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In This Issue:
A Solana ETF?
Bitcoin Thoughts And Analysis
Legacy Markets
Coinbase Sues The SEC And FDIC
The SEC Takes Another ‘L’
Another ETF Filed
Arch Public’s Algorithms Are Creating A Retail Renaissance For Investors
Crypto Dead? Not So Fast! Ethereum's Big Boom Ahead! 🌪💥
A Solana ETF?
WOW.
Yesterday’s newsletter was a bear porn monologue, moments before the markets injected us with a healthy dose of bull hopium when we needed it most.
Here’s a brief timeline of what unfolded.
My (yesterday) newsletter released at 6:30 AM EST.
At 8:01 AM Fox Business Reveals Coinbase is suing the SEC and FDIC.
At 9:06 AM VanEck announces they filed the first SOL ETF.
At 10:30 AM the Supreme Court rules against the SEC.
For reference (from yesterday):
The remainder of this intro will be about Solana. If you are seeking commentary on the other news events, they are covered in the news section below. Now for the goods.
For the record, let’s start here:
I've heard rumors that I'm a Solana bear. That's false. Solana is my third largest holding and the only coin I confidently discuss in this newsletter besides Ethereum and Bitcoin. Solana is at an earlier stage of its lifecycle and naturally has more to accomplish to catch up with Bitcoin and Ethereum. That said, anyone looking at a chart or metrics knows that Solana is an outperforming BEAST. That should go without saying.
December 28, 2022, I posted favorably about Solana. The high that day was $11.10.
There weren’t many other coins at this point in the bear market I was giving this benefit of the doubt to.
Now for the discussion on the ETF.
First up, I have to highlight this quote from Matthew Sigel at VanEck that came out a day before the news dropped. He served it up for my YouTube audience on a silver platter.
“See, I think when you read the language in the Ethereum 19 b4s about the decentralization characteristics that make Ethereum a commodity, you can basically substitute Solana for Ethereum in every sentence, and the truth still holds. There are also examples of commodity-based ETFs that do not have a futures market. So, you know, there may be a chance, like I said, it might surprise you.”
My response to his comment was that it essentially won’t happen under Gary Gensler’s current regime, and I still stand by that, though I would love to be proven wrong. I'm not 100% certain it won't happen under Gary; after all, we saw what happened with Ethereum. However, given the current facts, it doesn’t seem likely for Solana.
Now, everyone is speculating about the Solana ETF and whether Hester Pierce, if she were Chair of the SEC, would require a CME futures market. This quote from Matthew Sigel is highly relevant:
“If you recall, to satisfy the requirement for a regulated market of significant size, folks have been using the CME Futures Market. There was also talk of surveillance-sharing agreements between the relevant crypto exchanges and the listing exchange, like the Chicago Board Options Exchange (CBOE) or NASDAQ. Coinbase negotiated and signed those deals before the Bitcoin spot ETF came to market, but they were not put into effect. In the end, they used the futures market. If the exchanges are willing to sign similar surveillance-sharing agreements for, say, Solana, then perhaps that might be the market.”
We can debate endlessly about what happens if certain conditions are met, but the key point is that Solana will eventually get an ETF. It’s practically a done deal.
PolyMarket had the odds of an Ethereum ETF approval at 6% on May 6th. The only certainty in this industry is uncertainty and the odds against us. That said, there's a stark difference between Solana's current position and where Ethereum stood when its odds were 6%, or where Bitcoin was before its approval. Solana was labeled a security by the SEC in the Coinbase lawsuit and lacks a CME futures market. These factors may become irrelevant under a new regulatory regime, but they currently carry significant weight.
Will Solana become the asset that loses Biden crucial election votes? Doubtful. Is Solana on Trump’s radar to secure votes? Probably not. Will Trump care about Solana when in office? Maybe. I am skeptical of Solana’s ETF approval until the SEC undergoes a complete restructuring.
If BlackRock files, I might lean more toward an ETF approval happening sooner, but my thought process remains mostly unchanged. There are still roadblocks ahead; it's just a matter of how long it takes to clear them.
While this is good news, there's one downside that needs to be addressed—feel free to disagree. There are rumors of an investigation into Solana. So far, I haven't seen any evidence beyond hearsay, but the ETF application might provoke a reaction from Gary Gensler that the Solana community doesn’t want to see.
As for Gary Gensler's term, it extends until June 5, 2026. If Trump were elected, I imagine his term would be cut short, whereas with Biden, Gary would complete his term. Hence, this election matters significantly.
The Solana community should hope for Ethereum to achieve smashing success upon its ETF launch. If there’s an unexpected positive outcome, given Solana's strong performance this cycle, and if Solana secures an ETF before the end of the bull market, expect unprecedented excitement.
Yesterday morning, nobody thought a Solana ETF was imminent. Today, we're all talking about it. No two cycles are the same, and there are plenty of exciting turns ahead.
Solana is a rising star in the crypto sphere and a force to be reckoned with. It has carved its name in stone and still has ample room for growth. Every asset faces its own set of challenges, and Solana has the potential to overcome them. Even if an SEC investigation arises, I am not changing my long-term view—Valhalla awaits.
Solana wins.
* Yes, I watched the debate. No, I do not have the mental capacity today to attempt to unpack it for you in the newsletter.
Bitcoin Thoughts And Analysis
No reason to share a chart, we are exactly where we were yesterday!
Legacy Markets
US equity futures rose as investors’ focus shifted from the presidential debate to upcoming price data that may support the case for lower interest rates. Contracts on the S&P 500 and Nasdaq 100 advanced, suggesting a continuation of this week's rally on Wall Street, with both indexes on track for a third consecutive quarter of gains. The dollar remained steady near an eight-month high, following the debate where former President Donald Trump was perceived as the victor over President Joe Biden, increasing concerns about Biden's re-election chances. Treasuries retreated, paring gains from the previous session, as weak US economic data reinforced expectations that the Federal Reserve might cut interest rates this year to prevent a more significant economic slowdown.
