New research from London-based Nickel Digital Asset Management (Nickel), Europe’s largest regulated and award-winning digital assets hedge fund manager founded by senior traders and investment professionals formerly from major financial institutions including Goldman Sachs and JPMorgan, reveals concerns over security are the biggest obstacle preventing institutional investors and wealth managers from investing in crypto and digital assets.
A survey of institutional investors and wealth managers, who collectively manage around $108.4 billion in assets, revealed that 79% cited asset security as one of the top three reasons for not investing in cryptocurrencies and digital assets. This was followed by 67% who said price volatility, 56% who cited market cap, and 49% who said the regulatory environment. Further 12% included the carbon footprint from Bitcoin and other cryptocurrencies in their top three reasons for not investing.
Gary Gensler, the chair of the US Securities and Exchange Commission has called on Congress to provide the agency with more authority to police cryptocurrency trading, lending, and platforms and 76% of the professional investors interviewed believe this will be granted next year. If the SEC is granted these extra powers, 73% of institutional investors and wealth managers believe this will have a positive impact on the price of crypto and digital assets – 32% believe it will have a very positive effect.
Henry Howell, Head of Business Development at Nickel Digital, commented: “Our research shows that institutional investors have correctly identified custody and security as a critical differentiator to this unique asset class. At Nickel Digital, we have helped drive the innovation and institutional-grade solutions that are paramount to the largest investors in the world. As a result, we are seeing more institutional investors investing in digital assets for the first time, and those that already have exposure are making further allocations.”
Nickel Digital’s infrastructure is designed to offer various access points to the crypto market
Nickel currently has four funds investing in the digital asset space. Its market-neutral Digital Asset Arbitrage Fund pursues an absolute return strategy without expressing directional views on the underlying crypto assets market. It exploits market inefficiencies and price dislocations, and harnesses swings of volatility to deliver consistent positive returns within a strictly defined risk management framework. The fund delivered over 97% of positive months since inception over 2.5 years ago, with volatility of 3.5% and Sharpe of 3.7.
Diversified Alpha Fund is a non-directional multi-strategy fund which wraps a portfolio of attractive but hard-to-access and capacity-constrained strategies into a single, investible fund. Among the strategies it deploys are high-frequency market making, statistical arbitrage, relative value, volatility arbitrage, and trend following. The fund protected capital well at the time of distress in May 2021, delivering a record monthly performance of +4.7% despite the underlying market going through one of the strongest corrections in recent years. It runs with volatility of 7.5% and Sharpe of 3.
DeFi Liquid Venture Fund is designed to capture the growth potential of the broader digital assets space outside Bitcoin, spotting early winners in Layer 1 protocols and Decentralised Finance, the area of greatest financial innovation. The fund is an actively managed research-driven vehicle aiming at identifying early winners and capturing structural expansion of this space. Since its inception, it has outperformance bitcoin by a double-digit margin, highlighting greater innovation originated in the Defi space.
Nickel’s Digital Gold Institutional Fund, a Bitcoin tracker, provides secure, efficient, transparent, and liquid access to physically allocated Bitcoin. It delivers institutional-grade precision of trade execution, trades 7 days a week and offers one of the industry’s lowest expense ratios.
YouTube To Explore NFT Features For Video Creator
American online video sharing and social media platform YouTube has announced plans to explore Non-Fungible Token (NFT) features to help video creators capitalize on emerging technologies.
According to YouTube Chief Executive Officer, Susan Wojcicki, the introduction of NFT is to enhance the experiences of creators and fans on the platform, she said, “we’re always focused on expanding the YouTube ecosystem to help creators capitalize on emerging technologies, including things like NFTs while continuing to strengthen and enhance the experiences creators and fans have on YouTube.”
NFT, Non-Fungible Token is a unique unit of digital assets such as art, music, videos, and pictures built on a blockchain network. They can be bought and sold on NFT Marketplace.
Aside from YouTube, other social media platform has begun exploring NFT. Twitter now allows users to post NFTs as profile pictures while Meta, the parent company of Facebook and Instagram, is reportedly working on a similar offering where users can display the tokens they own.
