The Wolf Den #1013 - Consider These Alternatives
There are plenty of way to get exposure to crypto.
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In This Issue:
Consider These Alternatives
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
ETH ETFs Launch Today - Keep Track Of Inflows Here
The Market Does Not Believe Trump Will Make A Huge Announcement
Gary Gensler Is Gone With The Wind—I Hope
93% Of Bitcoin Addresses Are In The Money
Bitcoin As A Reserve Asset? Trump's Huge Plan to Boost Bitcoin to $1,000,000 | Macro Monday
Consider These Alternatives
All content in this newsletter, including past and future editions, is intended solely for entertainment and educational purposes. This has always been my approach and will remain so. There is NO financial advice here—now, we can begin.
For the past year and a half, I have been captivated by COIN, which I have shared multiple times in this newsletter. Full disclosure: I am an investor. I covered BASE the day it launched, the ongoing Coinbase vs. SEC lawsuit, Coinbase’s involvement in ETFs, all their quarterly reports, and everything in between. Each time I wrote about Coinbase, I reached the same conclusion: I am really bullish on this stock.
This got me thinking: For the longest time, I believed there were only a handful of alternative forms of exposure to crypto for investors. Because of this, I usually avoided the topic, as I couldn't confidently recommend what was out there. But that simply isn't the case anymore. Today, I'm going to give a rundown of some of the most popular alternative forms of exposure to this space, which are equities you can invest in anytime (during legacy trading hours).
First up, we have to start with COIN.
In my opinion, Coinbase is the purest play on the crypto market, essentially acting like an index for the entire industry, and nothing else comes close. Coinbase has aggressively expanded beyond its roots of just being a safe place to buy and sell crypto and proved to have the soundest structure when exchanges were stress-tested back in 2022.
Coinbase was tapped on the shoulder by Wall Street to act as the custodian of choice for eight of the eleven Bitcoin ETFs, which it described as follows: “Winning those mandates was a rigorous, competitive process that delivered a clear message: the world’s largest institutions trust Coinbase to keep their clients’ digital assets safe because of the quality, security, and track record of our institutional custody solutions.”
Coinbase trading below $300 is a steal. The platform has become the super-app for everything crypto, is aggressively expanding beyond its roots, and is going global. There’s something for everyone on this platform, and when the SEC gets its act together or loses, whichever comes first, it’s clear skies ahead. Earnings will be reported on August 1st.
Next up is HOOD.
In March of this year, I began to seriously reconsider Robinhood in a new light. When the company announced its Gold Card, I took a closer look at what they were building—and I must say, it’s impressive.
The Robinhood story has been a bumpy ride, to say the least. However, there's significantly less work needed to repair the company’s reputation than there was just a few months ago. I know this because of the sheer amount of retirement money coming into the platform—the ultimate signal of trust. The CEO, Vlad Tenev, has been sharing some pretty dorky charts that illustrate this turnaround.
I’ve covered the business model of Robinhood extensively, but where the flywheel really starts to spin uncontrollably is when crypto heats up. During these times, crypto trading makes up a disproportionate share of Robinhood's revenue, thanks to its strong retail capture. Sitting at about one-third the size of Coinbase, Robinhood back in March captured 42% of what Coinbase did the entire quarter in crypto notional volume. Robinhood is a comeback story poised for success in all markets, especially crypto. Earnings will be reported on August 7.
Next is MSTR.
MicroStrategy is essentially a leveraged Bitcoin play. MicroStrategy takes on debt to buy Bitcoin by issuing corporate bonds or convertible notes, raising capital from investors. This debt is then used to purchase additional Bitcoin, leveraging the company's balance sheet to increase its holdings. This strategy allows MicroStrategy to expand its Bitcoin investments without using existing cash reserves, reflecting its commitment to treating Bitcoin as a core asset.
Since the company first invested in Bitcoin, it has consistently maintained this strategy over the years, demonstrating a high level of reliability—there is value in that. As of June 20, the company owns 226,331 BTC, valued at $15.2 billion with Bitcoin trading at $67,392. MicroStrategy is so far ahead of any other company in its Bitcoin acquisition strategy that the gap is not even close.
MicroStrategy has yet to be included in the S&P 500, despite surpassing the size requirement. Some theories suggest that if it were added and Bitcoin experienced a strong rally, the S&P 500 might be forced to sell shares of other companies to continuously reallocate into MicroStrategy. This could create an ‘infinite buying loop’ where MicroStrategy uses the inflows to buy more Bitcoin, potentially creating a Bitcoin black hole effect. While this is speculative, MSTR investors have good reasons to feel optimistic as they head into this bull run. Michael Saylor is unmatched.
