• Digital Assets

    Equity Markets Capitalize on Digital Assets Rally

    Matthew Sigel, Head of Digital Assets Research

    "Let’s say you’re older, the kids are grown, and it’s time for you to take a break from the world. So you put on headphones and VR glasses. And in those VR glasses and headphones, you have a life of you as a much younger person, a much more beautiful, handsome, wealthier, stronger, whatever, with the friends that you remember of the time recreated, even though they may have passed away. That might be a more fun life for you every day than the life that you have in this scenario. So what happens when we lose people? I call that crossing to the other side. When they wake up in the morning, they just want to be over there. That will happen." - Eric Schmidt, former CEO Google, on the Tim Ferriss Podcast, 17 October.

    Digital assets rallied in October with strong macro tailwinds, seasonality and fundamentals driving Bitcoin +59% and Ethereum +88%. On the macro side, the U.S. CPI hit a 12 year high of 5.4% and breakeven spreads implied by TIPS made an all-time high of 2.9%, driving interest to inflation hedges such as commodities and crypto.1 On the fundamental side, total Bitcoin addresses and Ethereum addresses (virtual, unique identifiers for receipt of cryptocurrency, similar to email addresses) rose 1.5% and 2.7% month over month respectively, representing the highest growth rate since April.2 The two largest blockchain networks are on pace to facilitate nearly $8 trillion in payments between them in 2021, about two-thirds the value of the Visa network and growing 10x faster.3

    Broad digital assets adoption continues to result in robust capital markets activity including multiple IPOs. In the U.S., Stronghold Digital (SDIG, market cap $1b) raised an upsized $127m at a price above the marketed range.4 The Kenderell, PA-based miner operates its own coal-waste power plant and claims the lowest cost among publicly traded Bitcoin miners thanks to renewable energy credits and state tax incentives aimed at reclaiming abandoned coal mines. Stronghold claims its technology cuts emissions of nitrous oxide, sulfer oxide, particulate and mercury emissions by 90-99% versus leaving the coal in place.5 Meanwhile Delaware-based Rhodium Enterprise (RHDM) and Australia-based Iris Energy (IREN) also filed plans to each raise $100m in IPOs.6 Rhodium claims its liquid-cooling technology allows it to extend the mechanical life of Bitcoin miners by 30-50%, a strategy to capture higher-cost stranded energy with depreciated equipment not suited for more expensive data center rack space.7 Iris limits its mining development to regions with abundant low-cost renewable energy and has struck partnerships with indigenous communities in Canada which include profit-sharing, training and employment opportunities.8

    Annual Network Transaction Value

    (bubbles represent size of network)

    Annual Network Transaction Value

    Source: Nacha.org, NasdaqTrader.com, Coinmetrics, Visa, VanEck estimates as of 1 October 2021

    Elsewhere in the equity markets, Korean crypto gaming company WeMade (112040 KS, market cap $5b) rose 165% in October, making founder Park Kwan-Ho a billionaire, according to Forbes. Three of the five richest men in South Korea now derive at least part of their fortunes from digital assets.9WeMade's crypto role-playing game Mir4 has launched in 170 countries with more than 1.5m downloads across Android and Apple since 31 August, not counting downloads on Steam which disabled crypto gaming two weeks ago.10 (In response to Steam's move, Epic Games CEO Tim Sweeney tweeted that Epic "welcomes games that make use of blockchain tech," illustrating the game theory whereby one company or country will adopt what others shun). Meanwhile WeMade's "Wemix" cryptocurrency more than tripled in October and now trades at an $800m market cap, a good example of a pure-play coin outperforming the relevant equity by 2x.11 A similar dynamic has played out in the metaverse: Facebook's rebranding to Meta failed to move the stock, which fell 3% in October. A market-cap weighted basket of Jefferies' favorite NFT and Metaverse stocks rose 6%. The Roundhill Ball Metaverse ETF (META, market cap $150m) climbed 9%. In contrast to these muted gains, the MVIS CryptoCompare Media & Entertainment leaders index, which contains six of the largest tokens "used to reward users for content, games, gambling or social media" (i.e., – “pure plays”) rose 105% in October.12 Since the Facebook announcement alone, The Sandbox’s SAND is up 115%, Wilder Worlds’ WILD is up 114%, Alien Worlds’ TLM is up 79%, Star Atlas’s ATLAS is up 73% and Axie Infinity’s AXS is up 27%.13 Thus, investors looking for metaverse exposure are best served with direct exposure to the coins, in our view. Such an endeavour is now easier to monitor with indices such as MVIS' noted above, trackable on Bloomberg.

