BITCOIN: ETP launches on Swiss Exchange, while Chinese miners go out of business due to price collapse

What a weird crypto week. This market moves in conflicting directions at once, in large part because the execution speed of the actors is very different. A billionaire selling on a whim is instantaneous, while an enterprise team's process to build a product can take 18 months. So we simultaneously get to see (1) Switzerland's SIX stock exchange listing a crypto index product composed of BTC, XRP, ETH, BCH and LTC and (2) the long tail of miners starting to shut down their machines as BTC crashes below break-even range. Financialization and speculation up, infrastructure and hash power down. Would this be different if the timing was better synchronized?

This isn't the first exchange traded product, the honor for which goes to Coinshares (Bitcoin ETP at $500mm+ in assets on Nasdaq Stockholm). But it is meaningful. The underlying index comes from VanEck, a mid-size traditional asset manager which had tried to get a US ETF going and failed. And it is also a basket -- broadly speaking, diversification is a strict good, putting the arguments around inclusion of BCH and LTC aside for now. We hope now to see at least some family offices and Swiss private banks allocate 1-5% to crypto in liquid, regulated wrappers.

Right, so the second point is that Bitcoin mining pools across China are slowing down activity, with certain devices (Antminer S7, S9, Canaan Creative's AvalonMiner 741) becoming unprofitable at prices below $5,000. We have pegged the range of break-even somewhere at $6,000 for individuals with regular access to electricity, and $2,500 for large scale players inside a hydro-electric dam. Regardless of scale, this is bad news for Bitmain and several other Chinese hardware manufacturers. But, BTC was designed for this eventuality -- as price drops, miners will exit, and the probability of rewards to the remaining players goes up. 


Source: FT (Switzerland pay wall), Coin Telegraph (Swiss ETP), South China Morning Post (Mining), Amun/VanEck (Index Sheet -- which we neither hold nor endorse)