Despite the crypto markets facing a big dip due to the new Covid-19 strain, news from all around the crypto world maybe a sign that we are close to a bullish run. With one of the largest hedge funds increasing their BTC exposure and Ethereum solving one of the biggest issues that plagued its network, are we close to witnessing the rebound of the biggest
cryptocurrencies in the markets? Let’s find out !
Morgan Stanley increases exposure to Bitcoin, amounting to a $300 million value
Morgan Stanley, the hedge fund that was once a big skeptic of Bitcoin and cryptocurrencies cannot help but invest more and more into cryptos, especially Bitcoin. Bitcoin, as we speak is facing a few issues of its own. As of 26 th November, Bitcoin is trading at $54,489, according to Coinmarketcap.
After a price correction of almost 10% due to the new infrastructure bill that the Biden government brought forward last week, the cryptocurrency and stock markets have both taken a severe hit this Friday. BTC has fallen by 7.45% in the last 24 hours, along with most other digital currencies. The reason for this has been accounted to the increase in Covid-19 cases across major European countries like Germany and Switzerland. This has come from the new B.1.1529 strain which is reported to contain more than thirty mutations.
The news that was made public on November 24th stated that Morgan Stanley has increased their investment portfolio on Bitcoin exposure by buying more shares of Grayscale Bitcoin trust. In case you are not familiar, Grayscale Bitcoin Trust (GBTC) is basically a financial instrument that allows investors to put their money into trusts, which holds a large amount of Bitcoin. It does not give as much exposure to Bitcoin as directly buying the cryptocurrency from a proper crypto exchange, but it has been acclaimed to be much better than the first BTC ETF that got approved by the United States Securities and Exchange Commission (SEC).
This information was made public because Morgan Stanley had no choice but to disclose this information to the SEC. The documents stated that the Morgan Stanley Insight fund have broadened their holdings of Grayscale Bitcoin Trust. It is up by more than 63%, increasing from around 928,000 shares to 1.5 million shares during the second quarter of 2021. Not only this, the filings from the firm’s growth portfolio show a further increase of 71%; growing from 2.1 million shares in quarter two to 3.6 million shares in quarter three.
The price of GBTC was $45.72 when the news came out. This made the firm’s total value of shares worth $303 million since they hold a total of 6.2 million shares. But as of 26th November, the price of GBTC has fallen along with the bitcoin slump, taking it from $45.72 to $44. This still puts Morgan Stanley’s investment value at just under $300 million, since volatility in the market is likely to show a continuous rise and dip on their holdings.
Ethereum burning that could positively impact the price !?
For a long period of time, the Ethereum network was working on bringing new changes that could solve major hindrances of the existing blockchain. The biggest of these issues was the significant transfer fees, which make ETH very expensive, especially for new investors.
In order to tackle this and more problems, a very talked-about upgrade, known as the London Hard Fork was finally upgraded onto the existing blockchain. This was a part of the Ethereum Improvement Proposal (EIP) 1559, which promised that each Ethereum transaction will involve burning the base fee, which will help decrease the circulation of Ethereum as well.
This upgrade is just a small first step in the crypto networks’ eventual goal to switch from a Proof of Work to a Proof of Stake network. This major change will be coming with the much anticipated ETH2.0 upgrade, but it was important for the London Hard Fork to upgrade to be a success. It has been only a couple of months since the August upgrade, and the benefits have already started to show.
On Wednesday, 24th November, a blockchain research firm that goes by the name of CryptoRank revealed that over 1 million ETH had been burnt thanks to the London upgrade.
The EIP 1559 protocol upgrade has been the sole reason for this success and has helped in modifying the limit of ETH in the market. The reason for burning Ethereum is in hopes of increasing the price while the demand steadily falls down. Bitcoin is notoriously known for being ruthless with its total supply since there will ever only be 21 million BTC in existence. This has helped raise the price of BTC much more compared to any other crypto.
Ethereum is just getting started on its burning, so far the new protocol burning $4.24 billion worth of Ethereum. The data tracking the burning has revealed that approximately 7.76 ETH are being burnt every single minute, which adds up to a whopping 11,042 ETH being burnt each day. The only problem that exists is that the blockchain still emits around 5.4 million ETH per year. So regardless of the burning, the network will be adding more ETH, thus adding to inflation concerns.
Since BTC has been known to be a hedge against inflation, due to its high growth and low supply, Ethereum 2.0 is the new upgrade that is hoping to reduce the gap between coins created and burnt. Ultra Sound Money states that it expects Ethereum to hit a peak supply of almost 120 million, by which the number of ETH existing in the network should start to decline.
So, by the looks of it, two of the strongest cryptocurrencies in the world are beginning to look like a very good investment opportunity.