πŸš€ Bitcoin adoption continues

πŸ‘‡ 1) The SEC has approved the Bitcoin Spot ETFs as Gensler became the deciding vote. The two Republican Commissioners (Peirce and Uyeda) voted in favor, while the two Democratic Commissioners (Crenshaw and Lizarraga) voted against it. Leaving SEC Chair Gensler, a fierce crypto critic, as the deciding vote (votes: 3-2). While it was a close decision, the outcome cleared the path for broad crypto adoption for institutional players.

πŸ‘‡ 2) The applicants only recently amended their filings, removed the surveillance sharing agreement with Coinbase, and moved away from their previously stated mandatory requirement of an analysis regarding a market of significant size.

πŸ‘‡ 3) Instead, the SEC opted to rely on a comprehensive surveillance-sharing agreement with the CME. While the Grayscale Court decision provided cover for this move, it was not a done deal as many expected. I anticipated that SEC Chair Gensler would insist that the applicants enter a broader surveillance-sharing agreement with several exchanges.

πŸ‘‡ 4) While I welcome the progress of crypto adoption that this decision brings, Chair Gensler’s statement continues to warn that Bitcoin β€˜is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing.’ From a consumer protection point of view, Gensler’s swing vote is a bit puzzling.

πŸ‘‡ 5) But this vision of broader institutional adoption let us set up β€˜10x Research’ as an institutional-grade research company where we use quant models, market structure analysis, trading signals, and provide views and trade ideas. We deliberately set up 10x Research, not as another crypto news business but as an accountable entity that does not shy away from making difficult, forward-looking calls. Sometimes, those calls are tough to make, but this is trading (and life); nothing is 100% certain.

πŸ‘‡ 6) We are not long-only investors, nor is crypto as the regular -80% drawdowns show. We have managed money for the most successful hedge fund and the largest proprietary trading desk. We know risk management inside out and have shown our skills in analyzing the markets through numerous calls – that our view sometimes has an outsized impact can be positive or negative. Β 

πŸ‘‡ 7) Since early December, we have thought about hedging long crypto exposure in various forms through options (calendar call spreads [sell Dec calls to buy Jan calls], puts [buy 40k Jan put]) or even selling Bitcoin – as the news appeared to be priced in – and buy Ethereum against it as a) BTC would fall more during an ETF rejection or b) ETH would outperform as market focus shifts towards the May ETH ETF approval timeline. At a +70% rally in just three months, it was prudent to lock in PnL.

πŸ‘‡ 8) During the last 24h, BTC +1% vs. ETH +8.5%, the last 1 week, BTC +8.3% vs. ETH +16.5%. See the report from Dec 29 β€˜How should traders position themselves in the uncertain Bitcoin ETF approval period?’ in which we suggested switching into ETH vs. BTC.

πŸ‘‡ 9) So far, a few hours after the SEC approval, Bitcoin’s price reaction is rather disappointing.

πŸ‘‡ 10) On Tuesday (January 11), we published a list of three crypto assets to buy that were undervalued based on the current Bitcoin spot price. Those assets will only become even more valuable if Bitcoin adoption continues.