Welcome to the first installment of the Monthly Digital Assets Digest powered by Venn by Two Sigma. This is your guide to understanding the state of capital allocation in crypto. In this newsletter, we dive into the latest developments impacting advisors, asset owners, and managers to help institutional investors analyze digital assets with confidence.

 

Now, let’s dive into some recent news. Here are our top reads from the past month:

 

1. As Crypto Slumps, Goldman Sachs Aims for a Wall Street Built on Blockchain

The biggest banks on Wall Street have been slow to invest directly in crypto. Despite this, many are well underway in integrating blockchain technology into various aspects of their businesses. Goldman Sachs is trading debt securities for clients on networks such as Ethereum. Likewise, JPMorgan Chase has built its own blockchain-based trading platform called Onyx. It’s clear that institutional adoption of blockchain tech is continuing to grow.

 

2. Private Equity, Venture Capital, and Blockchain All Have a Place in Endowment Portfolios

Chief investment officer of Northwestern University’s $15 billion endowment shares her views on crypto, noting, “some of the most talented, thoughtful people in the venture-capital funds that we invest with, who are generally very good at identifying trends five, six years ago, are putting resources into this area [crypto]. As someone who’s worked in financial systems and trading systems, I like the idea of better, lower-cost ways of moving money around the world."

 

3. Institutions flocking to Ethereum for 7 straight weeks as Merge nears

A new report from CoinShare’s finds that institutional inflows into Ethereum products have been rising steadily over the last 7-weeks, now that a date has finally been set for "the Merge". The Merge, set for September 19th, will unite the Ethereum Mainnet chain with the Ethereum 2.0 Beacon chain to finally complete Ethereum’s transition from a proof-of-work to a proof-of-stake consensus mechanism.

 

4. Crypto bulls' comeback? Here are factors driving up institutional interest

Signals that the worst of crypto winter may already be behind us continue to surface. Bitcoin is up nearly a quarter (24%) from its June low, per data from CoinDesk. According to Tom Dunleavy, senior research analyst at Messari, Ethereum's Merge has been driving investors to act. He explains, in anticipation of the Merge, “there’s clear institutional and whale interest and accumulation."

 

In case you missed it, here’s what we’ve been up to:

 

Last week, Venn announced a strategic alliance with the institutional investment arm of cryptocurrency exchange Coinbase to empower institutional investors with the insights needed to incorporate risk analysis of digital assets into their capital allocation frameworks.

 

Through this new effort, Venn and Coinbase will join forces in developing materials for institutional investors seeking to better understand digital assets. These informational resources will include joint research, webinars, whitepapers and blog posts, designed to help Venn and Coinbase clients and the institutional investment community at large make more informed investment decisions.

 

The collaboration will launch with a joint webcast titled, “Putting Crypto Into Context - Tools & Frameworks for Asset Allocators to Evaluate Digital Assets” being held on Wednesday, September 14, 2022. The webcast will explore how to build a risk and allocation framework to analyze digital assets as part of an institutional portfolio. To register, head to: https://puttingcryptointocontext.splashthat.com/.


For more insights on how to take a quantitative approach to multi-asset portfolio risk and decision making, visit our blog at VennSights.

 


IMPORTANT DISCLOSURES

This article is not an endorsement by Two Sigma Investor Solutions, LP or any of its affiliates (collectively, “Two Sigma”) of the topics discussed. The views expressed above reflect those of the authors and are not necessarily the views of Two Sigma. This article (i) is only for informational and educational purposes, (ii) is not intended to provide, and should not be relied upon, for investment, accounting, legal or tax advice, and (iii) is not a recommendation as to any portfolio, allocation, strategy or investment. This article is not an offer to sell or the solicitation of an offer to buy any securities or other instruments. This article is current as of the date of issuance (or any earlier date as referenced herein) and is subject to change without notice. The analytics or other services available on Venn change frequently and the content of this article should be expected to become outdated and less accurate over time. Any statements regarding planned or future development efforts for our existing or new products or services are not intended to be a promise or guarantee of future availability of products, services, or features.  Such statements merely reflect our current plans.  They are not intended to indicate when or how particular features will be offered or at what price.  These planned or future development efforts may change without notice. Two Sigma has no obligation to update the article nor does Two Sigma make any express or implied warranties or representations as to its completeness or accuracy. This material uses some trademarks owned by entities other than Two Sigma purely for identification and comment as fair nominative use. That use does not imply any association with or endorsement of the other company by Two Sigma, or vice versa. See the end of the document for other important disclaimers and disclosures. Click here for other important disclaimers and disclosures.

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