Despite recent adverse events such as the bankruptcy of FTX, in the first weeks of January 2023 Bitcoin achieved positive performances, touching $23. How do you explain it? Do you think this could be a long-term rally?
«Obviously we are very happy that Bitcoin has returned to growth, also obtaining very positive performances; however, we at 21Shares believe the recent appreciation is nothing more than a convergence towards equilibrium. We are back to the levels after the LUNA collapse and before the FTX bankruptcy, which clearly indicates that the cryptocurrency sector is a sector able to operate much better in the absence of fraudulent actions such as those orchestrated by the latter and by Alameda. Further proof of this is that BTC's 200-day SMA (average price) has reached its highest level in 381 days. While it is true that past performance is not a guide to future performance and that current market conditions are very different than they were 4 years ago, this is still important as the last time the SMA at 200 days of BTC reached these levels in 2019 and preceded a growth of the asset of about 190%, going from a value of 4 thousand dollars to one of 11.300".
In your opinion, what are the external market events that could support the growth of the cryptocurrency market? And those who could hinder it?
«Certainly, the greatest of the trends supporting the cryptocurrency market and its fundamentals is the continuous push from developers who contribute to improving the infrastructure of the Web 3. Just think that, compared to the last time there was a bearish scenario, in 2018, Ethereum grew 5x and Bitcoin 3x, with an average number of active developers of 5 and 920 respectively. Additionally, the rapid expansion of networks such as Solana, Polkadot, Cosmos and Polygon is also a market-friendly factor that needs to be monitored closely. On the other hand, the headwinds that can put a spoke in the works of the cryptocurrency market are a worsening of the conflict between Russia and Ukraine and the invasion of Taiwan by China, as they would create a more tense geopolitical scenario and reduce the desirability of riskier assets».
In general, what are your expectations about Bitcoin and the cryptocurrency market as a whole?
«We are convinced that cryptocurrencies will play a very important role in investments in alternative assets. Furthermore, as ESG becomes increasingly central, we believe that more and more investors will look very closely at the energy consumption of various blockchains, with Ethereum and all those based on a Proof-of-Stake (PoS) algorithm being well positioned to take advantage of the narrative that accompanies them. On the other hand, this will force industry players to conduct much more in-depth research on the true size of Bitcoin's ecological footprint. Finally, we believe that in the coming years, the companies that have developed on blockchain technology will be the ones with the greatest profitability, just as today they are those that have developed thanks to the internet and which have contributed to the development of its structure through the creation of new devices. such as smartphones and tablets, and operating systems (e.g. Google, Amazon and Apple)».
On 18 January, you launched the STAKE ETP, a basket ETP that tracks staking returns. Why did you decide to develop a product that focuses exclusively on cryptocurrencies based on the Proof-of-Stake algorithm?
«The main motivation that prompted us to develop and launch the 21Shares Staking Basket Index ETP (STAKE) is certainly that of offering investors the possibility of creating a position, and therefore of receiving an income, from the remunerations that can be generated by the staking in cryptocurrencies through a simple and secure tool. In fact, our internal research has shown that not only is the demand for exposure to this practice particularly high today, but also that staking represents one of the most attractive sources of potential income in the entire crypto system. Furthermore, it should be remembered that STAKE is a "total return" strategy, which brings together staking remuneration and the performance of each underlying digital asset and this because the presence of multiple sources of income can offer investors a more stable and resilient performance under difficult market conditions, as well as a significant upside when the market improves. Finally, when Ethereum moved from PoW to PoS with the Merge, its energy consumption was reduced by more than 99% and this is a very important element for the narrative of this type of cryptocurrency in a world that, rightly, always lends more attention to ESG components».
