A Moment In History

The US Pivots to Pro-Crypto

Hello Investors,

The last 2 weeks were huge for crypto - even if the price does not reflect that properly, yet.

Spot Ether ETFs Approval

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The biggest news was around the approval of spot Ether ETFs in the US.

A single X post, highlighting the chance increase, resulted in a +20% move in one day - and a market cap increase of $100 billion.

The post was right, and on May 23 the SEC approved the fillings of major firms such as VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise.

This was ‘only’ the 19b-4 approval, and these ETFs are not traded yet. For trading, we need the approval of S-1 as well.

However, the SEC requested expedited fillings, and most of the applicants already submitted the first versions.

This could mean the approval, and with that, the trading will happen sooner than expected.

Why is this important?

The BTC exchange-traded products hold over 1 million bitcoin.

That’s 7.5% of the circulating supply in 4 months with the majority (80%) of these holdings from the US ETFs.

We do not expect ETH to experience the same inflows. But this will bring it the needed attention and over a longer time frame, the inflows from both institutions and retail.

Presidential Candidates Making a U-Turn

The 180-degree turn did not happen only on the ETF front.

Suddenly, both presidential candidates realized there are over 50 million US crypto users/voters.

Donald Trump is the first presidential nominee that embrace cryptocurrency donations.

He wants to “stop Joe Biden’s crusade to crush crypto, ensure the future of crypto will be made in the USA”*, veto the creation of CBDC, release Silk Road founder Ross Ulbricht*, and more.

He gave this speech while the crowds were chanting “End the FED”.

Trump also has his own NFT collection and a wallet with over $10m in crypto holdings - mainly meme coins and ETH.

The other candidate, Joe Biden, also wants to catch up with the voters.

Recently he decided to stop with veto promises on crypto bills (see below), hire a meme manager, post a crypto-friendly profile picture, and more.

Passing of Crypto Bills

Source: Google Maps

The FIT21 crypto bill, which proposes giving the CFTC primary control over cryptocurrencies, has passed the US House and now heads to the Senate.

This would bring clarity into who is deciding whether a specific cryptocurrency is a security (and regulated by the SEC), or a commodity (regulated by the CFTC).

A day after this vote, another bill passed. This one bans the FED from issuing the Central Bank Digital Currency (CBDC) - this might seem anti-crypto, but the broader consensus is rather in favor as CBDC could allow money printing.

Lastly, there is an active SEC accounting bulletin, SAB-121, which policymakers are trying to repeal. Oversimplified: SAB-121 is an SEC rule designed to prevent banks from providing custody of crypto assets.

President Biden initially wanted to veto any repeals or changes. However, bipartisan support in the House and Senate for repealing SAB-121 has been cited as a reason not to veto.

The recent passage of crypto bills, even if they become law in months, brings a new era in how politicians view the industry.

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How does this fit together?

AI-generated

The shift from policymakers and presidential candidates marks a significant milestone in terms of crypto legitimization and further adoption.

Recently, the NYSE announced interest in crypto futures and CME in crypto spot trading. If the legislation is in favor, these could bring crypto next to growth stocks.

While the price increased, these changes are not fully priced in and it will be another major macro catalyst to fuel the upcoming bull market cycle.

Other macro catalysts are:

  • Liquidity cycle - peak around mid-2025,

  • Election - 2024/2025,

  • Bitcoin halving - done,

  • Institutional exposure through ETFs - BTC approved, ETH in a few weeks

  • Technology adoption - deployment of major use cases in RWA, Gaming, and Consumer apps expected in 2025

How do I play this?

I see smart chains, such as ETH, Avax, or SOL, still undervalued. These are the enablers of the new use cases, and to me represent a great risk:reward ratio.

Having said that, I’m trying to buy ETH every time it gets close to the $3,000 levels.

While it is closer to 4k levels now thanks to ETF approval, I expect more volatility and slight drops before the real inflows happen. Once ETH gets closer to $3,500 I will start my probably last DCA before the market gets out of hand.

It is possible it will never happen and that is also fine, ETH is my biggest crypto position.

Meanwhile, I believe Avax around $35-36, and SOL $150-160 still represent decent entry points. I increased my position in the last 2 weeks by rotating from the US banking stocks - still bullish on banking, but expect higher returns on Avax & SOL.

I think we are in the last few weeks of the accumulation phase where we can still get good prices. After summer (early Q3) it might be too late.

I may be wrong, anything can happen - remember COVID?… So DYOR and consider your own risk profile as always.

If you want to get help with crypto, I’m about to launch a 1:1 consultations. You can get on the waitlist here.

Good luck!

Matt Curda


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