Susan Wojcicki in an annual letter informed content creators that the company is considering web3, internet service and mobile apps rebuilt on decentralized blockchain technology as a “source for inspiration”.
According to the CEO, YouTube is continuously exploring ways to serve its creators by adding tools like fan payments and e-commerce thereby creating more means of income generation.
In her letter, Susan Wojcicki affirmed YouTube’s priorities on gaming, shopping, music, and Shorts. The CEO wrote that Shorts has already generated 5 trillion views since its debut in late 2020. However, YouTube did not provide additional details on when and what NFT features would look like.
Stop Using Bitcoin as Legal Tender, IMF Tells El Salvador
The International Monetary Fund (IMF) has urged El Salvador to drop Bitcoin, the world’s most dominant cryptocurrency, as a legal tender over rising concerns about “financial stability, financial integrity, and consumer protection.”
The Executive Board of the Fund said in a report released on Tuesday after it concluded the Article IV consultation with El Salvador.
The report said “Directors agreed on the importance of boosting financial inclusion and noted that digital means of payment—such as the Chivo e-wallet—could play this role.
“However, they emphasized the need for strict regulation and oversight of the new ecosystem of Chivo and Bitcoin. They stressed that there are large risks associated with the use of Bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities.
“They urged the authorities to narrow the scope of the Bitcoin law by removing Bitcoin’s legal tender status. Some Directors also expressed concern over the risks associated with issuing Bitcoin-backed bonds.”
The board, however, said while the COVID-19 pandemic disrupted a decade of growth, “El Salvador is rebounding quickly.” The economy contracted by 7.9% in 2020 and is projected to grow by about 10% in 2021 and 3.2% in 2022, the board said.
“Against this backdrop, public debt vulnerabilities emerged,” the board said. “Persistent fiscal deficits and high debt service are leading to large and increasing financing needs.”
El Salvador became the first country to accept bitcoin as legal tender in 2021 despite the uncertainty surrounding the unregulated coin and the entire crypto space. The government gave $30 in free bitcoins to citizens who signed up for its national digital wallet, known as “Chivo,” or “cool” in English, to deepen its adoption.
However, with Bitcoin and other cryptocurrencies falling with the United States plans to raise interest rates in 2022, the country and citizens that invested in the digital currency could be in trouble.
Elon Musk Puts Pressure on McDonald’s to Accept Dogecoin
Billionaire Elon Musk, the CEO and Cofounder of Tesla, on Tuesday, took to his Twitter page to challenge Mcdonald’s, one of the world’s iconic fast-food restaurants, to accept the popular meme coin, Dogecoin as one of its numerous payment methods across its outlets globally.
The billionaire promised to eat the company’s happy meal on tv if the company accepts the meme coin as payment.
I will eat a happy meal on tv if @McDonalds accepts Dogecoin
— Elon Musk (@elonmusk) January 25, 2022
Dogecoin immediately responded to Elon Musk’s tweet with a picture of Mcdonald’s meal containing Kabosu, the dog in the doge meme logo.
— Dogecoin (@dogecoin) January 25, 2022
This is coming a week after Tesla and Elon Musk announced that the company has started accepting Dogecoin as payment for Tesla’s merchandise. The value of the digital asset surged by 20 percent immediately the billionaire made the announcement via his Twitter handle.
The value of Dogecoin rose by 3.76 percent on Tuesday to $0.1415 a coin, still below its all-time high of $0.7.
Cryptocurrency started falling in early December when it became clear that the US Federal Reserve will raise interest rates in 2022 to curb rising inflation and rein in prices.
According to The Wall Street Journal, the “Federal Reserve officials at their meeting last month eyed a faster timetable for raising interest rates this year, potentially as soon as in March, amid greater discomfort with high inflation.
“Minutes of their Dec. 14-15 meeting, released Wednesday, showed officials believed that rising inflation and a very tight labor market could call for lifting short-term rates “sooner or at a faster pace than participants had earlier anticipated.”
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