To help you better prepare for the Agora Conference | Crypto Strategies, we have assembled the following academic papers, research notes, and other educational resources published by our speakers:
LibertyRoad Capital | January 2022
This research paper aims to guide a potential institutional investor into why and subsequently how an allocation into Bitcoin should be made. The case is strong to include Bitcoin in institutional portfolios. Leaving aside arguments such as digital gold, inflation hedging, store of value, and medium of exchange which are all well-trodden paths and which I will not deal with here. Rather I want to concentrate on the asset protection and portfolio enhancement properties of Bitcoin, which are of prime consideration to Institutional investors.
Clocktower Group | January 2022
Clocktower Group’s Strategy Team posited in its May report that the monumental ascent of Bitcoin - and cryptocurrencies more broadly - has been largely driven by macro factors, such as the abandonment of monetary/fiscal orthodoxy, increased wealth inequality, inter-generational angst, the gamification of financial markets, and a degradation of trust in centralized institutions. In the last year, crypto has firmly entrenched itself as the high beta, risk asset of a new generation of investors. In the “Digital Asset” ecosystem – a catchall term to describe the broad spectrum of cryptographic tokens – Millennial and Gen Z investors have found an escape from the sovereign monetary system, a disruptive technology with the potential to disintermediate powerful incumbents, close-knit digital communities bootstrapped by memes and, of course, hyper-volatile assets with asymmetric growth potential. What lures the marginal entrant to the space varies. In the grip of a manic bull market, “number-go-up” economics is sufficient for most. The imminent reversion to fiscal and monetary orthodoxy may soon challenge many of these popular narratives. But crypto has progressed in recent years, and is no longer the sole domain of speculators, cybercriminals, libertarians, and “crypto bros.”
Campbell R. Harvey | Duke University | April 5, 2021
Our legacy financial infrastructure has both limited growth opportunities and contributed to the inequality of opportunities. Around the world, 1.7 billion are unbanked. Small businesses, even those with a banking relationship, often must rely on high-cost financing, such as credit cards, because traditional banking excludes them from loan financing. High costs also impact retailers who lose 3% on every credit card sales transaction. These total costs for small businesses are enormous by any metric. The result is less investment and decreased economic growth. Decentralized finance, or DeFi, poses a challenge to the current system and offers a number of potential solutions to the problems inherent in the traditional financial infrastructure. While there are many fintech initiatives, we argue that the ones that embrace the current banking infrastructure are likely to be fleeting. We argue those initiatives that use decentralized methods - in particular blockchain technology - have the best chance to define the future of finance.
Campbell R. Harvey | Duke University | May 31, 2022
We provide practical insights for investors seeking exposure to the growing cryptocurrency space. Today, crypto is much more than just bitcoin, which historically dominated the space but accounted for just a 21% share of total crypto trading volume in 2021. We discuss a wide variety of tokens, highlighting both their functionality and their investment properties. We critically compare popular valuation methods. We contrast buy-and-hold investing with more active styles. We only deem return data from 2017 representative, but the use of intraday data boosts statistical power. Underlying crypto performance has been notoriously volatile, but volatility-targeting methods are effective at controlling risk, and trend-following strategies have performed well. Crypto assets display a low correlation with traditional risky assets in normal times, but the correlation also rises in the left tail of these risky assets. Finally, we detail important custody and regulatory considerations for institutional investors.
perfORM Due Diligence Services | May 17, 2022
The debate around self-custody versus using a third-party custodian (sometimes classified as ‘qualified’) for investment managers looking to custody digital assets will continue. That debate no longer exists in traditional asset investing, as very few would now consider self-custody a feasible and sensible option. And yet, for digital assets, self-custody is an option and is often supported by dedicated third-party technology firms.
Fireblocks
In this white paper, we’ll walk you through everything you need to know about sub-custody and direct custody in the digital asset space to help you make a decision about what is best for your organization. But first, it’s important to understand exactly what sub-custodians do, and how this carries over into our industry.
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