Crypto interest from large institutions is something we’ve seen rapidly developing the last few years—whether investments by Google and Apple or new crypto platforms from TradFi giants like Fidelity or Deutsche Bank. But many of these leaps in institutional adoption have slid under the radar as more sensational crypto-related stories dominated headlines.
BlackRock’s filing for a spot bitcoin ETF last month, however, has made the entrance and integration of traditional institutions into crypto impossible to ignore. As our CIO Samir Kerbage noted in a recent CoinDesk article, “These institutions move slowly and deliberately and invest for the long term—once they are in, they are in.”
It’s not just the world’s largest asset managers recognizing that crypto is here for the long haul. Fed Chair Powell acknowledged before the US Congress last week that crypto as an asset class appears to have “staying power.”
To help institutions better understand how crypto can fit within their portfolios, our CEO Marcelo penned an opinion piece for Pensions & Investments that shares a specific formula for determining an appropriate crypto allocation. And in his latest Notes from the CIO, Samir elaborated on why the BlackRock news is so important for investors.
As always, the Hashdex team is here to answer any questions you have about these markets.
-Your Partners at Hashdex
In June, the Nasdaq Crypto Index (NCI) returned to positive performance after the decline in May, which had interrupted a four-month positive streak since the beginning of 2023. June started with relative stability until the SEC initiated proceedings against the Binance.US and Coinbase exchanges on the 5th and 6th, respectively. This event caused a drop in crypto prices, especially those mentioned as securities in the SEC's view, such as Cardano, Solana, and Polygon. Later, on the 12th, these three assets were delisted from the Robinhood platform.
By the 15th, the NCI had fallen 8.2%. However, that night news broke that BlackRock had filed for the launch of a spot bitcoin ETF with the SEC. This news changed market sentiment and set the tone for the second half of the month. Three major players in the traditional financial market, Fidelity, VanEck, and Invesco, followed with similar filings. The NCI reversed its losses and closed the month up 9.5%, recovering from the previous month's losses. The index has risen 74% this year.
Among the NCI constituents, the biggest standout was Bitcoin Cash, which rose by 162.4%. The surge was driven by the announcement that Bitcoin Cash is among the four cryptocurrencies listed on EDX Markets, a new crypto exchange supported by Fidelity Digital Assets, Citadel Securities, and Charles Schwab. The other three are Bitcoin (12.1%), Ethereum (3.2%), and Litecoin (16.4%).
The other indices that serve as benchmarks for Hashdex products did not have such a positive month. Among CF Benchmarks' sectoral indices, only the DeFi index saw an increase (2.4%). The Digital Culture and Smart Contract Platform indices fell by 14.7% and 11.2%, respectively. The Vinter Hashdex Risk Parity Momentum Index lost 4.5%.
The first half of the year was quite positive for the crypto market, especially Bitcoin and Ethereum. Despite the regulatory uncertainty resulting from the SEC's actions, institutional adoption continued to grow, and we witnessed significant improvements in the major protocols. We expect the crypto market to continue showing signs of maturation in the second half of the year.
BlackRock bitcoin ETF filing followed by competitors
The BlackRock news drove most of the upside for the NCI toward the end of June. Fidelity, Invesco, and several other asset managers also filed for spot bitcoin ETFs. A spot bitcoin ETF could attract a broader range of investors, including retail and institutional, to the crypto asset market. Crypto investment products added $199 million in the week following the BlackRock filing, the biggest weekly inflows in nearly a year.
Crypto exchange backed by Fidelity, Schwab, and Citadel launches
The launch of EDX Markets is a significant move in the US as it brings credibility and legitimacy to the crypto market as these major TradFi players recognize the potential and value of crypto as an asset class while expanding the infrastructure available for investors.
Deutsche Bank applies for crypto custody license
The largest bank in Germany is another important TradFi player entering the crypto market by applying for a digital asset custody license to offer services to institutional investors and clients.
Wall Street prepares to take on crypto exchanges
A Financial Times article highlights that Standard Chartered, Nomura, and Charles Schwab are building regulated crypto trading platforms to attract fund managers and traditional institutional investors. These firms are seeking to leverage their brands and experience in regulated, compliant platforms to tap into the interest in crypto assets and compete with established crypto exchanges and other companies.
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