Cryptocurrencies: Bitcoin rally pauses
The US Federal Reserve has put the brakes on Bitcoin's soaring price, but confidence remains high. There is a lot going on in crypto ETN trading, even in smaller currencies such as Chainlink and Ripple.
19 December 2024 FRANKFURT (Frankfurt Stock Exchange). The US Federal Reserve meeting on Wednesday put a brake on the crypto rally - at least for the time being. Fed Chairman Powell held out the possibility of fewer interest rate cuts in view of rising inflation expectations. He also reaffirmed his crypto-critical position and emphasized that the central bank itself is not allowed to hold Bitcoin and is not calling for a change in the law.
Bitcoin, which peaked at 108,000 US dollars at the beginning of the week, currently costs “only” 101,300 US dollars again. However, this still represents more than a doubling of the price this year. “The sharp rise is mainly due to the re-election of US President Donald Trump, whose crypto-friendly stance has inspired the market,” says Dovile Silenskyte from issuer WisdomTree. The announced resignation of Gary Gensler, head of the US Securities and Exchange Commission (SEC), also delighted crypto fans. His successor is to be Paul Atkins, the scene's preferred candidate.
The prices of “altcoins”, i.e. other cryptocurrencies, had also risen sharply, but have been losing ground since yesterday. Some of them, such as Ripple and Algorand, had more than quadrupled in price following Trump's election victory.
ETN trading: mainly Bitcoin, but by no means only
There is a lot going on in crypto ETN trading. Mostly it is about Bitcoin trackers, at ICF Bank for example the Invesco Physical Bitcoin (XS2376095068) or the WisdomTree Physical Bitcoin
(GB00BJYDH287), FOR EXAMPLE. “We are seeing some large buy orders, but also some profit-taking,” reports ICF trader Ivo Orlemann. Ethereum (DE000A3GPSP7, CH0454664027), Cardano (CH1102728750) and Solana ETNs (CH1114873776) are also in high demand. Demand for Ripple ETNs was also extremely high in some periods, mostly from 21Shares (CH0454664043). “Recently, however, it has become somewhat quieter.”
At Lang & Schwarz, smaller currencies, such as Polkadot, Polygon and Chainlink (CH1100083471), have also seen strong turnover. “The second and third tiers are now also attracting a lot of attention and are mostly being bought,” explains Andreas Schröer. Holger Heinrich from Baader Bank reports good turnover for Ripple (GB00BLD4ZN31), Algorand (GB00BNRRF105) and Solana trackers (CH1114873776). Crypto baskets are also extremely popular, such as the 21Shares Crypto Basket (CH0445689208) at ICF.
Bitcoin ETN: In the same league as large iShares ETFs
The active trading in crypto ETNs this year is also reflected in the Xetra statistics. Bitwise Physical Bitcoin (DE000A27Z304), formerly ETC Group Physical Bitcoin, was not only regularly the most traded crypto tracker on Xetra this year. With turnover of almost EUR 3 billion (as at 16.12.), it even ranks sixth in the turnover list of all ETPs, i.e. including ETFs and ETCs. Only the large iShares ETFs on the MSCI World, Euro Stoxx, S&P 500 and DAX as well as the money market ETF from Xtrackers achieved even higher turnover. Crypto trading volumes were also high in VanEck Bitcoin (DE000A28M8D0) and 21Shares Bitcoin (CH0454664001).
Bitcoin as a “store of value”?
Silenskyte from WisdomTree sees Bitcoin 2025 driven by increasing institutional acceptance, a favorable macroeconomic environment and potential political tailwinds. In addition, continued inflationary pressures, monetary policy uncertainty and geopolitical tensions could further increase interest in Bitcoin as a “store of value”.
More US spot ETFs expected
“Many market participants expect that the universe of approved ETFs could be significantly expanded by the SEC,” notes André Dragosch from Bitwise, formerly ETC Group. Further spot crypto ETFs, for example on Solana and Ripple, are on the verge of approval. Dragosch also refers to the planned strategic Bitcoin reserve. “The US obviously wants to establish a crypto reserve currency before other competitors such as China,” he emphasizes. The inclusion of MicroStrategy in the Nasdaq 100 should also not be forgotten - after all, the company is the largest listed Bitcoin holder. “This means that ETFs and funds that track the Nasdaq 100 are forced to invest in MicroStrategy shares.”
“Living with volatility”
Oliver Schäfer from 21Shares also believes that the market will be even more positive towards cryptocurrencies in 2025, fueled by a more favorable regulatory environment. “This could accelerate the acceptance of cryptocurrencies and the growth of the industry as a whole at a pace we have never seen before,” he adds. However, investors should be aware that digital assets are high-risk investments - and that the market will remain volatile. “If you can live with this volatility, then there is a good chance of significant outperformance.”
Among the accumulated assets of crypto ETNs on Xetra, three products are now more or less on a par: 21Shares Solana Staking (CH1114873776), CoinShares Physical Bitcoin (<GB00BLD4ZL17Y>) and Bitwise Physical Bitcoin with around 1.3 billion euros each. In fourth and fifth place are WisdomTree Physical Bitcoin (GB00BJYDH287) and 21Shares Bitcoin (CH0454664001).
By Anna-Maria Borse, 19 December 2024, © Deutsche Börse
About the Author
Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.
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