Both cryptoassets and stocks dropped sharply last week due to concerns over the new Covid variant, Omicron.

On Friday, the price of bitcoin dipped below $54k for the first time in over a month, but has since regained some of the lost ground, trading at around $58k today.

BTC falling 15% from its all time high of around $68.9k at 10 November has presented an attractive buying opportunity for long-term investors. But continuing to put a gleam in investors eyes are blockchain gaming and metaverse tokens. Despite Omicron-related uncertainty in the markets, a number of these assets have continued to post significant gains this past week.

GALA joins the rapidly growing list of high-performing Metaverse assets, showcasing growth of 67% this past week. MANA and SAND, which are the favourites among investors wanting exposure to the elusive Metaverse universe, continue to do their part with big gains of their own (16% and 30% respectively over the past seven days).

Also riding high is LUNA, the token of Terra – a stablecoin payment and DeFi service provider that has gained more than 7,000% since the beginning of 2021. This past week, LUNA has leapt more than 37% to trade at around $57 and secure its spot as the 13th largest crypto by market cap.

Shifting gears, after a long hiatus due to COVID, Art Basel returns to Miami Beach this Thursday. Obviously, a lot has changed in the art world since the pandemic – most notably the meteoric rise of NFTs . Those of you in Miami this week may be interested to learn that there'll be over 150 NFT/tech related events taking place (much too many for me to include in the What to watch out for this week section of this newsletter). You can review them all here.

As usual, for any questions of comments, send a note.

Best Regards,

Iva Lila

Beneath the headlines

Morgan Stanley increases bitcoin exposure by buying more GBTC shares. Could increased BTC demand from the banking giant impact the appetite for approving spot products at the SEC?

An SEC filing last week revealed that the leading global investment bank, Morgan Stanley, increased its Bitcoin exposure to over $300m by adding more Grayscale Bitcoin Trust (GBTC) shares to its holding during Q3.

The Twitter handle, MacroScope, highlighted that Morgan Stanley Institutional Fund’s Growth Portfolio reported holding 3,642,118 shares of GBTC at the end of Q3 compared to 2,130,153 at the end of Q2 – a dramatic increase of 71%.

The $32bn GBTC, which owns 3.5% of the world’s bitcoin, is the biggest bitcoin fund used by institutions and those who can’t directly invest in spot. It should trade closely to bitcoin but depending on demand, it can also trade at a discount or a premium to the asset. Since February 2021, which was the month Purpose Investments launched the world’s first bitcoin ETF on the Toronto Stock Exchange, GBTC shares have been trading at a discount. Today, GBTC trades at 15% below the value of its underlying assets.

To solve its price woes, Grayscale is exploring morphing its flagship trust into a bitcoin ETF backed by physical bitcoin, and is expecting an answer from the SEC to its proposal by January 2nd 2022. Though in recent weeks, Gensler and his team at the SEC have made their stance regarding spot market pegged crypto ETFs perfectly clear, many are speculating that the investment banking giant's increased exposure to GBTC may bolster Grayscale's case in getting its spot Bitcoin ETF approved.

Morgan Stanley earlier this year became the first big US bank to offer access to crypto among its qualified clientele. Away from its GBTC investment, the banking giant owns a 10% stake in MicroStrategy, backed the asset tokenisation outfit Securitize in a Series B funding round, and recently announced a crypto research department. It's expected that MS' most recent move may reverberate on Wall Street and beyond as banks increasingly face pressure from clients who want exposure to bitcoin and the emerging digital asset class. A survey by one of our oldest and dearest clients, Nickel Digital, shows that 82% of institutional investors and wealth managers are planning to increase their digital asset exposure between now and 2023.

Jack Dorsey steps down as Twitter CEO; is his resignation really about his crypto ambitions? As the new CEO, will Agrawal build on the foundations Jack built?

There's been a changing of the guard at Twitter. After an impressive 15 year run, Jack Dorsey yesterday announced that he is stepping down as the CEO of Twitter. Parag Agrawal, the company’s chief technology officer and a core figure at the social media company, will take over from Dorsey.

Since 2015, Dorsey has been running Twitter in parallel with the other multi-billion public company he co-founded, Square. During this time, many have questioned his effectiveness in helming two firms. Anyhow, yesterday's announcement is being interpreted by the media and the general public as a clear signal by Jack that Square is the favourite brainchild...

In the past, Jack Dorsey – who I think we can all agree comfortably fits the description of a 'bitcoin maxi' – has said that he believes bitcoin will be the native currency of the internet and is the single most important project he will work on in his life. Throughout 2021, we've witnessed him increasingly steer Square into crypto territory. In addition to building a bitcoin wallet, the firm set its sights on bitcoin mining and also announced plans for a decentralised finance protocol called tbDEX (which appears to stand for ‘Trust Based Decentralised exchange’).

