• European Economy Booms while Regulators Consider Adopting Crypto
• Bitcoin’s Growing Fundamentals and Institutionalization
• Ethereum’s Next Leap Forward: A Glimpse at the Upcoming Upgrade
European Economy Booms while Regulators Consider Adopting Crypto
Europe’s economy has exceeded expectations, with Germany’s gross domestic product (GDP) for Q1 2024 increasing by 0.2%, compared to the previous quarter’s reading of -0.5%. Additionally, France, Italy, and Spain are also seeing progress, picking up the bloc’s GDP from -0.1% to 0.3%. This is a good sign that Europe is on the right track away from a recession. Matching the positive outlook, regulators appear receptive to including new alternative assets within the EU’s most established regulatory framework.
Namely, the European Securities and Markets Authority (ESMA) is considering cryptoassets, among other asset classes like commodities and precious metals, in its Undertakings for Collective Investment in Transferable Securities (UCITS). Similar to mutual funds in the U.S., UCITS funds can be registered and sold in any country in the EU using unified regulatory and investor protection requirements. These funds are considered safe, well-regulated investments, hence their €12T market valuation and popularity among pension funds and risk-averse investors.
On May 7, ESMA invited investors and trade associations, among others, for a consultation to assess possible benefits and risks of UCITS gaining exposure to the selected 19 asset classes, having until August 7 to gather input. This is important since UCITS accounts for 75% of all collective retail investments in the EU. Thus, if the conclusions of this consultation are in favor of adopting crypto, it would attract an influx of investors and bring more regulated accessibility to this asset class. Moreover, although still under consultation, ESMA’s deliberation adds more credibility to crypto, considering the regulator’s renowned strict regulatory standards.
Further, the EU’s inflation is inching towards the 2% target, overshooting by only 0.4% in the past month, a level the U.S. is yet to achieve, with March’s inflation hitting 3.5%. Later today, a strong gauge for inflation is coming out, the Producer Price Index (PPI), measuring the change in the price of finished goods and services sold by producers. With the last consumer price index (CPI) disappointing, all eyes are on the CPI print coming out this Wednesday, along with data on retail sales. Although optimism seems to have checked out, a cooled inflation rate would recover investors’ appetite for risk-on assets like crypto, instigating more flows into Bitcoin spot ETFs, which have been especially quiet over the past week, as shown in Figure 1.
Figure 1: US Spot Bitcoin ETFs Flows
Source: Glassnode
Nevertheless, Bitcoin’s narrative has been growing beyond its primary use case as a store of value, with companies and governments alike leveraging Bitcoin mining to reduce their negative impact on the environment, ironically something Bitcoin is often scrutinized for.
Bitcoin’s Growing Fundamentals and Institutionalization
On May 7, Genesis Digital Assets and Argentina’s state-owned YPF Luz, the country’s largest producer of oil and gas with a ∼40% share in 2021, announced their opening of a Bitcoin mining facility. The data center takes ‘stranded gas,’ a byproduct of oil and gas production that would otherwise be flared and contribute to greenhouse gas emissions, to power the mining operation with the potential to reduce carbon dioxide equivalent emissions by 25-63%. Notably, 50 major oil and gas companies, representing over 40% of global petroleum production, signed the Oil and Gas Decarbonization Charter (OGDC), thereby committing to end gas flaring by 2030. The Argentinian project serves as a prime example of how companies can achieve the goals outlined in the OGDC, an approach likely to be replicated by others potentially using Bitcoin.
Aside from the obvious environmental benefits, projects like these actually strengthen Bitcoin’s network! More miners joining the fray means greater computing power, reflected by the growing hash rate in Figure 2. This results in a more secure network, as 51% attacks become more costly to execute successfully. The development comes at a crucial point in time, calming fears over miners exiting the network to cover costs, a dynamic often witnessed post-halving and one we explored in our Bitcoin Halving Report.
Figure 2 – Bitcoin Growing Hash Rate
Source: 21co on Dune
On a more familiar note, institutions continue to gobble up Bitcoin as an investment opportunity. The recent 13F filings mentioned last week revealed a growing appetite for Bitcoin as investment managers continue to disclose their U.S. equity holdings to the SEC. Quantitative trading firm Susquehanna holds over $1B in Bitcoin ETFs, with Boston-based hedge fund Bracebridge disclosing their $380M position too. Furthermore, in Japan, a weakened yen and government debt reaching 250% of GDP confirms sustained economic pressure, which has led early-stage investment firm Metaplanet to adopt Bitcoin as a strategic reserve. They have acquired over $7M since April, another testament to Bitcoin’s value proposition as a safe haven. The continuous adoption of Bitcoin is no surprise, given the accessibility of Bitcoin ETFs to traditional institutions through a regulated and familiar investment vehicle.
