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Do Kwon Has A Plan, Good News for Norway’s Bitcoin Miners, and More!
The overall sentiment for the cryptoassets industry is still in shock from the market correction that happened over the past few weeks. The macro factors driving the markets are a by-product of the Russian invasion of Ukraine and China’s COVID Zero policy combined, with the Federal Reserve’s latest interest hike adding fuel to the fire. Food prices have gone up 37% year-over-year, spurring protests in Sri Lanka and Iran. However, panic selling seems to be coming to an end; large investors, such as MicroStrategy, are still holding on to their crypto holdings. Bitcoin is down by 13%, trading between $33K and $29K over the past week, shrinking its market cap dominance to 42.4% as shown in Figure 1. Ethereum is down by 20%, trading between $2,423 and $2,013. On the upside, the top gainers out of last week’s rally were Cosmos, Solana, and Cardano.
Figure 1: Major Cryptoassets By Percentage of Total Market Capitalization
Source: CoinMarketCap
Regulations and Adoption
Treasury Secretary Janet Yellen urged the Senate Banking, Housing, and Urban Affairs Committee to pass a bill this year to regulate stablecoins. The current framework, she believes, does not provide consistent or comprehensive standards for the risks of stablecoins as a new type of payment product. The pending Stablecoin Trust Act does not affect non-payment stablecoins, which include algorithmic stablecoins. It is still unclear whether Congress will embrace algorithmic stablecoins or impose an outright ban.
Germany released a document on Tuesday outlining clear income tax rules for cryptoassets. Individuals who sell Bitcoin or Ethereum more than 12 months after acquisition will not be liable for taxes on the sale if they realize a profit. This is a great win for the cryptoassets market, especially in the time of bearish sentiment.
On the other hand, Portugal will allegedly start imposing taxes on cryptoassets in the “near future.” Until this announcement was made public in the country’s parliament, Portugal was considered a tax haven for investors holding and trading cryptoassets, primarily due to an effective capital gains rate of zero.
As Bitcoin enters its seventh week in decline, Bitcoin miners in Norway breathed a sigh of relief. The Norwegian parliament rejected a bill banning Bitcoin mining, proposed back in March. Norway contributes up to 1% to the global Bitcoin hash rate, taking advantage of the country’s renewable energy generated by hydropower.
In El Salvador, representatives of 44 countries met on Monday to discuss financial inclusion, digital economy, banking the unbanked, the Bitcoin rollout and its benefits in the country.
On the back of the ordeal of Terra Luna, being a Singapore-registered company, the country’s regulators are expected to focus their lens of scrutiny on Terraform Labs, which has no material ties to the country. There is a trend of crypto companies registering in Singapore to conduct business abroad without having a physical office in the country. Last month, the parliament passed a bill that requires these companies to be licensed primarily for anti-money-laundering reasons. Terra Luna’s bank run might inspire regulators to expand the provisions.
DeFi and NFTs
Many crypto exchanges, including Binance and OKX, have delisted LUNA and UST. Founder of Terraform Labs Do Kwon revealed a “revival plan” that will essentially reboot the network as “Terra Classic,” with Luna Classic (LUNC) as its new token, and redistribute the ownership of the network entirely to UST and LUNA holders through 1 billion new tokens. Luna Foundation Guards also just revealed its reserve and Bitcoin spending of 80K BTC, and after the crash was left with 313 BTC, which it will use to compensate its UST holders, starting with the smallest.
Figure 2: TerraUSD (UST) Performance in the Past Week
Source: TradingView
Aurora, an Ethereum Virtual Machine, has launched a $90M fund, in partnership with Proximity Labs, to scale decentralized apps on Near Protocol. PancakeSwap, a decentralized crypto exchange (DEX) built on Binance Smart Chain, announced in a new lite paper that it’s switching from an unlimited supply model to one capped at 750M CAKE.
Bancor, a DEX built on Ethereum and EOSIO, released the third upgrade of its protocol, which has new features meant to provide easier staking; which include Instant Impermanent loss protection, dual rewards, and auto compounding.
On the NFT front, the largest GameFi app on Avalanche, Crabada, will be migrating to Swimmer Network, Subnet of Avalanche, easing congestion on the network and therefore reducing gas fees. Dapper Labs, the company behind CryptoKitties, NBA Top Shot, and the Flow blockchain, unveiled a $725M ecosystem fund to support the latter. With the participation of venture capital firm a16z, Coatue, and others, the monumental fund will offer support for existing and future developers to build apps on the Flow blockchain through investments and FLOW token grants. It will focus on support for gaming, infrastructure, DeFi, content, and creators. The capital may also be used for team expansion, user acquisition, and general operating expenses.
