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Mar 06, 2021

CF Benchmarks Recap - Issue 22

  • Evolve strikes whilst the ETF iron is hot

  • JPMorgan suggests 1% allocation to crypto

  • CF Benchmarks adds more cryptos to Bloomberg Terminal

Evolve-1500x500Ether investment market set to Evolve

Evolution continues
If Jay Powell struck again against global markets this week, crypto assets showed every sign of remaining all too prone to the influence of the Fed as well, further diluting what remains of Bitcoin’s ’inflation hedge’ narrative (at least right now). Powell surprised no one by saying that financial conditions were being monitored, though he may have sent a chill through some participants with a reminder that disorderly markets would be ‘concerning’. For a second week, FICC avoided that chill and yields rose, putting almost everything else—including crypto—under fresh pressure. For Bitcoin, it was gentler pressure than at the end of last month, with the 28th February BRR low of $43,794.38 holding, as the benchmark price closed the working week down 2.15% at $48,259.23. Whatever the price trajectory from here, it is the momentum of crypto events that appears to be most in focus, as the pace of companies announcing significant news affirms that the march to normalisation passed the point-of-no-return quite a while ago. (Probably in 2020). For CF Benchmarks, not the least of these events has the been the persisting impetus of evolution in the ETF space that currently references (or will reference) our regulated benchmarks. There’s really no other way to interpret Evolve ETFs’s filing of a preliminary prospectus for the world’s first Ether ETF, powered by the CME CF Ether Reference Rate, after the recent launch of its BRR-powered Bitcoin ETF, than as a vote of confidence in our regulated benchmarks. Elsewhere, Kraken, PayPal, JPMorgan, Goldman, Citi, et al, vied for headlines, whilst there was de facto official signalling from the SEC, IRS and NYDFS. Meanwhile, despite corrections at the end of February spot volume growth was still 17%.

Evolve’s ETHR ETF in the air
The latest promising result yielded by Evolve Funds Group’s virtual and virtuous camping of the OSC is a preliminary filing for the world’s first Ether ETF (‘ETHR’). Echoing key investment themes outlined in our recent research report on the ETHUSD_RR that will underpin ETHR, Evolve’s COO Elliot Johnson called Ether the “building block for a revolution in digital finance which is still in its infancy.”

Bulge Bracket banks back up some more
Through gritted corporate teeth, JPMorgan conceded the possibility of an “efficiency gain” in the risk-adjusted returns of a portfolio from an allocation of up to 1% to crypto. Goldman spoke more by actions by bringing a long-shuttered crypto trading unit back online. Citi’s summation of Bitcoin is that it’s at a “tipping point”.

PayPal eyes custody as Kraken IPO wakes
The next stage of the largest payment platform’s crypto roadmap could be shorter than the half-generation required for the first. CEO Dan Schulman has been busy detailing plans for a dedicated crypto vertical amid reports hinting that these plans stretch to custody services. Coinbase’s approach remains more direct, looking at its S-1 filing pre-IPO. That disclosure roused talk of Kraken’s long dormant potential IPO, including a $20bn valuation.

The Returns: CF Litecoin-Dollar Settlement Price
The Bitcoin fork aimed at decreased block confirmation timing has taken almost a year to outperform rival alts. Down 23% from February’s high it’s 1-year return is still 184%.

Featured benchmarks: LINK, OMG, XLM, XTZ, EOS, OXT

CF Benchmarks LINK, OMG, XLM, XTZ, EOS, OXT prices added to Bloomberg Terminal

The range of regulated CF Benchmark indices available to Bloomberg Terminal users just got bigger

When Bloomberg added CF Benchmarks’ Bitcoin prices to the Terminal in 2017 (the CME CF Bitcoin Reference Rate and CME CF Bitcoin Real Time Index), it meant financial professionals could access regulated, transparent and high-integrity crypto prices with all the convenience and flexibility The Terminal offers, for the first time.

Fast forward to 2021, and predictably, all markets, not just crypto have changed quite significantly, but one thing remains the same for the digital asset class: the need for accurate, robust pricing data that meets the high standards set by global securities regulators. This is why CF Benchmarks has continued to innovate and, for the first time since we began to publish our CME CF Ether-Dollar Reference Rate and CME CF Ether-Dollar Real Time Index benchmarks on Bloomberg in 2018, we’ve added several more benchmark prices to the Terminal.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell any of the underlying instruments cited including but not limited to cryptoassets, financial instruments or any instruments that reference any index provided by CF Benchmarks Ltd. This communication is not intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. Please contact your financial adviser or professional before making an investment decision.

Note: Some of the underlying instruments cited within this material may be restricted to certain customer categories in certain jurisdictions.