• 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.
JPM Global Government Bond Active UCITSETF förvaltas aktivt och investerar främst i globala statsobligationer och kvasi-statliga obligationer från utvecklade och tillväxtmarknader. Vid investeringsbeslut tar investeringsförvaltaren systematiskt hänsyn till ESG-kriterier. Fonden är också tillgänglig för investerare med valutasäkring mot amerikanska dollar.
L&G UK Equity UCITSETF investerar i brittiska medelstora och stora företag och täcker cirka 85 procent av den brittiska aktiemarknaden. Företag som bedriver ren kolbrytning, är involverade i produktion av kontroversiella vapen eller har åsidosatt någon av principerna i FN:s Global Compact är undantagna.
Namn
ISIN Kortnamn
Avgift
Utdelnings- policy
JPM Global Government Bond Active UCITSETF – USD (acc)
Produktutbudet inom Deutsche Börses ETF- och ETP-segment omfattar för närvarande totalt 2 456 ETFer, 202 ETCer och 259 ETNer. Med detta urval och en genomsnittlig månatlig handelsvolym på cirka 23 miljarder euro är Xetra den ledande handelsplatsen för ETFer och ETPer i Europa.
Invesco Physical Platinum (8PSA ETC) med ISIN IE00B40QP990, spårar spotpriset på platina i USD.
Den börshandlade produktens TER (total cost ratio) uppgår till 0,19 % p.a. Invesco Physical Platinum är den billigaste ETC som följer Platinum-indexet. Denna ETC replikerar resultatet av det underliggande indexet med en skuldförbindelse med säkerheter som backas upp av fysiska innehav av ädelmetallen.
Invesco Physical Platinum är en liten ETC med tillgångar på 23 miljoner euro under förvaltning. Denna ETC lanserades den 13 april 2011 och har sin hemvist i Irland.
Översikt
Invesco Physical Platinum ETC syftar till att tillhandahålla prestanda för spotplatinapriset genom certifikat med säkerhet i fysisk platina. Varje Platinum ETC är ett certifikat, som säkras av fysisk platina som hålls i J.P. Morgan Chase Banks London-valv. Emittenten av certifikaten, Invesco Physical Markets PLC (Invesco PMP), är ett irländskt hemvist företag som administreras av J.P. Morgan Administration Services (Ireland) Limited.
Investeringsavkastningen uppnås genom att hålla fysisk platina, som värderas dagligen på PM-auktionen för London Bullion Market Association (”LBMA”) platinapris. ETC kommer att använda en ”swing bar”-metod, där platinaplattor/tackor som är lika med minst det fulla värdet av certifikaten kommer att hållas på ett tilldelat konto i emittentens namn.
Det betyder att det går att handla andelar i denna ETC genom de flesta svenska banker och Internetmäklare, till exempel DEGIRO, Nordnet, Aktieinvest och Avanza.
J.P. Morgan är glada att kunna tillkännage noteringen av det senaste tillskottet till deras sortiment av aktiva ränte-ETFer – JPM Global Government Bond Active UCITSETF (JGOV). Byggande på momentumet från lanseringen av sju aktiva ränte-ETF:er under de senaste 12 månaderna, kommer denna nya ETF att lägga till globala statsobligationer till J.P. Morgans omfattande utbud av aktiva ränte-fonder.
Denna lansering kompletterar JPM EUR Government Bond Active UCITS ETF (JEUG), som lanserades för fem månader sedan. JPM Global Government Bond Active ETF kommer att fungera som den globala versionen av denna ETF, vilket ger investerare tillgång till den globala statsobligationsmarknaden och utnyttjar J.P. Morgans omfattande erfarenhet av att förvalta statsobligationsportföljer.
Delfondens mål är att uppnå en långsiktig avkastning som överstiger jämförelseindexet genom att aktivt investera huvudsakligen i en portfölj av globala statliga och statligt relaterade skuldebrev.
Riskprofil
Värdet på din investering kan både minska och öka, och du kan få tillbaka mindre än du ursprungligen investerade.
Statliga skuldebrev, inklusive de som emitteras av lokala myndigheter och myndigheter, är föremål för marknadsrisk, ränterisk och kreditrisk. Regeringar kan fallera över sina statsskulder och innehavare av statsskulder (inklusive delfonden) kan ombedas att delta i omläggningen av sådana skulder och att bevilja ytterligare lån till statliga enheter. Det finns inget konkursförfarande genom vilket statsskulder som en regering har fallerat över kan drivas in helt eller delvis. Globala ekonomier är starkt beroende av varandra och konsekvenserna av en suverän stats fallissemang kan vara allvarliga och långtgående och kan leda till betydande förluster för delfonden.
Värdet på skuldebrev kan förändras avsevärt beroende på ekonomiska förhållanden och ränteförhållanden samt emittentens kreditvärdighet. Emittenter av skuldebrev kan misslyckas med att uppfylla betalningsförpliktelser eller så kan kreditbetyget för skuldebrev sänkas. Dessa risker är vanligtvis förhöjda för skuldebrev under investment grade, vilka också kan vara föremål för högre volatilitet och lägre likviditet än skuldebrev med investment grade. Kreditvärdigheten för skuldebrev utan kreditbetyg mäts inte med hänvisning till ett oberoende kreditvärderingsinstitut.
Tillväxtmarknader kan vara föremål för ökad politisk, regulatorisk och ekonomisk instabilitet, mindre utvecklade förvarings- och avvecklingsmetoder, dålig transparens och större finansiella risker. Tillväxtmarknader och skuldebrev under investment grade kan också vara föremål för högre volatilitet och lägre likviditet än skuldebrev utan investment grade respektive skuldebrev med investment grade.
Investeringar i onshore-skuldebrev som emitteras inom Kina via Bond Connect är föremål för regeländringar och operativa begränsningar, vilket kan leda till ökad motpartsrisk. Marknadsvolatilitet och potentiell brist på likviditet på grund av låga handelsvolymer kan få obligationspriserna att fluktuera avsevärt.
Hållbarhetsrisk kan väsentligt negativt påverka en emittents finansiella ställning eller rörelseresultat och därmed värdet av den investeringen. Dessutom kan det öka delfondens volatilitet och/eller förstärka befintliga risker för delfonden.
Delfonden strävar efter att ge en avkastning över jämförelseindexet; delfonden kan dock underprestera jämförelseindexet.
Mer information om risker finns i avsnittet ”Riskinformation” i prospektet.
Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel Nordnet, SAVR, DEGIRO och Avanza.