Weekly Returns
The returns of the top five cryptoassets over the last week were as follows — BTC (-3.55%), ETH (-13.6%), BNB (-6.5%), ADA(-11.47%), XRP (-17.86%).
Net Inflows per 21Shares ETP
The net Inflows of our ETPs amounted to $3.4M in the past week. Find the breakdown of the inflows and outflows per ETP below.
Media Coverage
We are excited to share that we are launching two ETPs tracking DeFi; one of which already got listed on SIX Swiss Exchange on May 12, the 21Shares Crypto Layer 1 (LAY1). Meanwhile, the 21Shares DeFi 10 Infrastructure ETP (DEFI) will be listed on the same exchange on May 18, both with total expense ratios (TER) of 2.50%.
“Our financial system is at the beginning of a paradigm shift. A plethora of new blockchain-based applications around DeFi and Web3 are already under development and making enormous progress,” 21Shares’ President and Co-founder Ophelia Snyder told ETF Stream on this occasion. “They are the components of a completely new, democratic and inclusive financial system. With our new thematic crypto ETPs, we are providing investors with two broadly diversified investment vehicles at the ideal time to participate in this revolution.”
If you happen to be at the Permissionless conference in Florida, meet our team at booth 611. Also, our very own Head of Tokens James Wang will be taking part in a panel discussing investment in an on-chain world. James’ fellow panelists are from Dragonfly Capital, Wintermute, Nansen and Volt Capital. The discussion will be moderated by Michael Ippolito, co-founder of Blockworks.
News
Coinbase CEO Reassures Traders That Funds Are Safe, After $430M Loss in Q1
What happened?
Cryptocurrency exchange Coinbase has disclosed to the SEC its first net loss as a public company of $430M in Q1 of 2022. Coinbase disclosed that revenue had dropped by 27% to $1.17B, down from $1.6B same time last year, dipping far below its Q4 2021 revenue of $2.5B. Monthly transacting users also dropped by over 19% to 9.2M, from last quarter’s 11.4M. This has spurred some uncertainty in the ecosystem, in response, co-founder and CEO of Coinbase Brian Armstrong reassured investors on Twitter, saying that funds are safe at Coinbase, just as they’ve always been.
Why does it matter?
On the back of this news, we have been receiving some questions from clients and investors given that Coinbase is 21Shares’ custodian partner. We contract with and hold the ETP assets with Coinbase Trust Company. This is a fiduciary under § 100 of the New York Banking Law and is licensed to custody its clients’ digital assets in trust on their behalf. As a New York state-chartered trust held to the same fiduciary standards as national banks, Coinbase Custody is a qualified custodian for purposes of § 206(4)-2(d)(6) of the Advisers Act, commonly called the custody role.
This is the same standard that must be met by equity custodians of traditional US equity ETFs and these are accepted as being bankruptcy remote. The assets are held as a bailment for the benefit of 21Shares rather than as an asset on the balance sheet of the company. This is also reflected in our agreement with Coinbase Trust Company which states that the assets are segregated and do not form part of the assets of Coinbase.
Research Newsletter
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.
2024 was a landmark year for bitcoin, solidifying its role as a fully institutionalised asset class.
Institutional inflows into physical bitcoin exchange-traded products (ETPs) reached nearly $35 billion globally, signalling a major shift in how traditional investors view crypto. As bitcoin continued to enhance portfolios’ risk-return profiles, more institutional investors followed suit, reshaping the financial landscape.
Looking ahead, 2025 promises to bring exciting developments across the crypto ecosystem. Here are the top five crypto trends to watch.
Fear of being left behind
The era of bitcoin as a niche investment is over. Institutional adoption is creating a ripple effect, forcing hesitant players to reconsider. Portfolios with bitcoin allocations are consistently outperforming those without, highlighting its growing importance.
