The Weekly Axis - Nov. 18, 2023

This was a big week in the realm of crypto and blockchain for financial professionals. We saw JP Morgan jump into tokenized wealth management, Coinbase offer more managers for their SMA platform, and Superstate raised $14 million to put funds onchain.

We’ll hit a couple of these here, with more explanations, analysis, and discussion on the site

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• December 5, 2023

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The Positive isn’t all about Institutional Investment

The crypto market has been making some serious waves lately, with prices of various crypto assets skyrocketing. Bitcoin and ETH have been leading the charge, but other assets like Solana and Chainlink have also seen massive growth, surpassing the 100% mark in just a few months.

Now, you might be thinking that this surge is solely driven by institutional investors, and you wouldn't be entirely wrong. The anticipation of a Bitcoin spot ETF and the application for an ETH spot ETF by BlackRock have certainly played a role in boosting the market. However, there's more to the story than meets the eye.

During the recent bear market, when crypto prices plummeted from their all-time highs, there was a significant amount of development happening behind the scenes. Companies like BlackRock, JP Morgan, Nike, Lufthansa, Starbucks, Visa, and PayPal, among others, recognized the potential of blockchain technology and started utilizing it in their operations. They weren't jumping on the bandwagon or chasing price increases; they genuinely saw the value that this technology could bring.

This building phase led to the creation of innovative applications and protocols. For instance, Solana has been making strides in developing robust applications, while Chainlink has introduced a cross-chain interoperability protocol, enabling coordination between different chains and custodians. These advancements are crucial for the overall ecosystem and technology.

So, what does all of this mean for us as financial professionals? 

Well, it signifies a fundamental shift in the way we transact and conduct financial operations. The adoption of blockchain technology by major players like BlackRock and JP Morgan indicates that they recognize the need for on-chain financial transactions. They’re investing in the technology, whether by utilizing it themselves or creating funds around it, because they see its long-term value.

This growing institutional interest in blockchain and crypto isn’t just a passing trend. It's a reflection of the underlying infrastructure and value that has been steadily built over the past few years. As financial professionals, it's essential for us to stay informed and understand the potential impact of this technology on our industry. The increasing institutional investment and adoption will continue to drive the market and create new opportunities for us.

So, keep an eye on the developments in the crypto space, not just for the potential price increases but for the transformative power of blockchain technology. Embrace the changes, adapt to the evolving landscape, and position yourself to leverage the opportunities that arise.

JP Morgan Tokenizes Wealth Management

JP Morgan has been experimenting with blockchain technology. Their Onyx group, which focuses on blockchain, has been working on a proof of concept using a blockchain called Avalanche.

So, what does this mean for you? Well, JP Morgan is looking to tokenize funds, assets, and portfolios using this blockchain platform. Imagine how much easier it would be for wealth managers and financial advisors to handle client portfolios if they could simply move around tokens instead of dealing with all the traditional paperwork and processes. It's a game-changer!

Now, let's break it down. This doesn't mean these tokens will settle outside of JP Morgan's environment. They're using blockchain technology to enhance efficiency and speed within their own system. The transparency and instant settlement that blockchain offers will allow wealth managers and advisors to manage client portfolios more effectively.

But here's the interesting part. JP Morgan isn't just looking at adding traditional funds and equities to this blockchain platform. They're also exploring alternative assets.

By utilizing blockchain technology and incorporating alternative assets, JP Morgan aims to provide a better wealth management experience for both the firm and the client. With the help of transparency and AI, they can analyze risk profiles, portfolio allocations, and potentially improve performance.

Now, keep in mind that this is currently a proof of concept and not yet on a public blockchain. JP Morgan is testing the waters with Avalanche, a private blockchain. But who knows, maybe in the future, we'll see this technology move onto a more public chain.

So, get ready for a potential revolution in portfolio management. JP Morgan is embracing blockchain technology to streamline processes and enhance the way you handle client accounts.

Ethereum Investment Thesis - Adoption

Ethereum is like a massive global database that operates in a decentralized manner. It's not controlled by any single entity like a bank or government. Instead, individuals, companies, and even you can be part of the network, helping to keep it secure and transact on it.

Now, let's talk about Ether. Ether is the cryptocurrency used within the Ethereum network. When you want to send or transact with any crypto asset based on Ethereum, you need to pay with ETH. Think of it as the fuel that keeps the network running smoothly. This is where the investment thesis comes into play for financial professionals like yourself.

The value of ETH depends on the demand for transactions on the Ethereum network. If more and more people, companies, and institutions start utilizing Ethereum for their transactions, the demand for ETH will likely increase. This means that the value of ETH could potentially go up.

As a financial professional, it's crucial to keep an eye on the adoption rate of Ethereum. Look out for big players like PayPal, Shopify, Visa, Mastercard, and even BlackRock and JP Morgan, who are exploring tokenization of assets on the Ethereum blockchain.

When these major institutions start transacting on Ethereum, it's a sign of adoption. And remember, they're not doing it for speculative purposes, but because they see the value in Ethereum as a better database. This increased adoption means more transactions, which in turn drives up the demand for ETH. As a result, the value of ETH could potentially rise.

So, as a financial professional, it's important to consider the potential value of ETH in your investment strategy. Keep an eye on reports and frameworks that analyze the adoption rate of Ethereum and its impact on the value of ETH. Understanding the supply and demand dynamics of ETH will help you make informed decisions and navigate the exciting world of cryptocurrencies.

Have a safe and happy Thanksgiving!

— Adam