The Iconic Insider is back this month after a short break in September! You will have to forgive me, but with my birthday on Oct. 1 and being away on vacation with family, I opted to take a bit of a break. We’re now back in full swing, so without further ado, let’s dive into what has been crypto’s hottest month since 2017!
Following the announcement of MicroStrategy purchasing nearly half a billion in Bitcoin as their primary treasury strategy, publicly-traded and Jack Dorsey-led Square got into the game through a $50M purchase of their own BTC, reflecting 1% of their total assets. This falls in line with the mantra myself and many in the crypto community push that urge a small allocation of any portfolio strategy to crypto. Iconic recently issued a thorough empirical research study showing the impact such a small allocation would have on multiple portfolio types, which is overwhelmingly positive, even on a risk-adjusted basis. The trend seems to be catching on with many other companies following suit, as evidenced by the newly launched bitcointreasuries.org, where you can track the Bitcoin treasuries of many companies and investment vehicles.
As of this writing, MicroStrategy’s unrealized gains on the Bitcoin they purchased exceed 3.5 years’ worth of the company’s most recent annual earnings. Let me be perfectly clear about this… MicroStrategy’s decision to buy Bitcoin has nearly quadrupled earnings, whereas keeping this position in USD, which is actively being devalued by its own government, would have weakened the company’s overall purchasing power. Kudos to Michael Saylor for being forward thinking! Make no mistake, every company will soon be following suit with their own Bitcoin treasury.
Well, the DeFi summer was fun while it lasted. I would note that while the general DeFi market has cooled off a bit, I do genuinely believe it is just getting ramped up. Coupling the caliber of developers in DeFi, the capital being poured in and the mission-driven focus of decentralizing finance and capital markets of the prominent players in the space bodes well for its future. The space is still in its infant staged and I will continue to observe the space cautiously, but highly optimistically. We are even seeing interest from investor groups we work with for a DeFi index fund and we are evaluating this opportunity alongside other investment products we are developing which further confirms the interest in the space from even traditional investors.
The most noteworthy piece of news the past month, and arguably this year, was PayPal’s plunge into crypto. By announcing that PayPal would now enable to purchase and use Bitcoin on its network, nearly 350 million people now have a direct crypto on-ramp with a trusted party that didn’t exist before. Currently, users cannot transfer the Bitcoin off the platform and while this is a hinderance, I am sure it is something that will be addressed in the near future. Afterall, not your keys, not your crypto!
Iconic published the second empirical research report we commissioned in late September where we Investigated the Myth of Zero Correlation Between Crypto Currencies and Market Indices. While historically, Bitcoin, as well as other leading crypto assets, were largely uncorrelated to traditional marketplaces, the research concluded that as liquidity in crypto markets increased, correlations between crypto and traditional markets began to converge. While the correlation factors observed were not alarmingly high, a general trend of correlation did, in fact, emerge. While crypto is still relatively weakly correlated to traditional markets, and therefore is a great diversification add to any portfolio, to say it is truly uncorrelated is no longer completely true.
Continuing our educational push to institutions and family offices about the merits of crypto, such as with our private workshops, we have begun sponsoring exemplary research being conducted by other parties. Iconic Funds was a sponsor of Cointelegraph’s recent research report on institutional demand for digital assets in the DACH region. The report concluded that there is a strong demand for crypto assets in the DACH, which only bolsters our resolve to deliver financial products tailored to the needs of investors and institutions in the region that are seeking exposure to crypto. We are excited to unveil these in the very near future!
I would be remiss if I ever wrote an Iconic Insider without a shameless Unibright plug (UBT is VIP, after all). In late September, UBT was admitted to Coinbase Custody, and Iconic promptly moved its roughly 2 million UBT into Coinbase’s storage. This is a massive step forward for Unibright and its framework, permitting enterprises onboarding to it, such as Coca-Cola, to have a trusted custody provider for their locked tokens. Coupling this with what I expect to be a few exchange listings pretty soon, UBT looks like an absolute gem, and something I am very proud to have been a part of for the past few years.
As many of you know, Iconic began to get its feet wet in DeFi earlier this summer. Unfortunately, the wallets we had connected to Uniswap were hacked last month, resulting in the loss of the liquidity we provided to multiple trading pairs on the protocol. While it was nowhere near a substantial loss, no hack is fun and it removed all ICNQ liquidity on Uniswap.
Coupling the hack with the upgrade to Idex 2.0, there is currently no trading market for the ICNQ token. While this may seem unfortunate at first glance, it has afforded us the opportunity to evaluate how to have ICNQ re-enter the market with a bang! I am happy to say that after speaking internally amongst the team, as well as with prominent ICNQ token holders and community members, we have a full plan of action we will be rolling out before the end of this year. Included in the relaunch plans are…
- Relisting of ICNQ on Uniswap with substantial liquidity, including multiple trading pairs
- ICNQ utility upgrades, including monthly liquidity contributions in parallel with current token burning
- The possibility of liquidity mining or staking rewards, however these are being reviewed for compliance and practicality as we want to ensure the economics work in favor of the ICNQ community
Coupling the ICNQ relaunch with new investment vehicles should make for a highly entertaining close to the year! Crypto is back in a big way, and I, for one, am excited to see how the remainder of the year unfurls.
- Discovering Institutional Demand For Digital Assets In DACH Region
- Investigating the Myth of Zero Correlation Between Crypto Currencies and Market Indices
- The Impact of Crypto Currencies on the Sharpe Ratio of Traditional Investment Models
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