Figure 1: Bitcoin in a multi-asset portfolio
| 60/40 Global Portfolio | 1% Bitcoin Portfolio | 3% Bitcoin Portfolio | 5% Bitcoin Portfolio | 10% Bitcoin Portfolio | MSCI AC World | Bloomberg Multiverse | Bitcoin | |
| Annualised Return | 5.77% | 6.46% | 7.83% | 9.20% | 12.57% | 9.07% | 0.56% | 56.24% |
| Volatility | 8.79% | 8.86% | 9.14% | 9.62% | 11.42% | 13.94% | 5.05% | 67.28% |
| Sharpe Ratio | 0.48 | 0.55 | 0.68 | 0.79 | 0.96 | 0.54 | -0.20 | 0.81 |
| Information Ratio | 1.01 | 1.01 | 1.01 | 1.00 | ||||
| Beta | 70% | 71% | 73% | 75% | 81% | 100% | 24% | 181% |
Source: Bloomberg, WisdomTree. From 31 December 2013 to 30 November 2024. In USD. Based on daily returns. The 60/40 Global Portfolio is composed of 60% MSCI All Country World and 40% Bloomberg Multiverse. You cannot invest directly in an index. Historical performance is not an indication of future performance and any investment may go down in value.
With bitcoin’s ability to noticeably improve portfolios’ risk-return profiles, asset managers face a clear choice: integrate bitcoin into multi-asset portfolios or risk falling behind in a rapidly evolving financial landscape. In 2025, expect the competition to heat up as clients demand exposure to this powerhouse cryptocurrency.
Expanding crypto investment options
In 2024, regulatory breakthroughs opened the doors for physical bitcoin and ether ETPs in key developed markets. This marked a critical step towards making cryptocurrencies mainstream, providing seamless access to institutional and retail investors alike.
Figure 2: Global physical crypto ETP assets under management (AUM) and 2024 net flows
Source: Bloomberg, WisdomTree. 02 January 2025. Historical performance is not an indication of future performance and any investment may go down in value.
In 2025, this momentum is expected to accelerate as the crypto regulatory environment becomes more friendly in the United States and as key developed markets follow Europe’s lead and approve ETPs for altcoins such as Solana and XRP. With their clear utility and growing adoption, these altcoins are strong candidates for institutional investment vehicles.
This next wave of altcoin ETPs will expand the diversity of crypto investment opportunities and further integrate cryptocurrencies into the global financial system.
The maturing of Ethereum’s layer-2 ecosystem
Ethereum’s role as the backbone of decentralised finance (DeFi), non-fungible tokens (NFTs), and Web3 is unmatched, but its scalability challenges remain a hurdle. Layer-2 solutions—technologies such as Arbitrum and Optimism—are transforming Ethereum’s scalability and usability by enabling faster, cheaper transactions.
In 2025, Ethereum’s recent upgrades, such as Proto-Danksharding (introduced in the ‘Dencun’ upgrade), will drive layer-2 adoption even further. Innovations like Visa’s layer-2 payment platform leveraging Ethereum for instant cross-border transactions will underscore the platform’s evolution.
Expect Ethereum’s layer-2 ecosystem to power real-world use cases ranging from tokenized assets to decentralised gaming, positioning it as the infrastructure of a truly scalable digital economy.
Stablecoins: bridging finance and blockchain
Stablecoins are becoming indispensable to the global financial system, offering the stability of traditional assets with the efficiency of blockchain. Platforms such as Ethereum dominate the stablecoin landscape, hosting stablecoin giants Tether (USDT) and USD Coin (USDC), which facilitate billions in daily transactions.
Figure 3: Key stablecoin chains
Source: Artemis Terminal, WisdomTree. 05 January 2025. Historical performance is not an indication of future performance and any investment may go down in value.
As we move into 2025, stablecoins will increasingly interact with blockchain ecosystems such as Solana and XRP. Solana’s high-speed, low-cost infrastructure makes it ideal for stablecoin payments and remittances, while XRP Ledger’s focus on cross-border efficiency positions it as a leader in global settlements. With institutional adoption rising and DeFi applications booming, stablecoins will serve as the backbone of a seamless, interconnected financial ecosystem.
Tokenization: redefining ownership and revolutionising finance
Tokenization is set to redefine how we think about ownership and value. By converting tangible assets like real estate, commodities, stocks, and art into digital tokens, tokenization breaks down barriers to entry and creates unprecedented liquidity.
In 2025, tokenization will expand dramatically, empowering investors to own fractions of high-value assets. Platforms such as Paxos Gold and AspenCoin are already showcasing how tokenization can revolutionize markets for gold and luxury real estate. The integration of tokenized assets into DeFi will unlock new financial opportunities, such as using tokenized real estate as collateral for loans. As tokenization matures, it will transform industries ranging from private equity to venture capital, creating a more inclusive and efficient financial system.
