15th February 2024 > > Flight to safety & tokenisation.

tl;dr

The flight to safety into BTC might have started. Tokenisation will democratise the financial industry.

Market Snap

Market Wrap

BTC is up 17% over the course of seven days.

In the last four days net inflows to the ETFs has been 43,000 BTC. In their first twenty days the ETFs took in a net 42,000 BTC, suggesting an acceleration in the pace of ETF investments that could be significant in the process of price discovery:

The big question is whether this is just the start of the ETF accumulation phase, or are we nearing the end of the ETF enthusiasm stage?

You can probably guess my thoughts on this topic.

Curious Cryptos’ Commentary – Cryptos are so important

Hands up those who believe that central banks are independent?

Ah, no-one.

Hands up those who think that central banks can control inflation by government sponsored market manipulation of interest rates, across the entire curve?

Ah, no-one.

Hands up those who think that our politicians use technocrats (BoE, OBR, and the plethora of other TLAs that rule our lives) to hide their own inadequacies?

Ah, everyone.

Hands up those who think that cryptos can solve these problems, problems born of an abandonment of a true conviction in the importance of democracy for human decency?

Ah, everyone.

Curious Cryptos’ Commentary – Tokenisation

Citigroup has been experimenting with tokenising securities in collaboration with Wellington Management and WisdomTree. In this case, the simulation was of a tokenised private equity fund. According to Bloomberg “… the project showed it’s possible to issue and custody tokenized versions of private equity funds on behalf of clients in a controlled environment, while remaining compatible with existing bank systems.”

Which does raise an interesting point. Changes to both front-office and back-office systems in banks and other financial institutions can be lengthy and painful for users. I should know, I have been there many times. Incorporating DLT into legacy IT systems will be a challenge, and will slow the global adoption of cryptos.

We have previously looked at some tokenisation projects, for example BondbloX on 16th of September last year. Dune Analytics reports that the market cap for tokenised securities is now nearly half a billion dollars:

https://dune.com/steakhouse/tokenized-securities

Many of these projects use the Avalanche blockchain powered by AVAX, which has been a core part of the CC Treasury holdings since July 2022.

Tokenisation has two distinct benefits. It brings the prospect of all potential financial investments into the arms of small retail clients making financial markets more democratic. Even more importantly, it will provide a massive boost to liquidity in the financial markets, lowering the cost of capital for business, and making everyone wealthier.

For these reasons, predictions for the growth of the tokenised market suggest that in a relatively short space of time, the market cap will be in the tens of trillions of dollars, only made possible by blockchain technology. If Avalanche maintains its market leading position in this truly democratising revolution brought on by tokenisation and DLT, holders of AVAX will be content.