Quick dive Friday (Sovereignty: The New Catalyst for Crypto)
Institutional investors have been one of the many catalysts for crypto-assets, but for now, that catalyst is changing.
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At ComiBlock, we see crypto-assets as a dynamic asset class, because we believe that many Web-3 investors have different views of the real catalyst behind crypto-assets; some say it’s decentralized money, personal banking, a store of value, and a hedge against inflation, among other things. But our catalyst or case for crypto has a lot to do with the great awakening of the sovereign individual and the understanding of the potential of peer-to-peer distributed networks to reshape the nature of financial and investment markets.
As the war continues in Ukraine, investors, regulators, and institutions are now witnessing the dynamic nature of crypto-assets and the real catalyst that drives this industry. It is now clear that the many claims that crypto-assets have no value are purely wrong. Just like Ken Griffin, CEO of investment firm Citadel, who has now softened his stance on crypto-assets, he previously dismissed crypto-assets as “ a jihadist call “ against the dollar. But this week he admitted that “crypto has been one of the greatest stories in finance over the course over the last 15 years.”
“The crypto market today has a market capitalization of about $2 trillion in round numbers, which tells you that I haven’t been right on this call,” he said in an interview with Bloomberg. Griffin is the 40th richest person with a net worth of about $30.4 billion; according to Bloomberg.
Institutional investors have been one of the many catalysts for crypto-assets, but for now, that catalyst is changing. Gone are the days once institutional investors or wealthy individuals started getting bullish on crypto, prices would start going parabolic. Because what ‘smart’ money temporarily gave to crypto has gradually been taken away.
Since November, institutional investors have been selling off riskier tech stocks and crypto assets, lumping them together as they rotate capital to perceived safer asset classes, in response to the Federal Reserve’s hawkish moves about raising interest rates throughout 2022.
As for the correlation between crypto and tech stocks, that narrative is gradually falling apart in light of the events unfolding between Russia and Ukraine.
As we noted in our January 29th letter; we believe the crypto markets have historically benefited from rising geopolitical risks, and the escalating tensions could offer a catalyst for price. With access to banking and traditional assets at a fragile state in Russia and Ukraine, it has once again brought to light the value demonstration of crypto-assets as a financial asset outside the traditional financial system. Investors, governments, and regulators are witnessing in real-time the dynamic roles and importance of crypto assets. Many Russian citizens have turned to crypto-assets to safeguard their wealth. Ukrainians are using crypto-assets in many different ways; payments, government fundraising, and getting aid to communities.
Have a great weekend
There is no doubt many people across the globe have turned to crypto-assets as part of their holdings for this reason. And this highlights the value of crypto as a sovereign asset. In a world, where we’ve lost the ability to choose, crypto-assets are the opposite, and are creating more choices, free markets, allowing individuals and businesses to turn their mobile devices into their banks.
We believe that the war between Ukraine and Russia has once again reminded investors that crypto-assets indeed have a place in the modern portfolio, and we believe the sovereign nature of crypto-assets will be a deciding catalyst in the months and years ahead.
Have a great weekend
These are meant for informational purposes only, are not intended to serve as a recommendation to buy or sell any security, and are not an offer or sale of a security. They are also not research reports and are not intended to serve as the basis for any investment decision and do not constitute a comprehensive description of ComiBlock’s advisory services.