For the avoidance of any doubt, tokenization complements crypto by expanding the use cases of blockchain to include real-world applications.
Looking ahead
2025 is set to be a defining year for crypto, as innovation, regulation, and adoption converge. Whether it is bitcoin cementing its position as a portfolio staple, Ethereum scaling for mainstream use, or tokenization unlocking liquidity in untapped markets, the crypto ecosystem is poised for explosive growth. For investors and institutions alike, the opportunities have never been clearer or more compelling.
This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
On January 20, 2025, bitcoin (BTC) reached a new all-time high, surpassing $109,000, and this milestone coincided with Donald Trump’s inauguration for his second term as U.S. President.
Historical trends show that BTC has performed exceptionally well in the 12 months following the past three U.S. elections. If history repeats, this could signal another bullish phase. With Trump’s pro-BTC stance and a U.S. Congress aligned on favorable digital regulation, the outlook for the coming months appears highly promising.
Source: Hashdex Research with data from Messari (from November 6, 2012 to January 19, 2025).
MARKET HIGHLIGHTS | Jan 13 2025 – Jan 19 2025
Bitcoin-backed loans enabled on Coinbase’s L2
• Now customers can borrow USDC in the new base’s lending protocol by using bitcoin as collateral.
• This underscores the importance of onchain innovations as the pillar for future adoption of blockchain technology, in this case enhancing personal finance to be more decentralized and intuitive in a permissionless etho..
ETF filings reiterate bullish regulatory tailwinds
• As Donald Trump’s inauguration approaches, several asset managers have filed applications for new crypto ETF products, including those focused on assets like LTC and XRP.
• This reflects optimism for 2025’s crypto regulations and their potential to transform the regulated products landscape.
Trump to make crypto top priority in US agenda
• U.S. President-elect Donald Trump allegedly plans to issue an executive order making crypto a national policy priority and establishing an advisory council.
• The announcement signals that crypto has gained political importance. Even if not all promises are met, crypto has already crossed the chasm.
MARKET METRICS
The Nasdaq Crypto Index™
This week saw a significant rise in digital assets as the market awaits Trump’s inauguration, with the NCI™ (+15.3%) outperforming all traditional asset classes. The NCI™ (+13.2%) also outperformed BTC (+12.1%), highlighting the value of diversification in a volatile market. The performance was positively impacted by SOL’s strong 46.3% gain, while ETH’s underwhelming 3.0% growth had a dampening effect.
Source: Hashdex Research with data from CF Benchmarks and Bloomberg (from December 31, 2024 to January 19, 2025).
It was a strong week for the NCI™ , with SOL leading the pack (among others, like XRP and LINK), surging 46.3%, while BTC (12.1%) and ETH (3.0%) lagged behind. This price action seems driven by excitement around Trump’s inauguration and the crypto-friendly environment his promises suggest.
Source: Hashdex Research with data from Messari (from January 12, 2025 to January 19, 2025).
Indices tracked by Hashdex
Source: Hashdex Research with data from CF Benchmarks and Vinter (from January 19, 2024 to January 19, 2025).
5 crypto trends to watch in 2025
FGLR ETF gör hållbara investeringar i hela världen
Trump’s inauguration day, BTC all-time high and the US election bullish effect
AXA IM antar SDR-märkningar för tre aktiefonder i Storbritannien
HSDD ETF köper aktier i hållbara företag från den utvecklade världen
De mest eftersökta ETFerna i december 2024
Post-election rally cools at year end
De bästa ETFerna för värdeaktier
BlackRock slår rekord med lanseringen av bitcoin ETF
Hector McNeil kommenterar Trumps krav på Natos försvarsutgifter
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Nyheter3 veckor sedanDe mest eftersökta ETFerna i december 2024
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Nyheter3 veckor sedanDe bästa ETFerna för värdeaktier
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Nyheter2 veckor sedanPost-election rally cools at year end
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Nyheter3 veckor sedanBlackRock slår rekord med lanseringen av bitcoin ETF
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Nyheter3 veckor sedanHector McNeil kommenterar Trumps krav på Natos försvarsutgifter
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Nyheter3 veckor sedanBuffertstrategin på Nasdaq-100 med december 2024/2025 som ny målperiod
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Nyheter4 veckor sedanValour PYTH SEK spårar priset på kryptovalutan PYTH
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Nyheter4 veckor sedanJREZ ETF investerar i företag från Eurozonen med höga ESG-betyg