    Coincident with the rise in crypto-related equity capital markets activity in the month, we also have noticed a marked increase in the volume of broker research on cryptocurrencies in our inboxes. As such research often supports additional equity capital markets activity, we observe the three Bitcoin mining IPOs filed in the last month include JPMorgan, Citigroup, Macquarie, Canaccord Genuity, Cowen and Tudor Pickering as underwriters and bookrunners.14 Meanwhile Morgan Stanley, Jefferies and Merrill Lynch all published 100+ page deep dives on digital assets in October. With crypto companies raising $8.2b in Q3 2021 alone,15 we'd expect the investor community to be flooded with research explaining these new issues in coming months. Clearly the education story has been working so far with midcaps such as Marqeta (MQ, market cap $17b) and Bakkt (BKKT, market cap $9b) gaining 38% and 258%, respectively, in October after revealing more details about their crypto customers Mastercard and Coinbase, among others.16 Amidst a macro backdrop of supply chain-related shortages and inflation worries, the market's transition to “de-materialized” products and services such as NFTs and digital land in the metaverse appears to be accelerating.


    One of the more notable corporate crypto ventures of October was the Dish Network’s (DISH, market cap $22b) partnership with Helium Network to crowd-source 5G coverage. Customers will install 5G transmitters at their own expense to provide and/or strengthen 5G wireless coverage using CBRS (“Citizens Broadband Radio Service”, a shared wireless spectrum in the 3.5Ghz band). In return, customers can earn rewards in the form of $HNT, a Helium Network-based token now valued at $3b, up 70% in October.

    DISH is no stranger to crypto. With 11 million customers, it was the largest company to begin accepting Bitcoin in 2014 and has also partnered with Input Output global (Cardano promoter) to build a variety of blockchain-based services.

    As for Helium, the decentralized wireless network now has 240,000 hotspots across 21,000 global cities, with 500,000 additional hotpots currently back-ordered.

    The Helium project is founded by Shawn Fanning, who developed the first peer-to-peer file sharing systems Napster in 1999. Currently, $HNT token is not for sale at Coinbase or other major U.S. exchanges.

    Source: Dish Network, Helium Network, VanEck

    Three Ways to Invest in the "Metaverse"

    Three Ways to Invest in the 'Metaverse'

    Sources: MVIS, Jefferies, Bloomberg, VanEck. As of 2 November 2021. Past performance is not a guarantee of future results. It is not possible to invest directly in an index.

    The MVIS CryptoCompare Media and Entertainment Leaders Index (MVMELE) is designed to track the performance of the largest and most liquid media & entertainment assets, and is an investable subset of MVIS CryptoCompare Media & Entertainment Index.

    MVIS CryptoCompare Media and Entertainment Leaders Index is the exclusive property of MV Index Solutions GmbH (a wholly owned subsidiary of the Adviser), which has contracted with Solactive AG to maintain and calculate the Index. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards MV Index Solutions GmbH, Solactive AG has no obligation to point out errors in the Index to third parties.


    1 Bloomberg

    2 Glassnode

    3 Glassnode, Coinmetrics, VanEck, Visa

    4 Bloomberg

    5 Company Information: Stronghold Digital

    6Coindesk.com: “Bitcoin Miner Rhodium Enterprises Plans to Raise Up to $100M in IPO”, 29 October 2021; “Australian Bitcoin Miner Iris Energy Files for $100M IPO”, 26 October 2021

    7 Company Information: Rhodium Enterprise

    8 Company Information: Iris Energy

    9 Bloomberg, Forbes

    10 Sensor Tower

    11 CoinMarketCap.com

    12 Bloomberg

    13BTIG research "Game On In the Metaverse!" 1 November 2021

    14 Bloomberg

    15 Messari, DoveMetrics

    16Marqeta.com “Marqeta powers crypto cards for innovators”, 19 October 2021

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  • Authored by

    Matthew Sigel
    Head of Digital Assets Research

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