With the Twitter albatross now lifted from his neck, it's thought that Jack may significantly step up Square's crypto footprint and its role in the mainstreaming of digital assets. There's no denying that with Dorsey as a full-time CEO, Square has a better chance of successfully dealing with increased competition from PayPal, Robinhood, Coinbase and others.

Online, there's speculation that despite Twitter having launched bitcoin tips and established a Crypto team under Dorsey's leadership, the founder may have faced greater pushback from the board on his crypto ambitions. Twitter's chief financial officer, Ned Segal, earlier this month dismissed the idea of holding bitcoin in its corporate treasury. Segal's statement stands in sark contrast to Square's approach. Back in October 2020, the company helped kick off a wave of bitcoin institutional adoption when it first purchased $50m in bitcoin for its treasury (the firm went on to buy another $170m in February 2021). Square's finance chief, Amrita Ahuja, declared in March 2021 that there’s a case "for every balance sheet to have bitcoin on it."

With Dorsey on his way out, most are wondering whether crypto will remain central to Twitter's roadmap. Obviously it’s still too early to determine if and how the social media giant will operate differently under Agrawal’s watch, but like his predecessor, Agrawal appears to be a big believer in crypto.

During his time as CTO, he was responsible for leading the Twitter Crypto team and overseeing the social media giant's Web3 projects. And here's a fun fact: at 37 years old, Agrawal is now the youngest person to run a company in the S&P 500. Circling back to Dorsey, now that he has more time to focus on his most passionate projects, I'm genuinely excited to see what role he will play in the next wave of crypto adoption. Rooting for you Jack!

Roundup of other key developments

INSTITUTIONAL

WisdomTree launches spot ETPs in Europe.

Grayscale launches Solana trust product.

Former Citi banker launches $1.5bn crypto fund, taps Algorand as first partner.

Invesco launches bitcoin spot ETP on Deutsche Borse.

Thoma Bravo is building a crypto and fintech growth investment practice.

LEGAL + REGULATORY + GOV + CBDCs

Two bitcoin funds launched in Singapore by MAS-regulated fund manager.

Mixed messages on crypto tax rules create confusion in South Korea.

Jerome Powell nominated for second term as chair of US Federal Reserve.

Japan plans a new bank-deposit-backed digital currency.

Tanzania has begun preparations to launch its own CBDC.

El Salvador buys 100 more bitcoins as crypto market falls.

Indian government confirms that its new crypto bill is not the same as the old one.

COMPANY

Galaxy Digital seeks to raise $500m in debt market.

Coinbase acquires crypto wallet startup BRD.

Coinbase to acquire crypto custody technology firm Unbound Security.

Meta’s David Marcus, creator of the Diem project, to leave company.

Institutional investors dominate Pantera Capital’s $600m funding.

Binance is in talks with sovereign wealth funds on investment.

Jesse Powell addresses reasons for Kraken dropping Monero in the UK.

Crypto.com becomes first crypto exchange to comply with SOC 2 standards.

MicroStrategy purchases $414.4m worth of Bitcoin, with total BTC balance eclipsing $3.5bn.

DeFi + WEB3 + NFTs + METAVERSE

Adidas Originals announces partnership with Coinbase.

OpenSea and Christie’s partner on NFT collection.

Bancor announces features of its long-awaited V3.

Decentralised exchanges near $100bn in monthly volume for November.

Race for metaverse ETF launch has Canada calling a tie for first.

Axie Infinity plot of land sells for $2.3m worth of ETH.

Morgan Stanley: Metaverse gaming, NFTs could account for 10% of luxury market by 2030.

What to watch out for this week

TUESDAY 30 NOVEMBER

-MultiVAC smarts contracts launch. Find out more here.

-EMPIRE adds the Empire marketplace to Solana chain.

-Nav Coin mainnet upgrade. Full details.

WEDNESDAY 1 DECEMBER

-SEC Chair Gary Gensler to participate in the Digital Asset Compliance and Market Integrity (DACOM) summit. See agenda and registration details.

-The Asia Risk Cryptocurrency Trading Forum takes place. Copper's Takatoshi Shibayama (Head of Sales APAC) will participate in the event's Settling Crypto: How to ensure safety within a trading cycle panel discussion. View the agenda and event details here.

-Horizen Zen 3.0.0 (Zendoo) hard fork. Learn more.

-XDC Network update. Find out more.

-IDEX V3 to launch on Polygon. See more details here.

THURSDAY 2 DECEMBER

-Swiss Association of MBAs (SAMBA) to host the Megatrends Blockchain Summit, virtually and in-person in Zurich. Copper's Head of Compliance, John Bratowicz, will be speaking as part of a panel discussion exploring DeFi. See the agenda and full speaker lineup here.

MONDAY 6 DECEMBER

-Nakamoto Games mainnet launch. Find out more here.