The Breakdown - Is This the Beginning of the Next Institutional Bitcoin Wave?

Starting point is 00:00:04 Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by nexo.io and Casper and produced and distributed by CoinDesk. What's going on, guys? It is Saturday, March 13th, and that means it's time for the weekly recap. For those of you following along on my journey at home, we're just rounding out the first week with this new board. my brain is fried, so we'll see if I can make it through this thing without mumbling my words, but appreciate you bearing with me. I wanted to talk about how this felt like quietly a huge week and potentially the beginning of the next institutional Bitcoin wave. So what do I mean? Well,

Starting point is 00:00:53 first let's talk about the quiet part. It almost feels to me like many of us were distracted by the craziness of these headline-grabbing things happening in the NFT space. If you haven't been listening to the podcast or just haven't been on crypto Twitter or really regular Twitter either, Mike Winkleman, the artist who goes by Beeple, had his Christie's auction close and ultimately the purchase price for his piece the first 5,000 days, was over $69 million. This is not just by far the most expensive NFT ever seen. sold, it is the third largest price ever paid for a work from a living artist. We discussed on the show a couple days ago, to what extent this was reflective of an NFT bubble

Starting point is 00:01:40 versus an everything bubble, and I think that's still a pretty important debate. By the way, I found out after I recorded the show that the winner was almost Tron's Justin's son. Apparently, he bid $60 million but was outbid at the last second. Anyway, hold aside everything about NFTs and whatever the hell else, because what I really want to talk about now and today is institutional Bitcoin adoption. First, let's talk about one company that came to the public markets and a couple of other large financings. Coin shares, which is a digital asset manager that you may know as being the company smart enough to snap up Meltem de Mirrors as CSO, began trading on Nasdaq Nordic after an oversubscribed public offering. The Nasdaq First North growth market, which is where

Starting point is 00:02:29 they listed is an alternative stock exchange for small and medium-sized growth companies in Europe. Coin shares said that their initial offering was oversubscribed by about 400% and gained nearly 2,300 new shareholders in over $80 million in subscriptions. Coin shares has been launching a huge number of institutional crypto products, including in February an Ethereum-backed exchange-traded product on the Swiss SIX Exchange. That product currently has around $75 million in assets under management. Next, let's talk about the huge BlockFi round. This one was rumored before but is now confirmed.

Starting point is 00:03:10 BlockFi raised $350 million at a $3 billion valuation led by Bain Capital Ventures. The crypto lender is trying to double their 500-person team by the end of the year. Next we have Falcon X. So this is a crypto brokerage and trading firm that is backed by American Express, so multiple layers of integration with traditional finance here. They have raised a fresh $50 million at a valuation around $670 million. This round is being led by Tiger Global. What you're seeing here clearly is big corporate and traditional venture in private equity finding their way into the crypto markets at extremely meaningful valuations. Tiger Global has not historically been a crypto funder, although over the last few weeks,

Starting point is 00:03:59 they've expanded their footprint pretty significantly in a number of different deals. Meanwhile, Falcon X funding from last summer was a set of crypto venture capitalists, including Avon Ventures, which is a venture arm of fidelity, Coinbase ventures, and more. Looking for the best way to unlock your crypto's liquidity? Nexo.io is exactly what you need. borrow against your digital assets at just 5.9% APR, earn passive income with yields of up to 12% and swap between more than 75 market pairs with the instant nexo exchange. Try the nexo wallet app to get the whole 360 degrees of crypto banking.

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Starting point is 00:05:06 Learn more at casper.network. Let's close this out by talking about another big round that we've mentioned on the show previously this week, the $200 million round for Nidig. Nidig is one of the fastest growing Bitcoin companies in the space, and when they announced their 200 million, $1,000 round, what was more notable than even just the amount, was the investors involved.

Starting point is 00:05:32 New investors in the company included mutual insurance company and third biggest insurance company in America overall, New York Life, a fund connected to Soros and Morgan Stanley. In their press release about that fund, they said that each of these partners are actually doing something in the Bitcoin space with them. In other words, their exposure to Bitcoin is not just in the form of Nidig equity, but in other. specific partnerships, some of which are yet to be announced. One of those deeper engagements was in the form of New York Life CEO Ted Mathis joining the Nidig Board of Directors. I did a show about why I think that's significant earlier in the week. But ultimately, the key thing is that it shows just how much

Starting point is 00:06:15 these big, storied, historic, and conservative institutions want to have their basis covered in the Bitcoin space. And speaking of old institutions coming into the Bitcoin and crypto space, we have to talk about JP Morgan's new cryptocurrency exposure basket product as well. A Forbes piece about the JP Morgan product was titled, J.P. Morgan Bitcoin exposure basket could be, quote, gateway drug for clients. This information comes from a U.S. Securities and Exchange Commission filing and shows that J.P. Morgan is putting together a debt product of 11 unequally weighted stock. that have either direct or indirect exposure to cryptocurrencies and digital assets. Some of the highlight stocks include micro-strategy, which makes up 20% of the product,

Starting point is 00:07:02 Square which makes up 18% of the product, Riot Blockchain, which makes up 15% of the product, and Invidia, which makes up 15% of the product. So together, these four stocks make up about 68% of the overall basket. PayPal is also in there making up 10% of the basket, AMD, TSM, ICE, CME, and others round it out. It seems to me like J.P. Morgan is trying to leverage its brand as a skeptic to go appeal to those other skeptics who still feel like, based on what they've seen, they can't really afford to have no exposure at all. If that's the case, they're effectively expanding the total addressable market for companies interested in this space. Finally, let's talk about the nuggets that we're getting about institutional sentiments. Specifically, let's talk about Goldman Sachs.

Starting point is 00:07:52 Goldman Sachs CEO and President John Waldron said that the company is seeing more demand for Bitcoin among its clients. Quote, client demand is rising. We are regulated on what we can do. We continue to evaluate it and engage on it. While this seems a little cagey and like a corporate officer who can't really say too much about what they're doing, he did continue a little bit about the fundamentals. That same Reuters piece that first reported these comments pointed to an explosion in online

Starting point is 00:08:21 commerce because of the pandemic as a key piece driving the use of digital currency. Waldron said, quote, the pandemic has been a significant accelerant. There is no question in our mind there will be more digital commerce and use of digital money. What this means about Goldman Sachs conviction around Bitcoin or other digital assets remains to be seen, but the fact is the COO is in Reuters talking about it. So just to recap, despite so much of our attention on NFTs and these other flashy things, you saw this week a major digital asset company go public, major financing rounds at unicorn valuations, new companies coming into the space,

Starting point is 00:09:01 including New York Life, Soros, Morgan Stanley, J.P. Morgan, Goldman Sachs, COO talking about Bitcoin and crypto assets. It's almost as though we've just come to assume that every week goes on, we're going to hear more about new institutions coming into Bitcoin. In retrospect, you might say it was inevitable. Anyways, guys, I just wanted to share that little observation. I know I found myself being surprised at how little airtime these big announcements were getting in my brain, and I wondered if you felt the same and wanted to talk through it. I hope you're having a great weekend, getting a lot more sleep than I am. Until tomorrow, be safe and take care of each other. Peace.

The Breakdown - Is This the Beginning of the Next Institutional Bitcoin Wave?

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