| Welcome to 2025 Happy New Year to all our readers and welcome to the first newsletter of 2025.
We start the year, much as we ended it, with all things digital.
This week we bring you two stories on the pervasive presence of artificial intelligence (AI) in financial services, and a third on the inexorable rise of cryptocurrencies.
The latter piece from Dovile Silenskyte, Director, Digital Assets Research at WisdomTree, notes that the total market capitalisation of cryptocurrencies reached USD3.4 trillion, surpassing listed real estate (USD1.9 trillion) and broad commodities (USD1 trillion), and rivals other well-established categories such as emerging markets small cap equities (USD2.8 trillion), high yield bonds (USD2.8 trillion), and inflation linked bonds (USD2.6 trillion).
There is no ignoring the impact of the return of Donald Trump to President in the US as major boost for digital assets.
His election campaign was marked by deregulation promises and an end to what Trump referred to as the incumbent administration’s "anti-crypto crusade", which saw digital currencies and their associated exchanges rally.
Bitcoin reached an all-time high on the night of the election passing USD75,000, and in the week since rocketed to USD88,000; a gain of 27 per cent.
Silenskyte says this presents real opportunities for investors – many of whom remain sceptical about crypto’s longevity – to take advantage of spot bitcoin exchange traded products (ETPs) which track the performance of various cryptocurrencies.
For example, GraniteShares 3x Long Coinbase Daily Exchange-Traded Product (ETP), closed the session up 93.27 per cent on the day of Trump’s victory.
Silenskyte argues: "For investors dismissing the sector as a passing trend, it may be worth reevaluating their stance in light of the evidence."
Turning to AI, this week we speak to Oliver Johnson, Chief Revenue Officer at SimCorp, who says more asset owners and managers are taking advantage of what the technology has to offer.
The platform provider has seen more buyside participants adopt Generative AI to move from simple administrative tasks to suggesting how to rebalance portfolios.
Meanwhile, Olivier Fines, CFA, Head of Advocacy for EMEA at CFA Institute, tells us that AI is changing the face of pensions management.
"AI can add more than just operational efficiencies. From onboarding new members to account management, plan governance, investment management, and decumulation strategies, AI and machine learning can play a positive role in addressing key issues facing the pensions industry."
Yet both Johnson and Fines are keen to reassure those working in these industries that they are not set to be replaced. Rather machines are there to augment processes and make life easier.
This view is not shared by Elon Musk, CEO of Tesla and social Media platform X and newly appointed leader of Trump’s Department of Government Efficiency and vociferous AI pioneer.
Last year Musk made it clear that in the future "probably none of us will have a job… AI and the robots will provide any goods and services that you want".
However, he did add: "The question will really be one of meaning – if the computer and robots can do everything better than you, does your life have meaning?" he said. "I do think there’s perhaps still a role for humans in this – in that we may give AI meaning."
Let’s hope so…
Gill Wadsworth, Editor, Institutional Asset Manager
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