February 2021 Market Commentary

“Expansion, always, in all ways.”

As we look back on February of 2021 to reflect on what continues to happen in the digital asset space, it is clear that the underlying themes of this asset class and the technology brought forth by a decentralized system will continue to spark growth and usage across an increasing number of mediums, further expanding innovation leading to rapid adoption.

Bitcoin and Ethereum have changed the way we think about money and the internet, but more importantly, they have moved from experimental ideas to mainstream applications spearheading a new era of investing. Both assets ended February in positive territory, with bitcoin rising 38.79% and Ethereum up just under 10% at 9.24%, while the greater digital asset market, as measured by the Bloomberg Galaxy Crypto Index (BGCI), rose 21.91%. As we turn to the highlights of the past month, let’s all be mindful of bitcoin’s increasing role in the investor portfolio alongside the backdrop of Ethereum staking its claim to operate Web 3.0.

The bitcoin train continues to roll on each month, with new members of the herd arriving while early adopters continue to solidify their hold on a share of the 21 million. In case it hasn’t been clear, BTC has fully moved from the growth to the adoption phase. And to be clear, there is still plenty of room for growth. Below are some of the notable highlights from February.

• Tesla became the largest corporation to date holding BTC as it revealed a $1.5B balance sheet holding

• MicroStrategy ($1B+) and Square ($170M) both added BTC to their existing balance sheet holdings

• BNY Mellon, one of the world’s oldest and largest custodians, announced it will service and custody digital assets

• German-based bank Deutsche Bank announced plans to offer custody and prime brokerage services for digital assets

• MasterCard announced plans to enable digital asset purchases for all merchants

• Apple Pay will now get support from the digital asset card payment system, BitPay

• Miami Mayor, Francis Suarez, continues his tech push, announcing BTC will be adopted across the city, notably in treasury, taxes, and fees

Alongside bitcoin, Ethereum continues to build its ecosystem. While still very much in a growth phase, what we are seeing in terms of adoption is nothing short of impressive for Web 3.0. DeFi applications have grown to over $50B as innovators and investors continue the push to rebuild the financial system on top of one of the world’s largest decentralized and censorship-free operation systems. Additionally, ETH is now facilitating the expansion of non-fungible tokens (NFTs), allowing for the tokenization of real-world tangible assets that enable them to be bought, sold, and traded more efficiently while reducing the probability of fraud. NFTs are cryptographic tokens that exist on a blockchain and cannot be replicated. Examples can be, but are not limited to photos, trading cards, and artwork. It is also thought that NFTs can verify identity, property rights, and other forms of ownership. As we continue past the early stages of 2021 and beyond, it’s important to consider the limitless possibilities the expansion of the ETH blockchain and ether token may provide.

An additional point to add during the month of February was the removal of much of the FUD (fear, uncertainty, doubt for newcomers) around Tether (USDT) and some of its impending legal news. Much of that was laid to rest with a positive outcome of the asset class as Tether settled its longstanding case with NYAG for $18.5M. Tether did not admit wrongdoing and agreed to future audits of its often questioned reserves. Additionally, in digital asset exchange, Bitfinex repaid its $550M outstanding loan from Tether.

Digital asset expansion now almost feels inevitable. With that in mind, it’s important to consider the fact that inevitabilities are always happening around us.