An Appealing Case for a Rally
SEC Deadline Looms
Back in August, a court sided with Grayscale, accusing the SEC of acting in an “arbitrary and capricious manner” when it denied their spot Bitcoin ETF application. Since then, the SEC's options have narrowed to the following:
- Appeal the court's decision within a 45-day window.
- Develop a new rationale for rejecting spot Bitcoin ETFs.
- Consider revoking existing approvals for futures-based ETFs as justification for denying spot ETFs.
- Conform to the judicial ruling by approving the spot Bitcoin ETFs, thereby avoiding further legal issues.
As tomorrow marks the end of the SEC's appeal window, the regulatory landscape is on the cusp of significant change. Should the SEC forgo an appeal, the court is expected to outline the subsequent steps, potentially instructing the SEC to greenlight Grayscale's application.
Market Implications
The Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust (ETHE) have seen their discounts to Net Asset Value (NAV) narrow. Despite this trend, both trusts still trade at a significant discount to their respective NAVs, a situation we still view as offering an enticing risk/reward profile for investors.
Reports you may have missed
CORE STRATEGY: REMAINING TACTICALLY CAUTIOUS, TGA RUNDOWN + EARLY JAN FLOWS COULD PRODUCE NEEDED SPARK In our view, this cycle is far from over. However, until bonds find a bottom and the USD peaks, it’s prudent for more tactically-minded crypto investors to remain nimble and ready to capitalize on opportunities once a trend reversal is confirmed. While this could happen as early as next week due to early-January inflows, additional...
CORE STRATEGY: FOCUS ON MAJORS, KEEP HEAD ON SWIVEL UNTIL BONDS/DXY RELENT We think it's right to expect a bounce into year-end, potentially starting tomorrow if PCE data comes in soft. In our view, this cycle is far from over, but until bonds find a bottom and the USD tops, it’s likely best for the more tactical investor to stay nimble and prepared for opportunities upon confirmation of this trend...
CORE STRATEGY Our base case assumes that the macro environment will remain accommodative for crypto through year-end. However, in light of recent market action, we remain alert for signs of a local top (not a cycle top). That said, it is difficult to justify a risk-averse stance at this stage and think it is right to lean into this altcoin rally. Source: TradingView, Fundstrat Source: TradingView, Fundstrat STRONG DOLLAR +...
Today's employment numbers broadly met investor expectations, placating a nervous market. Risk assets rallied, aligning with our view that yesterday's de-risking would not persist through today. Yields continued their downward trajectory, and Fed funds futures also declined, reflecting the market's adherence to the Fed's dovish messaging. Yields Falling: Source: TradingView Fed Funds Futures Showing More Cuts: Source: TradingView Oil prices nearing YTD lows likely assisted in alleviating near-term concerns about...