Economists expect the Federal Reserve’s preferred inflation gauge, the core PCE Price Index, to show a decrease to 2.6% from 2.8%, marking its lowest level since March 2021, but still above the Fed’s 2% target. Fed Bank of Atlanta President Raphael Bostic continues to anticipate one rate reduction this year amid signs that inflation is declining. Swap markets are pricing in about 45 basis points of easing in 2024, equivalent to fewer than two rate cuts.
In corporate news, Nike Inc. shares sank 14% after the company's full-year outlook missed expectations. European stocks pared early gains, with France’s CAC 40 index falling 0.5% due to concerns about the fiscal outlook ahead of the parliamentary election. Investors remain cautious about French financial assets due to high event risks and low chances of significant fiscal consolidation. L’Oreal SA shares dropped on expectations of slower growth in the beauty market, while Puma SE and JD Sports Fashion Plc declined, tracking Nike's slump. Nokia Oyj shares rose after the Finnish company agreed to buy US-listed optical transmission equipment maker Infinera.
Asian equities climbed, with Japanese, South Korean, and Chinese shares among the top gainers. Japan’s Topix index is set for its highest close in 34 years. Meanwhile, India is expected to attract significant inflows as JPMorgan adds its government bonds to its emerging markets index, opening up a $1.3 trillion market to a broader range of investors.
In commodities, oil held in its narrowest trading range since 2021, awaiting US economic data that could set the tone for broader markets. Zinc reached its highest level in more than three weeks on speculation of Chinese production cuts, joining a broad advance for base metals. Gold is heading for a third consecutive quarterly gain, the best run since the pandemic-affected 2020.
Key events this week:
US PCE inflation, spending and income, University of Michigan consumer sentiment, Friday
Fed’s Thomas Barkin speaks, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.4% as of 5:44 a.m. New York time
Nasdaq 100 futures rose 0.4%
Futures on the Dow Jones Industrial Average rose 0.1%
The Stoxx Europe 600 rose 0.3%
The MSCI World Index was little changed
Currencies
The Bloomberg Dollar Spot Index fell 0.1%
The euro was little changed at $1.0705
The British pound was little changed at $1.2647
The Japanese yen was little changed at 160.68 per dollar
Cryptocurrencies
Bitcoin fell 0.1% to $61,351.59
Ether fell 0.2% to $3,433.75
Bonds
The yield on 10-year Treasuries advanced two basis points to 4.30%
Germany’s 10-year yield advanced one basis point to 2.46%
Britain’s 10-year yield advanced three basis points to 4.16%
Commodities
West Texas Intermediate crude rose 1.1% to $82.65 a barrel
Spot gold was little changed
Coinbase Sues The SEC And FDIC
The good news doesn’t stop at Solana. If VanEck hadn’t filed for a spot SOL ETF, this segment would have taken top priority.
Coinbase has recaptured the legal initiative and filed lawsuits against the SEC and FDIC, alleging non-compliance with Freedom of Information Act (FOIA) requests and seeking court orders for disclosure. The lawsuits claim regulators are attempting to stifle the crypto industry's access to banking, specifically using the term “Operation Choke Point 2.0” in the complaint. Specifically, Coinbase, filed FOIA requests seeking information from the SEC about its stance on Ethereum regarding its security status and other industry entities related to encryption as well.
But it gets better. Coinbase didn’t just target the SEC; the FDIC is also named in the complaint. Coinbase alleges that the FDIC issued “pause letters” to financial institutions regarding crypto activities in an attempt to cripple the industry. Here’s a killer quote: “This FOIA lawsuit seeks to bring to light the FDIC’s role in that unlawful scheme.” I don’t think anyone was expecting Coinbase to line up an attack on both the SEC and FDIC. Paul Grewal, Coinbase’s CLO, has an excellent thread detailing the main points Coinbase takes issue with.
The SEC Takes Another ‘L’
Yesterday morning, the Supreme Court issued a landmark decision that significantly restricts the SEC's ability to combat securities fraud, with potential wide-reaching implications for other regulatory agencies and our industry. In a 6-3 ruling, the justices determined that individuals accused of fraud by the SEC are entitled to a jury trial in federal court. This may seem obvious, but before this decision, the SEC used in-house hearings for these cases. The court found this practice violated the 7th Amendment, which guarantees the right to a jury trial, and rightly overturned it. Not only is this a win for future and pending crypto cases, but it's a win against administrative overreach and the SEC’s regulation by enforcement.
Another ETF Filed
Wall Street will create ETFs in any way they can to capture the flood of capital eager for crypto exposure. And bundling Bitcoin and gold is a great idea to attract boomers who favor hard assets. Once the third ETF hits the market, with Solana appearing to take an early lead among other contenders, expect all hell to break loose in the offerings that follow. The ETF market will serve up financial products like a Hibachi Buffet.
Arch Public’s Algorithms Are Creating A Retail Renaissance For Investors
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Crypto Dead? Not So Fast! Ethereum's Big Boom Ahead! 🌪💥
The crypto market is experiencing some fatigue, but it's far from over. Exciting developments are on the horizon, including the potential approval of the Ethereum ETF as early as next week, which could significantly impact ETH prices. Additionally, a major political event is coming up: the debate between Trump and Biden. The crypto community will be listening closely to see if either candidate addresses cryptocurrency. Join me and Simon Dixon, as we explore these pivotal moments and what they mean for the future of 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.