High Net Worth Demand

GB Market Commentary 04/08/2021

by William Morris


RIT Capital Partners, the investment trust founded by Jacob Rothschild, is co-leading a funding round for crypto investment platform Aspen Digital. Aspen Digital is seeking funds to create an online platform that would give wealthy investors a single portal to manage their crypto investments. Aspen will target family offices and asset managers in Europe, providing a portal which will take care of compliance procedures and bear the counterparty risk.


This follows growing appetite from investment institutions to have crypto exposure, with Hedge Funds leading the charge. A report by the Alternative Investment Management Association (AIMA), PWC and Elwood Asset managers, in May, found that 21% of traditional hedge fund managers are investing in digital assets, with a further 26% planning to invest. Barriers to investment cited by hedge funds included: “regulatory uncertainty, lack of infrastructure, and client risk or reputational risk.” In addition to this, it is claimed in the report, digital assets do not translate well into the rigorous risk management process investors require when planning to entrust their capital to a fund manager. The AIMA survey also cited service provider availability as another key barrier. As a result there have been some notable sell-side reactions in the first six months of 2021, filling brokerage gaps in the market such as Northern Trust and Standard Chartered, as well as BNY Mellon and Street. Global Block has been providing an insured and regulated crypto brokerage service since 2017 and is one of the leading UK agency institutions.


Partido Popular, the Spanish opposition party, has introduced a bill allowing for the payment of mortgages with cryptocurrencies. It also stated intent to create a national crypto assets council to analyse the implications of crypto and blockchain in the country. For the law to be implemented a change of legal category would have to be made from the current crypto allocation as a ‘means of exchange’ to a ‘means of payment’. Payment adoption is increasingly widespread with Binance Pay announcing yesterday it will bring Bitcoin payments to Shopify through partnership with Alchemy Pay.


Ethereum’s London hard fork is due to go live tomorrow at around 1pm GMT (according to Ethereum.org/en) on block 12.965 million. Going forward each transaction fee will decrease the assets circulating supply, in theory making Ethereum a deflationary asset. To become deflationary ETH burned must be higher than ETH issued in block rewards so it remains to be seen how this will work in practice. Moving forward base fees will be clear to users but will still be high at high volume trading. Ethereum is also moving to a proof of stake system, staking Ethereum to validate transactions and create new blocks. Solo staking will require 32 ETH, alternatively, staking pools are available for smaller investment with interest being paid in ETH.


Bitcoin continues to languish from its weekend highs, Matt Maley, chief market Strategist for Miller Tabak + Co stated: “If it does bounce back, it’s going to be quite Bullish” while if the downward trajectory continues “things are going to get scary pretty quickly”. Bitcoin is trading at $37,745 at time of writing. Cardano ADA, showed strength while most of the crypto market looked flat, gaining 5% after news of the introduction of Smart Contract Functionality on its blockchain.