Federico Brokate, Global head of business development at 21 Shares, breaks down the shifting dynamics behind Bitcoin’s recent performance, explaining that market structure has changed since last October as leveraged positions were forced to unwind, creating selling pressure and price volatility. Despite that turbulence, he notes growing interest from professional investors, with billions flowing into Bitcoin ETFs and total assets still near peak levels signaling strong conviction across institutional, retail, and crypto-native participants. He also highlights how macro themes like artificial intelligence are influencing sentiment, as investors reassess software-driven assets alongside tech giants such as Microsoft and Amazon. On the product front, the firm is expanding its U.S. lineup with new crypto ETF strategies ranging from spot trackers to leveraged and alpha-focused offerings. Looking ahead, he expects a supportive regulatory backdrop from the Securities and Exchange Commission and growing momentum behind tokenization, pointing to initiatives discussed by Larry Fink of BlackRockand digital payment integrations explored by Facebook across platforms like Instagram and WhatsApp all signaling accelerating innovation that could reshape global financial markets.
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Well joining me live this morning is Federico Brokate Global, head of business development at 21 Shares.
Federico, great to have you back.
Thank you so much for joining me.
Thanks for having me, Remy.
It's great to be here.
And when you think about the performance of Bitcoin in the past year and even year to date, we are looking at quite the shift.
So you mentioned as point number 2 of your three points about how the structure.
Has changed since last October.
So for the layperson out there, what does that mean?
That means that people that were taking margin out to continue buying more and more Bitcoin were now forced to sell some of those positions down.
And so that leverage that we saw in the market, which basically meant there was additional lending going on in the background of some of these purchases, is removed.
And so as you sell down some of those positions, we see selling pressure forcing the prices going down.
Yeah, and we continue to hear about institutional adoption as well as the maturity of this market compared to past cycles.
So what are you actually seeing?
Yeah, it's a great question.
And actually one of the things that I love talking about the most because despite the price action, we've actually seen a lot of interest, especially from more professional investors over the last couple of months.
When it comes to intermediaries, whether they're wealth platforms, the wirehouses or RAs.
Across the country, uh, a lot of them are looking at this price action as a good opportunity for their end clients to actually participate and come to the market for the first time.
Just as recently as this week, we've seen over $2 billion in inflows into Bitcoin ETFs despite trading around 65 million, uh, or 65,000.
So, certainly there's a lot of intent and appetite from the market, and I think there's a lot more capital that could come, uh, and benefit from this price moment.
And when it comes to the divergence in terms of trading between the institutional, professional, as well as retail investors, what's really happening?
What is the data looking like right now?
Yeah, it's a great question.
So ETF holders have predominantly held throughout the volatility.
If you look at N&A across the Bitcoin ETF complex, we're around $53 billion in total assets since the launch of these products, that's about 85% of the all-time highs that we saw for N&A and ETFs.
So really what that tells. me is the majority of investors know that there's volatility when entering this asset class and are comfortable riding this cycle through the next, hopefully uptick in prices.
Uh, at the more retail side and the more cryptoative side, we're actually seeing similar trends in, in on-chain data.
Uh, and we're seeing more accounts that hold over $10,000 worth of Bitcoin, uh, popping up on on-chain every single day.
And so what that tells me is that there's a lot of conviction both in the crypton native side and the more retail trading side, as well as the more professional investors right now.
Yeah, and on this Thursday morning, a lot of eyes are on artificial intelligence, in particular earnings, and you mentioned some of the disruption and how that is affecting some key names in the tech sector.
So how is that affecting crypto?
It's a great question.
I think right now there's a view across investors that software companies that could potentially be disrupted by AI are unfavorable or they're out of favor.
Uh, and if you think about Bitcoin and crypto more broadly, at the very, very core of it, it is a software.
It is a few lines of code.
Uh, and so I think it's getting looped into a lot of these conversations that we're having around companies like Microsoft and Amazon, and what their remotes are in a world where AI, uh, is so as powerful as we've seen these last couple of months.
Yeah, and before I let you go, we are fast approaching the opening bell.
I do want to ask you about your recent launches in terms of products.
So what is the strategy here and how does this fit into the overall outlook?
Yeah, look, we're really excited about expanding our US product footprint in particular.
Uh, we recently launched our SUI crypto ETF.
You mentioned, uh, and, and it marks over 10 crypto ETFs that we have in the US market today.
And our product strategy has really diverged in the sense of the types of strategies that we're bringing to market.
We have spot trackers like the SUI and the Bitcoin products.
We have index products levered and soon to be an alpha strategy as well for the US market.
And finally, before I let you go, one thing I do want to ask you about is the regulatory outlook, because here on Wall Street we're paying attention to what comes out of the nation's capital.
So what do you expect and what's realistic?
Well, the first thing regarding regulation, I think it's continued to be supportive of, of our market broadly.
Uh, if you look at the announcement from the SEC last week, they're basically classifying, um.
Of money market funds just like they are for the rest of crypto in terms of tokenized, uh, real world treasuries.
Uh, and so what we've seen from Washington is continued support, uh, and more, uh, infrastructure around the asset class as a whole.
And regarding tokenization, that is a key theme that we're watching.
So when it comes to that innovation both in the US as well as overseas, what can we expect?
Yeah, we've seen companies like Facebook announce already that stablecoins are going to be trading or or available on Facebook, uh, you know, Instagram, WhatsApp, which is incredible news.
We've seen conversations led by Larry Fink and BlackRock around the opportunity to tokenize all real world assets, including most recently their, uh, entire ATF book.
Uh, which would be really exciting to see on chain.
Uh, so there's a lot of momentum.
I think there's a lot of excitement about what tokenization could be, especially from an operational scale perspective, uh, and we're excited to see how that disrupts financial markets globally.
Well, that is something we'll continue to monitor.
So thank you so much for joining us today, Federico, and thank you so much for your perspective.
Thank you.