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Bitcoin Warms up to Climate Goals and Ethereum’s Next Milestone: What Happened in Crypto This Week?

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Bitcoin Warms up to Climate Goals and Ethereum’s Next Milestone: What Happened in Crypto This Week? European Economy Booms while Regulators Consider Adopting Crypto

• 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

Source: GrowThePie

This Week’s Calendar

Source: Forex Factory, 21Shares

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.

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En av världens största ETFer ordnar om sina innehav i Apple och Nvidia

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För närvarande upptar Microsoft, det största företaget i världen, 22 % av indexet, medan Apple står för 21 % och Nvidia bara 6 %. De senaste veckorna har det skett stora rörelser på finansmarknaderna, vilket tvingar en av världens största ETFer att omorganisera sin portfölj.

För närvarande upptar Microsoft, det största företaget i världen, 22 % av indexet, medan Apple står för 21 % och Nvidia bara 6 %. De senaste veckorna har det skett stora rörelser på finansmarknaderna, vilket tvingar en av världens största ETFer att omorganisera sin portfölj.

Apples aktier steg med mer än 10% efter presentationen av sin plattform för artificiell intelligens. Detta ledde till att teknikföretaget blev, återigen, om än tillfälligt, det största företaget på planeten, med en värdering på 3,30 biljoner USD.

Nvidia har å sin sida stigit med 170 % hittills i år och nått 3,27 miljarder USD. Därmed kunde den placera sig på tredje plats bland de mest värdefulla företagen, till och med överträffa Alphabet och Amazon.

Som ett resultat är den börshandlade fonden Technology Select Sector SPDR Fund (XLK), som följer utvecklingen för de ledande teknikföretagen på den amerikanska marknaden, på väg att balansera om sin portfölj för att följa reglerna, vilket kan påverka aktiekurserna. Följ kursen här.

För närvarande upptar Microsoft, det största företaget i världen, 22 % av indexet, medan Apple står för 21 % och Nvidia bara 6 %. Men snart måste Apples och Nvidias positioner bytas ut.

Flytten skulle innebära en försäljning på cirka 11,4 miljarder dollar för Apple, en total som representerar en hel dag med genomsnittlig handel, och köp på 10 miljarder dollar för Nvidia, ungefär en fjärdedel av den dagliga volymen.

Även om siffrorna bleknar i jämförelse med de två jättarnas börsvärden, är sanningen att de fortsätter att antyda ett flöde av pengar som kan ha en inverkan på priserna på deras aktier. Hur som helst kan de icke-professionella investerarnas frenesi dämpa effekterna av denna omstrukturering.

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D6RE ETF investerar i gröna företagsobligationer

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Deka iBoxx MSCI ESG EUR Corporates Green Bond UCITS ETF (D6RE ETF) med ISIN DE000ETFL615 strävar efter att spåra iBoxx® MSCI ESG EUR Corporates Green Bond Select-index. iBoxx® MSCI ESG EUR Corporates Green Bond Select-index följer eurodenominerade gröna obligationer utgivna av europeiska företag. Tid till förfall: 1,5-10 år. Betyg: Investment Grade.

Deka iBoxx MSCI ESG EUR Corporates Green Bond UCITS ETF (D6RE ETF) med ISIN DE000ETFL615 strävar efter att spåra iBoxx® MSCI ESG EUR Corporates Green Bond Select-index. iBoxx® MSCI ESG EUR Corporates Green Bond Select-index följer eurodenominerade gröna obligationer utgivna av europeiska företag. Tid till förfall: 1,5-10 år. Betyg: Investment Grade.

Den börshandlade fondens TER (total cost ratio) uppgår till 0,25 % p.a. Deka iBoxx MSCI ESG EUR Corporates Green Bond UCITS ETF är den enda ETF som följer iBoxx® MSCI ESG EUR Corporates Green Bond Select-index. ETFen replikerar det underliggande indexets prestanda genom full replikering (köper alla indexbeståndsdelar). Ränteintäkterna (kuponger) i ETFen delas ut till investerarna (kvartalsvis).

Deka iBoxx MSCI ESG EUR Corporates Green Bond UCITS ETF är en liten ETF med tillgångar på 27 miljoner euro under förvaltning. ETF lanserades den 2 augusti 2023 och har sin hemvist i Tyskland.

Investeringsmål

Deka iBoxx MSCI ESG EUR Corporates Green Bond UCITS ETF är en UCITS IV-kompatibel värdepappersfond som replikerar resultatet av iBoxx MSCI ESG EUR Corporates Green Bond Select Index (prisindex). Hållbarhetskriterier beaktas vid sammansättningen av indexuniversum. Indexet består av företagsobligationer utgivna för att finansiera projekt som har en positiv inverkan på miljön.

Indexuniversum

Gröna obligationer som ingår i iBoxx EUR Green Bonds Select Index och klassificeras som sådana av Climate Bonds Initiative (CBI).

Inkluderar euro-denominerade obligationer från stora och medelstora företag baserade i euroområdet, Storbritannien, Norge, Sverige, Danmark och Schweiz

Lägsta obligationsrating på BBB-/Baa3 (Investment Grade Rating)

Handla D6RE ETF

Deka iBoxx MSCI ESG EUR Corporates Green Bond UCITS ETF (D6RE ETF) är en europeisk börshandlad fond. Denna fond handlas på Deutsche Boerse Xetra.

Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel DEGIRONordnet, Aktieinvest och Avanza.

Börsnoteringar

BörsValutaKortnamn
XETRAEURD6RE

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Spotlight Stock Market erbjuder handel med ETPer och godkänner första emittent samt två instrument

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Spotlight Group AB meddelar att dotterbolaget Spotlight Stock Market från och med den 25 juni 2024 kommer att erbjuda handel med ETPer. Spotlight Stock Market har idag godkänt en emittent som utgivare av instrument samt två stycken olika ETPer för handel.

Spotlight Group AB meddelar att dotterbolaget Spotlight Stock Market från och med den 25 juni 2024 kommer att erbjuda handel med ETPer. Spotlight Stock Market har idag godkänt en emittent som utgivare av instrument samt två stycken olika ETPer för handel.

ETP (Exchange-Traded Products), eller börshandlade produkter, är ett samlingsnamn för olika typer av värdepapperiserade derivat som listas för handel på en marknadsplats. De första två instrumenten av denna typ som godkänts för handel är trackercertifikat på Core och HBAR (Hedera). Emittenten som ställer ut instrumenten är Valour Inc.

”Vår långsiktiga strategi är att utöka möjligheterna till handel på Spotlight Stock Market både när det gäller omfattningen av produkter som kan handlas och att underlätta för fler internationella aktörer att handla på marknadsplatsen. Under en lång tid har flera olika aktörer approcherat oss med önskan om att få notera ETPer på vår marknadsplats. När vi under föregående år handlade upp ny leverantör av handelsystem var också denna möjlighet en del av beslutet att byta från NGM till Nasdaq. Därför är vi glada över att nu ha godkänt vår första emittent och de två första instrumenten för handel”, säger Spotlight Groups koncernchef Peter Gönczi.

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