From Money Substitute to Lottery Substitute

The average Bitcoin holding time for investors is estimated 3.1 years.

However, as a new Handelskontor infographic shows, there has recently been a change: More and more traders are appearing, while the relative proportion of long-term investors is falling.

According to research done by Handelskontor, at the beginning of March there were 5.41 million Bitcoin traders – more precisely, so many BTC addresses where Bitcoins were held for less than a month. In November of last year there were only 3.56 million.

The effect shown can be due to an increased use of cryptocurrency as a means of payment, as well as to increasing trading for speculative intentions. Judging by the advertising in the social media, however, when buying Bitcoin, the focus is on speculation about quick wins, and the payment function is hardly mentioned.

The addresses on which the Bitcoins are held for at least 12 months and are not transferred make up an ever smaller relative share of this popluation. This fell within the last 5 months from 64.79 to 58.88 percent.

In the social media these days, optimistic comments on the subject of Bitcoin predominate. In the last 7 days, 110,042 tweets with a positive connotation regarding the development of the crypto currency were posted, whereas the number of negative comments only amounts to 26,253. The vast majority, however, were neutral. This could be an indication that – in spite of all the highs – there is still no euphoria.

Google data shows that the demand for Bitcoin is extremely high, but that altcoins are also increasingly in demand. The search volumes for the crypto currencies Ethereum and IOTA also recently reached new highs.

First Crypto Fund Ratings in Germany

Agencies, Assets, Methodologies

TELOS GmbH, known for their fund ratings in the institutional sector, and DLC Distributed Ledger Consulting GmbH announce a strategic cooperation in the field of crypto fund ratings.

The aim of the cooperation is to connect two worlds – that of classic asset management and that of digital asset management. On the one hand, the partners want to create more transparency in the crypto market, which is still new and relatively unknown for institutional investors. On the other hand, the qualitative rating should give investors security about the know-how of the fund providers in the management of this asset class.

“In the first step, crypto values such as Bitcoin or Ether will probably find their way into multi-asset strategies, after the inclusion of illiquid assets, among other things, one can speak of ‘multi-asset 4.0’. Many investors are already indirectly already today invests in Bitcoin without knowing it – for example, if they hold shares of Tesla, MicroStrategy or the parent company of Twitter, Square, in their portfolio “, says Alexander Scholz, Managing Director of TELOS GmbH.

The expertise of TELOS as an established rating agency, even in complex fund products, and the in-depth expert knowledge in the field of crypto assets from DLC Distributed Ledger Consulting should complement each other: “We take on the role of technical specialists in the cooperation and also advise on innovative incentive models for digital assets. Specifically, for example, we carry out smart contract audits of the tokens in a fund and in this way significantly increase security for the respective asset manager and, of course, the investor,” says Dr. Sven Hildebrandt, who was employed by a capital management company before DLC was founded.

Both cooperation partners assume that the universe of crypto funds, which is attractive for institutional investors, will increase exponentially. As market participants understand the asset class and its attractiveness in the overall portfolio context (correlation effects, improvement of the Sharpe ratio), questions about practical portfolio implementation and risk management will come to the fore, especially when choosing the right investment product and asset manager.

carnival mask decorated with pink flower

Whistleblowing Is Getting Popular

Read, Whistleblowing

Whistleblowers, i.e. mostly anonymous tipsters who report irregularities to supervised companies, dubious providers or market practices, have developed into an important source of information for the Austrian Financial Market Authority (FMA).

In 2020, 278 reports were submitted via the whistleblower platform on the FMA website, a new record since the system was introduced in 2014, and an increase of 57% in the past five years alone. Around nine out of ten reports prove to be relevant for supervision. Of the 245 reports that actually affected the FMA’s area of responsibility, around half related to investment fraud (120) and unauthorized business operations (9), i.e. the provision of financial services requiring a license without the required authorization. Almost a third (77 reports) suspected misconduct at banks, only four concerned insurance companies and pension funds. 19 related to the securities business, 15 related to suspected money laundering.

“Our web-based whistleblower platform guarantees whistleblowers technically absolute anonymity. The information is encrypted cryptographically, so it is not possible for us or for the law enforcement authorities to technically identify the informant, “said the FMA Board of Directors, Helmut Ettl and Eduard Müller:” This creates trust and security, and is one of the main reasons why this information channel is becoming more and more popular. ”At the same time, an anonymized, equally secured mailbox enables communication between the authorities and the whistleblower, if they allow it.”

“Our whistleblower platform is such an important – often preventive – instrument in the fight against investment fraud and dubious market practices. Abuses can often be recognized early, and damage can be limited or completely prevented. It makes a valuable contribution to protecting consumers, investors and creditors,” wrote Ettl and Müller.

Two thirds of the indications of investment fraud already concern offers in connection with crypto assets and so-called virtual currencies, with sales being carried out via dubious or criminal online trading platforms on the Internet, and advertising is often via social media such as Facebook, WhatsApp, TikTok or Telegram. In addition to the distribution of fraudulent crypto assets, the criminal trade in virtual currencies continues to increase. On the dubious trading platforms are in particular financial contracts for differences (CFDs), foreign currency trading (FOREX) or binary options as well as supposedly automated trading with such alleged investment products.

The offer of binary options to small investors is prohibited in the EU, that of CFDs is severely restricted by regulations. A third of the reports of investment fraud related to fraudulent offers with traditional investment products such as stocks or gold as well as various forms of advance fraud.

Results

Whistleblower notices led to seven investor warnings, 42 reports to the public prosecutor’s office and a large number of official proceedings by the FMA as well as criminal convictions in 2020, reports FMA.