Next is MARA.
Marathon Digital Holdings is a pioneering player in the public Bitcoin mining sector, having made its debut on the stock market all the way back in 2012 at a split-adjusted opening price of $53.04. Last time I checked, Marathon was the largest miner in the U.S. in terms of hash rate, currently sitting at 31.3 EH/s.
Personally, I avoid investing in Bitcoin mining stocks because it's too time-consuming to analyze and compare the financials of each company—like RIOT, MARA, HIVE, HUT, and CLSK—just to find the best investment with minimal added risks. Unlike Bitcoin itself, which isn't affected by weather, local regulations, operational challenges, fluctuating energy costs, or intense competition, mining stocks face all these additional complexities.
Next is BITX.
Taken straight from Volatility Shares, “The 2x Bitcoin Strategy ETF (Ticker: BITX) is a leveraged Bitcoin-linked ETF that seeks to provide daily investment results, before fees and expenses, that correspond to two times (2x) the return of Bitcoin for a single day, not for any other period.”
What’s important to note about this option is that BITX experiences decay, often referred to as ‘compounding decay.’ This phenomenon occurs due to the daily rebalancing of the leveraged ETFs and can lead to performance differences from what investors might expect based on the underlying index.
Given Bitcoin's inherent volatility, BITX should be used exclusively for short-term trading by experienced professionals. Under the right conditions, such as anticipating a major announcement from Trump later this week, BITX can be a powerful tool. While crypto leverage is difficult to access in the U.S., you can further amplify your position by trading options contracts on BITX if you're seeking higher leverage. Proceed with caution and be aware of the risks involved!
That concludes my analysis of alternative investments. What’s key to remember is that none of these options should replace the strategy of accumulating Bitcoin and storing it securely in cold storage for at least one full market cycle, if possible. These alternatives might offer higher yields, but they require thorough research and alignment with your investment strategies and convictions.
Since you made it this far, I’ll share some price targets. These are just fun predictions, liable to change anytime. This is for entertainment purposes only.
COIN is going +$800 this cycle.
HOOD is going +$40 this cycle.
MSTR is a wild card; it may go over $3,500 (which means a split) this cycle.
MARA + BITX are going to… I have no idea.
As for Bitcoin, $100,000 isn’t thinking big enough.
Bitcoin Thoughts And Analysis
Bitcoin continues to test the center of the range as support. Bulls really want this area (dashed line) to hold, as it indicates price is likely to continue trading in the top half of the range. I assume that all eyes will be on ETH today.
Altcoin Charts
The Ethereum chart actually looks stellar, even in light of the expectations, which I will lay out below. Price is testing the center of the red range as support and Trading Alpha has sustained bullish dots. We had the breakout from the blue descending bull flag and a retest as support. All good.
But I have concerns.
It is hard to expect a good performance from the ETH ETFs to start, but this market tends to do exactly the opposite of what you expect.
The rationale is that we see a major sell off, like we did at the beginning with the Bitcoin ETFs. Why? Not because it is a "sell the news" event. The reason is... Grayscale.
When the BTC ETFs launched, GBTC fees were 1.5% - 5x the average competitor. Ridiculous. So we saw billions of dollars in immediate and sustained selling pressure, sending price from $49,000 to below $39,000... before going up to $74,000.
Grayscale set their fees for ETHE at an astounding 2.5%. ETHE has $10B in AUM, which you can expect to largely be sold into the market. That is 10X the fees of BlackRock et al. ETH is a smaller asset than BTC, so this is a huge amount of potential selling pressure relative to the market. Am I bearish? No. Am I looking to potentially buy ETH much cheaper before demand kicks in? Yes.
It may not happen.
Legacy Markets
Stocks are mixed as traders anticipate key tech earnings reports. US equity futures edged lower after a previous rise in the S&P 500, with companies representing 29% of its market value reporting this week. Focus is on tech giants like Tesla and Alphabet, with analysts particularly interested in Tesla’s robotaxi service and Alphabet’s AI and Google Cloud revenue. European markets showed mixed performance, with tech and travel gains countered by declines in chemicals and mining. The US dollar and Treasuries remained steady, and oil hovered near a six-week low.
Key corporate highlights include:
Porsche shares dropped due to lowered outlook amid an aluminum parts shortage and slow sales in China.
