Insight
December 20, 2024
This week’s piece presents insights into NYDIG’s weekly research notes and reports, a feature we started over 4 years ago to help educate and inform bitcoin investors. While the research targets the professional investor audience (institutions, corporates, family offices, endowments, high net worth individuals, etc.), we have made it open for all to read. Our hope is that the broader Bitcoin community benefits from the thoughts, observations, and opinions NYDIG brings to the market. While the writing, analysis, and data presentation is largely a singular effort (I do my own stunts), I am fortunate to be surrounded by world-class lawyers, technologists, traders, and regulatory experts here at NYDIG.
The style of the newsletter is very much reflective of how I like to consume information, especially content I consider to be a tool used to make investment decisions – conclusion-led, fact-supported, data-driven, and graphically infused. Where applicable, I find that tables and charts do a better job of driving home points than words. I tend to let the data do the talking.
I’ve thought a lot about the nature of investment research. This will be my 25th year of professionally producing and consuming it (both on the sell and buy side for both equities and crypto). I find that investment research serves one of three purposes: education, actionable information, or entertainment. Hopefully, we do a little of all three here at NYDIG.
The bitcoin ETFs were the story of 2024, until the election. With $37.1B of net inflows in less than a year, the ETFs have proven to be way more popular than we had estimated. Here’s the strange thing though, and reason to be hopeful for more – it’s still mostly retail investors (80% of total AUM). Hedge funds are engaged in basis trading and independent advisors own some, but ownership through the wealth management arms of banks and the wirehouses is largely absent.
I’ve been writing about bitcoin’s price cycles for 7 years now. They keep happening. Their existence is simultaneously one of the most interesting economic conundrums created by the asset as well as a source of intermediate-term alpha if one were to embark on market timing in the name of active management. Certainly, we have argued for a long-term allocation for bitcoin rather than short-term trading, as investment horizon longevity is one of the durable sources of return for any asset.
Finally, I spent the better part of this past summer dispelling seller overhangs that resulted in choppy markets. We’ve known for a long time that Mt Gox coins would transition to creditors' hands, but there seemed to be no facts to support the idea that actual selling materially affected price, rather it seemed to be fear of potential selling that weighed on price.
Here are the topics covered in 2024 by count. Sometimes I devote a week to 3 topics, sometimes 1. It just depends on the subject and the amount of space required.
The weekly research notes and occasional long-form reports are just a portion of the “research” function at NYDIG. Most of the research goes directly into the work we do with our clients and partners as well as functions internally within NYDIG. But what I write or analyze publicly is informed by questions we receive from clients, market events, or important news. Bitcoin is a vast arena, one that encompasses market, legal, regulatory, political, and technical matters, just to name a few. While the industry seems to continue to be an endless source of new items to analyze, it is hard to cover all the industry events. To the extent there are important or interesting topics that should be tackled, we’d love for you to let us know what you’d like to read about.
Greg Cipolaro
December, 2024
This report has been prepared solely for informational purposes and does not represent investment advice or provide an opinion regarding the fairness of any transaction to any and all parties nor does it constitute an offer, solicitation or a recommendation to buy or sell any particular security or instrument or to adopt any investment strategy. Charts and graphs provided herein are for illustrative purposes only. This report does not represent valuation judgments with respect to any financial instrument, issuer, security or sector that may be described or referenced herein and does not represent a formal or official view of New York Digital Investment Group or its affiliates (collectively NYDIG).It should not be assumed that NYDIG will make investment recommendations in the future that are consistent with the views expressed herein, or use any or all of the techniques or methods of analysis described herein. NYDIG may have positions (long or short) or engage in securities transactions that are not consistent with the information and views expressed in this report. The information provided herein is valid only for the purpose stated herein and as of the date hereof (or such other date as may be indicated herein) and no undertaking has been made to update the information, which may be superseded by subsequent market events or for other reasons. The information in this report may contain forward-looking statements regarding future events, targets or expectations. NYDIG neither assumes any duty to nor undertakes to update any forward-looking statements. There is no assurance that any forward-looking events or targets will be achieved, and actual outcomes may be significantly different from those shown herein. The information in this report, including statements concerning financial market trends, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. Information furnished by others, upon which all or portions of this report are based, are from sources believed to be reliable. However, NYDIG makes no representation as to the accuracy, adequacy or completeness of such information and has accepted the information without further verification. No warranty is given as to the accuracy, adequacy or completeness of such information. No responsibility is taken for changes in market conditions or laws or regulations and no obligation is assumed to revise this report to reflect changes, events or conditions that occur subsequent to the date hereof. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be relied on in making an investment or other decision. Legal advice can only be provided by legal counsel. NYDIG shall have no liability to any third party in respect of this report or any actions taken or decisions made as a consequence of the information set forth herein. By accessing this report, the recipient acknowledges its understanding and acceptance of the foregoing terms.
