March 2021 Market Commentary

There were so many storylines over this past month that we’ve lost count. Nearly every corner of the digital asset space captured mainstream headlines, from bitcoin to nonfungible tokens (NFTs). Unsurprisingly, those headlines drove interest in digital assets, and prices rose higher. Bitcoin and Ethereum increased 26.43% and 31.17%, respectively, and the Bloomberg Galaxy Crypto Index (BGCI), which measures a broader portion of the digital market, rose 25.73%.

Each month, we reflect on the notable progress made across the digital asset landscape. We’re seeing momentum build and adoption increase month after month, yet one thing remains constant. There’s a common denominator across every sector of this asset class: the investor. From individuals to institutions, blockchain to bitcoin, liquid to venture, no other asset class in recent memory has connected assets and products to investors at this remarkable pace.

As we look back on some of the notable highlights of March 2021 and consider the feverish pace of this asset class, I urge everyone to think about how investor demand continues to push innovation across digital assets.

Among many foundational events over the past year, one watershed moment stands out. In March 2021, Morgan Stanley’s wealth platform announced it will offer bitcoin to its private wealth clients. Over bitcoin’s lifespan, we’ve seen a number of different ways investors could purchase and hold bitcoin. However, there’s no greater representation of investors’ demand or the bitcoin ecosystem’s progress than a platform of this caliber connecting its clients to bitcoin. Galaxy Digital is proud to partner with Morgan Stanley on this initiative by offering our bitcoin funds on the platform.

Other points of note:

• Visa continues its push into the asset class on two fronts. One, the credit and payments giant enabled bitcoin for its roughly 70M users. Two, it launched a pilot with crypto.com to settle USDC on their network.

• Investment bank Goldman Sachs announced it will restart operations for an internal desk to trade digital assets and plans to offer digital asset products to its private wealth clients.

• On the bitcoin ETF front, eight applications are pending at the SEC as issuers race to get a product in front of regulators. Applications meeting approval for this coveted structure will unlock what many perceive to be the largest investor capital pool overnight.

• Yet another publicly traded listing, the Hong Kong software company Meitu, announced it is holding $50M ETH and $39M BTC on its balance sheet.

• Oil Billionaire Kjell Rokke announced he purchased nearly $60M of BTC, and that he intends to launch a BTC business.

On the other side of the spectrum, auction house Christie’s sold digital artist Beeple’s digital NFT, EVERDAYS: THE FIRST 5,000 DAYS, for $69M. This was the third-largest sale ever for a living artist. The sale was undoubtedly an historic event for several reasons. In one sense, it demonstrated the power of blockchain technology, which allows investors to buy and sell unique items while tracking who owns the assets in real-time. In another sense, and perhaps more significant, moments like this bring blockchain technology in front of new audiences. Artists, musicians, creators, and collectors now recognize another digital platform to buy and sell work in a direct manner.

As discussed in previous newsletters, DeFi continues to challenge the traditional financial sector as investors participate in decentralized financial functions once only available from centralized sources. In the creative world, NFTs are now challenging what was seemingly an endless world of intermediaries. Yet again, we see the value of the Ethereum network and open-source, decentralized systems. Investors of all kinds are quickly learning more about these access points and putting capital to work as this technology emerges.

As developments in the digital asset class continue, weekly breakthroughs feel almost routine.

Now more than ever before, the world is becoming increasingly digital. And investors continue to be the foundation of this digital transformation.