Cybersecurity startup Wiz Inc. rejected a takeover bid from Alphabet Inc., opting for an IPO instead.
Banco Sabadell SA's profit increased in Q2, aiding efforts to prevent a takeover by BBVA SA.
Toyota plans to buy back ¥806.8 billion ($5.2 billion) of its stock from Japanese banks and insurers.
The yen strengthened as traders adjust for the summer, with Bank of Japan officials divided on raising rates. In US politics, Kamala Harris has enough delegates to secure the Democratic presidential nomination.
Key events this week:
Eurozone consumer confidence, Tuesday
US existing home sales, Tuesday
Alphabet, Tesla, LVMH earnings, Tuesday
Canada rate decision, Wednesday
US new home sales, S&P Global PMI, Wednesday
IBM, Deutsche Bank earnings, Wednesday
Germany IFO business climate, Thursday
US GDP, initial jobless claims, durable goods, Thursday
US personal income, PCE, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.1% as of 9:58 a.m. London time
S&P 500 futures fell 0.2%
Nasdaq 100 futures fell 0.4%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index rose 0.4%
The MSCI Emerging Markets Index rose 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro fell 0.1% to $1.0876
The Japanese yen rose 0.7% to 156.01 per dollar
The offshore yuan rose 0.1% to 7.2879 per dollar
The British pound was little changed at $1.2922
Cryptocurrencies
Bitcoin fell 1.9% to $66,867.54
Ether rose 0.9% to $3,521.1
Bonds
The yield on 10-year Treasuries declined two basis points to 4.24%
Germany’s 10-year yield declined two basis points to 2.47%
Britain’s 10-year yield was little changed at 4.16%
Commodities
Brent crude rose 0.2% to $82.59 a barrel
Spot gold rose 0.3% to $2,404.56 an ounce
ETH ETFs Launch Today - Keep Track Of Inflows Here
Farside Investors has created an Ethereum inflow chart to complement their Bitcoin chart, which I will be referencing a lot in future newsletters. The approved issuers include BlackRock, Fidelity, Bitwise, 21Shares, VanEck, Invesco, Franklin Templeton, Grayscale's converted Trust, and Grayscale Mini.
The Market Does Not Believe Trump Will Make A Huge Announcement
This could explain why Bitcoin's price has remained relatively stable since rumors began circulating that Trump intends to declare Bitcoin a strategic reserve asset if elected president. Admittedly, the market for this announcement is small, with only $100,000 in bets, but I expect it to grow as we approach the conference, where Trump is scheduled to speak later this week. If the current 20% chance accurately reflects the mainstream's odds of this announcement, it suggests that the rumor is far from being fully priced in—perhaps only about one-fifth, if even that.
Since the rumor dropped, the price of Bitcoin has increased by about $6,000, I can only imagine what the price does if this announcement is made.
Gary Gensler Is Gone With The Wind—I Hope
10x Research founder Markus Thielen is making the prediction that Gary Gensler will resign within the first two months of 2025, following a Trump victory, due to the fact that the SEC chair typically resigns when a new administration enters the White House.
“With Joe Biden dropping out of the US Presidential race, no credible candidate can seriously challenge Donald Trump. The November election appears to have been decided without a single vote. For Bitcoin, a pro-crypto administration will enter the White House.”
Even better, Trump’s running mate, JD Vance has called Gary Gensler, “a candidate for the worst person to regulate securities.” He continues, “He is way too political in his regulation of securities. He has it backwards when wanting to ban useful tokens and seemingly not caring about those without specific utility.”
The pressure for Gary to resign is coming from some of the highest places in politics. We know his days are numbered.
93% Of All Bitcoin Addresses Are Profitable As Miners Aggressively Accumulate
Nothing makes me happier than seeing the percentage of Bitcoin holders in profit rise alongside its price. Currently, 93% of holders are in profit, which this article attributes partly to Bitcoin miners aggressively accumulating instead of selling. However, I believe this is more due to substantial ETF inflows, which have been remarkable over the past week and could potentially be surpassed this week. We're just one major announcement away from this number reaching 100%.
Bitcoin As A Reserve Asset? Trump's Huge Plan to Boost Bitcoin to $1,000,000 | Macro Monday
Join Dave Weisberger, James Lavish, and today's guest host, Noelle Acheson, author of Crypto is Macro Now newsletter & partner at Triple Crown Digital, as we break down what's happening in macro and crypto!
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.