The positive Bitcoin sentiment is amplified by continuous innovation on the network itself. Bitcoin’s prime scaling solution, the Lightning Network, has taken a significant leap forward. By leveraging the Taproot Asset Upgrade, the Lightning Network successfully tested a protocol for issuing stablecoins directly on Bitcoin. This underscores the trend of Bitcoin’s growing use cases following the launch of Runes, which unlocked the ability to launch fungible tokens on Bitcoin. The recent surge in on-chain activity is reminiscent of the ERC-20 explosion in Ethereum’s early days, and stablecoins would truly unlock Bitcoin’s DeFi potential. They facilitate a wide range of transactions, shown below by Ethereum stablecoins amassing $3.8T in 2024 processed volume so far.
Figure 3 – Ethereum Stablecoin Volume
Source: 21co on Dune
While still in the early stages, this development would also significantly boost miner revenue, offering them a much-needed additional income stream through transaction fees, following the halving of block rewards last month. The potential of stablecoins on Bitcoin will be monitored going forward, as they have clear implications for the network’s potential on-chain footprint.
Ethereum’s Next Leap Forward: A Glimpse at the Upcoming Upgrade
More information is finally starting to come out regarding Ethereum’s next major upgrade, slated for late this year or early next year. Known as Pectra, the upgrade promises to introduce a range of enhancements aimed at bolstering the network’s stability and refining user experience. For example, the upgrade will raise the maximum stake per validator from 32 to 2,048 ETH, streamlining the management process for large validators who spread their stake across multiple wallets. Moreover, Pectra will tackle the problem of empty accounts, those with zero assets or funds, by removing them from the network. This action reduces the network’s state size, which effectively leads to lighter transaction processing.
Although the upgrade will incorporate various Ethereum Improvement Proposals (EIPs), one in particular stands out. Referred to as EIP 7702, Vitalik Buterin’s new proposal aims to expand upon the advancements made in Account Abstraction (AA) on Ethereum by refining certain concepts introduced in an earlier proposal, EIP 3074. As a quick recap, AA transforms users’ wallets, externally owned accounts (EOAs), into more sophisticated accounts resembling smart contracts, enhancing security, flexibility, and simplified user management. That said, EIP 7702 addresses some of EIP 3074 criticisms by steering clear of dependencies on EOA-specific functionalities. It aims to establish a versatile system capable of meeting the evolving needs of the Ethereum ecosystem while helping to reduce technical debt for the network
However, EIP 7702 proposes several other enhancements, including batched transactions, which could enhance transaction efficiency and even reduce fees by consolidating multiple user actions. Another exciting feature is the introduction of s sponsored transactions, which allow third-party applications to cover transaction fees for consumers, an ideal solution for onboarding new users. Finally, the upgrade could make users’ accounts resistant to threats from quantum computing. That said, with the proposal’s introduction of a new transaction type enabling EOAs to temporarily transition into smart accounts, concerns arise regarding the heightened risk of malicious actors’ ability to swiftly drain user wallets. Nevertheless, Vitalik’s proposal is intriguing as it charts a more pragmatic course toward realizing the AA vision. This is pivotal because it echoes our thesis at 21Shares that crypto won’t onboard millions of more users without providing them with an intuitive interface resembling the user-friendly experience they are familiar with across Web2.
Now, while Ethereum’s long-term prospects remain promising, its status as a deflationary network has come under threat in recent weeks, as seen below in Figure 3. This decline is primarily attributed to decreasing on-chain activity, which peaked at the end of March. Furthermore, the DenCun upgrade, implemented in March, significantly reduced the costs L2s incurred for storing their data on Ethereum by 90%.
Figure 4 – Ethereum’s Inflation
Source: 21co on Dune
It is worth noting that while it is currently more cost-effective for L2s to operate on Ethereum, these reduced costs will eventually onboard a larger user base. This will make it more feasible for applications, especially those requiring a high volume of interactions, to operate within the Ethereum ecosystem, which was previously economically unviable. A pivotal piece of evidence supporting this perspective is Arbitrum’s recent milestone, onboarding approximately 600K daily active users, as depicted in Figure 4. This likely influenced Securitize’s decision to propose deploying Blackrock’s BUIDL on Arbitrum, considering its position as the pioneering L2 platform with such a vibrant user base, alongside being the first L2 to process over $150B in swap volume on Uniswap, putting Arbitrum as the leading Ethereum scaling solution. Nevertheless, readers shouldn’t be wary, as we expect a broader spectrum of applications to arrive at the Ethereum network, helping to fill in the gap for Ethereum’s lost revenue while expanding the universe for what is possible within its ecosystem.
Figure 4 – Daily Active Users of Ethereum’s Leading Solutions
Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
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.
Amid soaring US debt and Gold’s steady gains, Bitcoin has continued to deliver strong returns over the past 15 years. Its scarcity and decentralization make it a hedge that investors can’t ignore, providing new ways to pursue growth, security, and opportunity in an evolving financial landscape.
