Some Quick Thoughts on ETH ETF, Regulation, and Updates on Recent Tactical Trade Ideas
On ETH Approval and Volatility
We expect a decision on the ETH ETFs today and are bullish on the prospect of approval. ETH open interest is well above all-time highs. Whichever way this breaks, expect some potentially whipsawing volatility. Our base case right now is that we are likely to see a bit of a rally and drawdown post-19b-4 approval, then a slow march higher into S-1 approval and listing.
What will be interesting post-approval is which assets are identified as next in line for an ETF. Our money is on SOL.
FIT21 was passed by the House yesterday on a bipartisan basis. This bill provides clarity around market structure and regulatory jurisdiction for the SEC and CFTC. This was yet another regulatory victory for crypto this week. We think that regardless of what happens, this 180-degree pivot from the Democratic party has created a bullish environment for crypto asset prices and is encouraging for the broader outlook for the industry in the US.
Tactical Trade Updates
Closing AKT – We did not get the follow-through out of AKT that we were looking for post-NVDA earnings, despite smashing new all-time highs. Thus, we think it’s right to cut this trade loose and perhaps revisit it next earnings ...Reports you may have missed
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...
INDICATIONS OF FROTH Given the violent nature of the past month’s rally, we have been vigilant for signs of a local top. It would be disingenuous to claim that some qualitative "top signals" are not flashing right now. XRP—which we noted as a possible election trade back in October—with only 1–2k daily active addresses (vs ETH's over 400k, source: Artemis), is ripping toward new highs while influencers take to TikTok...
