Blockchain Bites: universities are gaining exposure to Bitcoin as ETH’s institutional appetite grows

Overstock is trying to exit its blockchain-related investments, Tanzeel Akhtar reports from CoinDesk. The online shopping giant that entered the cryptographic hype will now transform its blockchain-focused subsidiary, Medici Ventures, into a managed fund.

Janet Yellen is the 78th US Treasury Secretary. Approved by the Senate on Monday, the former Federal Reserve chairman will oversee an office with a series of encryption-related rules on his plate. This includes an 11-hour Trump administration proposal to increase surveillance of private wallets. The controversial, and perhaps illegal, short comment period on this subject has just been expanded.

Since BoE’s Bailey despises cryptography as cryptography, it is important to note all the ways he is already wrong. Crypto works for payments, although it may not be the first choice for luxury “first world” economies. But it is very powerful for those who are isolated from the financial system.

It’s all about allocation…

Yesterday, it was reported that universities, including several in the Ivy League, are quietly buying bitcoin directly from Coinbase for their endowments.

Harvard, Yale, Brown and the University of Michigan are among those buying, an anonymous source told Ian Allison of CoinDesk. No university confirmed the rumor, several declined to comment. It is not known how well these BTC university properties can be endowed.

Harvard and Yale have $ 70 billion in assets between them, and the total endowment pot is estimated at $ 600 billion in 2017.

“If I had heard this three years ago, I would have said it was wrong,” said Ari Paul, co-founder of BlockTower Capital and previously investment manager at the University of Chicago. “But many institutions are now comfortable with bitcoin. They understand and can simply buy it directly, as long as it is from a regulated entity like Coinbase, Fidelity or Anchorage. “

Cathie Wood, CEO of ARK Investment Management repeated that thought, saying he believes more companies will load their balance sheets with bitcoin. She told Yahoo Finance on Saturday that several public company executives raised the issue with her: Should we follow Square?

Square, the darling of fintech led by Twitter CEO Jack Dorsey, bought approximately 4,709 bitcoin in October. That initial investment of $ 50 million is now worth about $ 150 million. MicroStrategy is perhaps the most visible public company that treats its cash reserves as wastewater and bitcoin as its baby (it will never throw its BTC away with the bath). It now has a total of 70,784 bitcoin.

Rothschild Investment Corporation has also increased its exposure to bitcoin, buying 24% more shares of the Grayscale Bitcoin Trust, released yesterday. The $ 1.4 billion investment manager is not directly holding bitcoin and has long experimented with bitcoin ownership and disposal. (CoinDesk and Grayscale are owned by the Digital Currency Group.)

Interestingly, Danny Nelson of CoinDesk reports that a Canadian virtual reality company bought BTC as a “long-term” investment, but sold last week apparently under false rumors of a “double spent” bitcoin.

Institutional exposure is not limited to bitcoin as more and more legacy financial companies have an interest in ether (ETH), Ethereum’s native currency.

In its 2020 annual report, Coinbase noted that “an increasing number” of its institutional clients have taken up positions in the ether. “The case of having ethereum [ether] that we hear most often from our customers is a combination of, first, its evolving potential as a store of value and, second, its status as a digital commodity needed to move transactions on its network, ”according to report.

Denis Vinokourov, head of research at digital assets brokerage Bequant, told CoinDesk market reporter Muyao Shen that part of this ETH purchase may be an indirect way of gaining exposure to decentralized finance.

“Not everyone is comfortable with the risks that are still associated with DeFi, but the overgrowth of these projects drives activity on the Ethereum network and thus supports capital appreciation,” he said.

In fact, the total amount blocked on all DeFi protocols and applications reached a new record of $ 26 billion on Sunday, according to DeFiPulse, mainly driven by the appreciation of the ether price.

Bitcoin spilled a few thousand dollars, falling approximately 7% day after day, bringing the largest crypto market with it. CoinDesk’s Omkar Godbole reports that about $ 4 billion in BTC options are set to expire on Friday. Deribit, the largest crypto options exchange, is expected to set a new record of 102,162 closed contracts, worth around $ 3.5 billion.