Investors can’t ignore the corporate world’s big bet on Ethereum
Ethereum is stealing the spotlight, as public companies have accumulated over 4.4 million ETH, worth nearly $19 billion, in the past few months. This treasury boom is outpacing Bitcoin’s early adoption and redefining how Wall Street approaches digital assets.
The rise of Hyperliquid: DeFi’s record-breaking powerhouse
Hyperliquid is making waves in DeFi perpetuals by setting new records, leading trading volumes, and propelling its token to all-time highs. Backed by market volatility, high-performance infrastructure, and concentrated liquidity, the platform continues to draw investors and assert its market dominance.
Research Newsletter
Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
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.
iShares NASDAQ 100 SwapUCITSETF USD (Acc) (N100 ETF) med ISIN IE0001ZFMLN7, försöker följa Nasdaq 100®-indexet. Nasdaq 100®-indexet spårar ett urval av 100 aktier valda bland icke-finansiella aktier noterade på NASDAQ-börsen.
Den börshandlade fondens TER (total cost ratio) uppgår till 0,20 % p.a. ETFen replikerar det underliggande indexets prestanda syntetiskt med en swap. Utdelningarna i ETFen ackumuleras och återinvesteras.
iShares NASDAQ 100 SwapUCITSETF USD (Acc) är en mycket liten ETF med 4 miljoner euro under förvaltning. Denna ETF lanserades den 3 oktober 2024 och har sin hemvist i Irland.
Varför N100?
Exponering mot 100 av de största amerikanska och internationella icke-finansiella aktierna noterade på NASDAQ-börsen.
Exponering för företag inom stora industrigrupper inklusive hårdvara och mjukvara, telekommunikation, detaljhandel/grossisthandel och bioteknik.
Använd i din portfölj för att söka tillväxt på medellång till lång sikt även om fonden också kan vara lämplig för kortsiktig exponering mot index.
Investeringsmål
Fonden strävar efter att uppnå avkastning på din investering, genom en kombination av kapitaltillväxt och inkomst på fondens tillgångar, vilket återspeglar den totala nettoavkastningen för NASDAQ 100-indexet (”Indexet”).
IncomeShares passed three milestones in August. Assets under management climbed to almost $66 million, cumulative fund flows topped $72 million, and turnover across London and Xetra listings reached over $27 million. Palantir paid the highest annualised distribution yield at 57.11%. The sections below break the numbers down in more detail.
Cumulative fund flows
Fund flows track how much money investors put into or take out of IncomeShares ETPs (exchange-traded products). Positive flows mean more money coming in than going out – a sign of demand for the products.
Flows have risen every month this year. In January, they stood at $13.7 million. By the end of August, they reached $72.4 million. That’s over $8 million of new money added in August alone – the biggest increase since May.
Trading turnover
Turnover is the total dollar value of IncomeShares ETPs bought and sold on the exchanges. Higher turnover means more activity and liquidity for investors.
Turnover reached $27.3 million in August – the highest on record and more than double January’s $13.0 million. London listings (USD and GBP combined) made up $14.2 million, with Xetra listings close behind at $13.1 million. Both exchanges have seen steady increases through 2025, showing rising interest in income options strategies across the board.
Note: Figures use IDC FX rates as of the August month-end to convert GBP and EUR into USD. We apply the same August rates to all prior months to compare turnover on a like-for-like basis.
Assets under management (AUM)
AUM is the total value of assets held across all IncomeShares ETPs. It grows when new investors buy in, or when the underlying assets rise in value.
AUM grew from $13.8 million in January to $65.8 million at the end of August. It was also $8 million more than in July. Steady inflows and consistent income distributions are helping the product range build scale.
Distribution yields
Distribution yields represent the annualised income paid to investors as a percentage of the current NAV (net asset value), based on the latest month’s yield. IncomeShares ETPs aim to generate this income from selling options. Yields change each month depending on strategy performance and market volatility.
Annualised August yields (ranked highest to lowest):
Our Palantir ETP topped the list with an annualised yield of 57.11% for August, up from 30.57% in July. The stock was volatile in August, trading between $142 and $190. That wider range increased option premiums, which boosted the ETP’s yield. The ETP sells put options on Palantir stock and holds shares – the strategy used for all our single stock ETPs and the Magnificent 7 product.
The Nasdaq 100 ETP paid an annualised yield of 46.44% in August, up slightly from 44.52% in July. At the other end, Gold+ and Microsoft stayed below 7%, reflecting relatively calmer conditions in their underlying assets.
The table below shows the annalised distribution yields for all IncomeShares ETPs so far this year. Note that the bottom eight ETPs launched in late June, so they only have yields for July and August.
Key takeaways
• Fund flows climbed to $72.4 million, with August adding more than $8 million.
• Turnover hit a record $27.3 million, split almost evenly between London and Xetra.
• Palantir topped the yield table at 57%, with Nasdaq 100 and Coinbase also paying above 40%.