What has been happening around Blockchain Technology and Cryptocurrencies this week? The most relevant local and international developments as well as appealing background reports in a pointed and compact way in retrospect in our weekly review.
After a few US companies have made bitcoin investments, the first institutional interest in cryptocurrencies is flaring up from China. Listed tech firm "Meitu" unveiled an initial investment of $40 million this week. The company sees great potential in digital assets and is considering further investments. The Chinese company did not limit itself to Bitcoin (BTC), over 50% of their initial investment was in Ether, the second largest token by market capitalization. In February, the U.S. futures exchange CME launched Ether futures, which, together with the current DeFi boom, could further drive the price of the digital currency.
The integration of digital assets into the traditional financial system is becoming visible in Switzerland as well. While the big banks are holding back with opinions and offers on digital assets, more private banks are stepping in with a range of services. Neue Privat Bank (NPB) announced this week that they will be offering digital asset services. This is in collaboration with InCore, a Swiss specialist in cryptocurrency trading and custody. The local offering of services for the new asset class is on the rise, with private bank Maerki Baumann only recently adding investment consulting for Bitcoin & Co.
Present developments have made it easier for traditional investors to gain simple access to digital assets and thus an interesting way to diversify a portfolio. Yet, cryptocurrencies are still a young and volatile asset class. Although this may deter many investors, it is worth taking a closer look at its risk-return profile. Even a weighting of 1-5% can provide a significant positive impact on a traditional portfolio structure. Yves Longchamp explores the question and compares the risk exposure to the expected return. Using the "Sharpe Ratio", the advantage of a portfolio enrichment with digital assets can be easily assessed.
So-called non-fungible tokens (NFTs) are currently an emerging trend in the blockchain sector. They possess unique properties, are not divisible and are easy to trade. Accordingly, NFTs are ideal for the digital representation of exclusive assets on the blockchain. This is also referred to as the tokenization of items. In a basic knowledge article, CVJ.CH dives into the basics of NFTs as well as their various applications. Proof of the new world's relevance comes in the auction of a digital artwork by artist "Beeple" at Christie's auction house. The artwork was sold this week for $69 million - a record value.
Furthermore: Estimates indicate that more than 4 million Bitcoin are lost forever. This represents almost 20% of the total quantity of the limited digital currency. Some of these coins are on wallet addresses of deceased people, to whose no one has access anymore. With the rise in Bitcoin's price, there are now billions of US dollars on "dead" wallets. The inheritance of crypto assets is often not thought of. A mistake for an asset class that has impressively outperformed all other assets in terms of appreciation over the last 10 years.
Selected articles in the weekly review:
Technology company Meitu is one of the first Chinese companies to invest part of its cash reserves in Bitcoin and Ethereum.
With Neue Privatbank (NPB), an additional Zurich-based private bank is entering the digital assets industry.
While many investors acknowledge Bitcoin's strong performance, they see too much risk in the associated volatility. An examination of the cryptocurrency's risk-adjusted return profile using the Sharpe Ratio.
Digital ownership of art? Non-fungible tokens? CVJ.CH clarifies the topic of NFTs: the different use cases, segments and the untouched potential of the technology.
According to estimates, more than 20% of the total quantity of Bitcoins are in lost wallets. This is partly because their owners have not taken care of their storage or inheritance.
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