simply be responding to user demand by facilitating investment in crypto.”

Read Original/a>
Author: AnTy

$95 Billion Investment Firm CEO Invests in Ether As “A Programmable Bitcoin”

$95 Billion Investment Firm CEO, Barry Sternlicht, Invests in Ethereum As “A Programmable Bitcoin”

Billionaire Barry Sternlicht revealed this week that he owns the top cryptocurrencies, Bitcoin (BTC) and Ether (ETH), due to the excessive amount of money-printing happening globally.

The chairman and CEO of Starwood Capital Group, an investment firm with $95 billion in assets under management (AUM), talked about cryptocurrencies in an interview with CNBC, where he noted that it makes sense to invest in them as a way to diversify a portfolio.

“The reason I own bitcoin is because the U.S. government, and every government in the Western Hemisphere, is printing money now to the end of time, and this is a finite amount of something and it can be traded globally.”

At the same time, he called Bitcoin a “dumb coin,” saying that its sole purpose is being a store of value, and it is crazy volatile. Here comes his second investment, Ether, which is

“a programmable Bitcoin, and there are tons of other coins built on that system.”

When asked about JPMorgan CEO Jamie Dimon calling Bitcoin “worthless,” Sternlicht said, “Gold is kind of worthless too” despite the precious metal having some “industrial uses.”

Additionally, Sternlicht, worth $4.4 billion, has “become very interested in blockchain technology as a whole,” which he believes is “going to change everything.”

“We’re probably in inning one.”

Read Original/a>
Author: AnTy

BSC Is Back in the Game as Binance Announces $1 Billion Incentives Program to Pump the Ecosystem

BSC Is Back in the Game as Binance Announces $1 Billion Incentives Program to Pump the Ecosystem

Money is flowing in the cryptocurrency space with projects using incentives to attract masses and even more capital. Now, Binance has also joined in by announcing the launch of a $1 billion growth fund to support the Binance Smart Chain.

“BSC’s growth has attracted over 100 million users with its initial funding of $100 million,” said Binance CEO ‘CZ’ Changpeng Zhao.

“With the additional contribution of $1 billion, BSC will be better equipped to disrupt traditional finance and accelerate global mass adoption of digital assets to become the first-ever blockchains ecosystem with 1 billion users.”

About half of the Crypto Mass Adoption Fund is reserved for investments in areas including decentralized computing, metaverse, gaming, virtual reality, artificial intelligence, and blockchain-based financial services, said the company in a statement.

Of the remaining $500 million, $300 million will be directed towards a builder program, and $100 million each will be used in liquidity incentives and talent development.

Competing blockchains like Algorand, Avalanche, and Fantom have already tried this tactic resulting in an explosion in their inflows. Fantom launched a 370 million FTM incentive program for developers, Avalanche (AVAX) announced a $180M ecosystem-wide liquidity mining program, and Algorand (ALGO) launched a $300 million fund for various incentives.

These incentive programs helped these blockchains attract a lot of capital. Fantom saw its total value locked (TVL) surging from less than $500 mln to $5.77 bln. Similarly, Avalanche’s assets went from $300 mln to over $5 bln.

Meanwhile, BSC’s assets have been stagnant since May, when it hit $32.6 billion in TVL. At the time, in less than three months, it had grown 15x as Binance Smart Chain attracted the priced-out users with its faster and cheaper alternative to Ethereum (ETH).

As of writing, the BSC TVL is sitting at $18.2 bln.

To bring excitement, people, projects, and funds back, Binance is injecting the biggest yet incentives into its ecosystem.

With this initiative, the focus will also be on “building cross-chain and multi-chain infrastructures integrated with different types of blockchains,” said Gwendolyn Regina, investment director of the BSC Accelerator Fund.

In response to this, the native token BNB nearly jumped about 12.5% to $441 but has since pared some gains to now trade at $427.

Read Original/a>
Author: AnTy