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The Monthly Drop
Covering A to Z with Algoz

MAY 2021

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  • Bitcoin's 50% collapse 
  • Ray Dalio makes big bets  
  • Crypto's 1st billion dollar deal 💸

30 DAYS IN 1




Banking Giant Coins Crypto an "Asset Class".

Fellow industry peers,

We have crossed the Rubicon!

“It’s not often that we get to witness the emergence of a new asset class."

In a new report by Goldman Sachs, Crypto: A New Asset Class?, the bank’s Digital Asset representative, Mathew McDermott, responded YES when asked if the bank’s clients consider cryptocurrencies an asset class! “Discussions with institutional clients revolve around how they can learn more on the topic and get access to the space—as opposed to questions around what bitcoin or cryptocurrencies are.” 

Goldman Sachs announced in March that it would be offering crypto investment products in the second half of 2021.  Joining the list are banks Morgan Stanley, J.P Mogan, Wells Fargo, BNY Mellon, State Street, to name a few. 



Annual Crypto Hedge Fund Report. The 3rd edition PwC's Global Crypto Hedge Fund Report was published this month, sharing insights from its annual survey of the biggest crypto hedge funds by AUM. This year, the publication even reported on traditional hedge funds and their rising interest in digital assets and the inclusion of this asset class in their portfolio. Below are some of the key facts stated in the report, all of which Algoz strategies were able to outperform.. 

PwC Median vs Algoz

Want to read the full report? Click here.

Want to learn about Algoz Trading? Click here.



Bears beating the Bulls? Crypto exchange volumes have just about tripled since January 2021 with over $2 trillion in cumulative trading volumes in May, a milestone for the asset class (thanks for sharing Goldman Sachs 😊)! In the same period, Bitcoin had it’s worst month in ten years reaching a dip of nearly 50% before recovering a bit of the loss, ending the month with a total drop of approx. 35%. However, the bears ain’t beating the bulls... at least for now. 76% and 94% of Bitcoin and Ethereum supply is still in profit, respectively.

Bitcoin: Percent Supply in Profit

Source: Glassnode 



Collide & Collapse. Bitcoin closed at approximately $57,800 on May 1st and $37,300 on May 31st... What the h*ll happened in 31 days?! Following Tesla’s announcement (discussed below), China banned financial institutions and payment companies from “offer(ing) any service involving cryptocurrency, such as registration, trading, clearing and settlement.” In regards to China, this is not the first time drastic regulatory measures have been taken against cryptocurrencies; however, the new ban restricts services that were never halted in the past. While this (and Tesla) shocked and basically wiped-out half of crypto’s market cap., this does not come as a surprise as China’s central bank is in the final stages of issuing the e-CNY, China’s CBDC.



A Conflict of Interest. On May 12, electric vehicle maker and clean energy company, Tesla, announced that it was (temporarily) halting vehicle purchases with Bitcoin due to environmental concerns over Bitcoin mining (and crypto mining in general), less than 3 months after activating BTC payments, beginning the tumble of Bitcoin. Tesla’s move is somewhat mock-worthy as these concerns have been evident for a few years before Tesla investing $1.5 billion in Bitcoin.

So what’s the catch? Maybe this is another brilliant marketing move by Musk to focus the attention on the electricity consumption concern that comes with mining as discussed between leading Bitcoin miners Musk, along with MicroStrategy’s Saylor. Thus far, the miners have committed to reporting current usage levels and even intend to regulate future energy consumption.



“I’d Rather have Bitcoin than a Bond ''. Billionaire hedge fund owner, Ray Dalio of Bridgewater Associates, revealed, not only that he prefers to own Bitcoin over govt. Issued bonds but that he actually owns Bitcoin! In January, he posted an article, ‘What I think of Bitcoin’, which extensively discussed the asset, pointing out its flaw but also illustrating its value. Recently, Dalio shed some light on what an economy with CBDCs could look like, and has placed a ‘strong’ bet on the e-CNY, China’s central bank digital currency. And it seems we will soon be able to see if the Billionaire’s bet lives up to his expectations. Over $4 trillion in assets, The Industrial and Commercial Bank of China’s customers can now activate their e-CNY digital wallet in their mobile banking app. Users can deposit balances from linked bank accounts, withdraw balances to bank accounts, payment QR code and initiate peer-to-peer transactions in the ‘Internal Test Wallet’. White-listed AliPay users have also been given access to the e-CNY digital wallet in their mobile app.



1st Billion Dollar Deal in the Industry. Financial services firm, Galaxy Digital, has acquired $40 billion custodian, BitGo, for $1.2 billion, the first billion dollar deal for the crypto industry! As cryptocurrency continues to grow and materialize into an accepted asset class, the industry is pulling out all the stops to attract more institutional money. “The acquisition will position Galaxy Digital as a full-service platform for institutions, offering a breadth of industry-leading products and services at scale.”



Emotional Trading. Over $300 million worth of Bitcoin trading took place on PayPal on May 19th, the day of Bitcoin’s collapse. It can be easily deduced that PayPal’s all-time-high volume came from the platform’s amateur investors panic selling due to the unexpected wild plunge in Bitcoin’s value. That aside, PayPal has a high speed to market for its offerings. Since October 2020, when the first crypto-related product was introduced, PayPal has introduced several new crypto-features on the platform. Crypto withdrawals to external wallets will soon be possible, and word on the street is that PayPal is exploring the idea of launching its own stablecoin.



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