November 2020 Market Commentary

After nearly one year of positive momentum for bitcoin and the broader digital assets landscape, November of 2020 will go down in the asset class’s history as the “November to Remember”. Bitcoin rose 43.66% to close the month at $19,456.81 after hitting an all-time high just below $20K before month-end. It also posted its largest market cap ever this month, just under $365B according to Bloomberg price data. Additionally, the broader large cap digital asset market measured by the Bloomberg Galaxy Crypto Index (BGCI) rose 62.41% for a final close of 887.30. In addition to bitcoin, Ethereum (+58.44%) and XRP (+172.70%), the second- and third-largest holdings of the index, turned in strong monthly performances.

Over the past few years, we have discussed advances in infrastructure, regulation, and education around bitcoin and digital assets. But this past November should be remembered as a time when bitcoin became about the investor. As our CEO Mike Novogratz indicated, “the herd is coming,” and now it seems the first members of that herd are beginning to arrive. Unsurprisingly, the first arrivals are the Alpha Mares—top of the herd hierarchy—or rather notable investors like Paul Tudor Jones, Bill Miller, and Stanley Druckenmiller.

Optically, price is reflecting the influx of new capital while positive sentiment towards the digitization of finance appears to be at an all-time high. But, as always, the substance is in the hard facts. As we look back on the past month and begin to turn the page toward 2021, it is important to understand these seemingly simple developments as transformative to this burgeoning asset class. Below are a few highlights that underscore how bitcoin has become an asset recognized on an institutional level.

Major Investors

• Notable value investor Bill Miller emphasized that “every major bank, every major investment bank, and every major high-net-worth firm is going to eventually have some exposure to bitcoin or what’s like it”

• Stanley Druckenmiller, arguably the world’s best macro investor, recently announced his bitcoin position on CNBC

• Rick Rieder, CIO of the world’s largest asset manager BlackRock, shared his thoughts on bitcoin’s potential to replace gold in the future

• Ray Dalio, founder of the world’s largest hedge fund Bridgewater Associates, conceded he “might be missing something with bitcoin”

• Paul Tudor Jones, another notable macro investor and vocal bitcoin holder, maintained his view that bitcoin reminds him of gold in 1970s

Financial Institutions

• Citigroup, one of the world’s largest global banks, published a research report suggesting bitcoin’s 2021 year-end price target could possibly reach as high as $318K

• BTIG Research published a report calling for a bitcoin 2021 year-end price target of $50K

• SkyBridge, one of the world’s most recognizable fund of funds, filed an SEC amendment allowing for investment into bitcoin with its $3.6B fund

• Guggenheim, a $295B AUM manager, filed to buy up to 10% bitcoin exposure in its $5.3B Macro Fund

• World-renowned money manager Alliance Bernstein published a report recommending an allocation to digital assets

Regulation

• Brian Brooks, Acting Comptroller of the Currency, testified on Capitol Hill to the US Senate about the importance of digital assets

• Cynthia Lummis, a noted bitcoin bull, was elected to the US Senate representing Wyoming

Additional Points of Note

• Square (SQ) released Q3 earnings citing bitcoin revenue of 11X and gross profit of 15X YoY

• PayPal (PYPL), the digital payments unicorn with 325 million users worldwide, rolled out bitcoin and other large cap assets (Ethereum, Litecoin, and Bitcoin Cash) on its platform allowing for the purchase, sale, and use of digital assets

This was truly a “November to Remember”. As we approach 2021 and beyond, look for more members of “the herd” to follow.