Monday, Oct 16, 2023

BTC finally reacting? why Zimbabwe is adopting a gold-backed token

"If you want to teach people a new way of thinking, don't bother trying to teach them. Instead, give them a tool, the use of which will lead to new ways of thinking." ­– R. Buckminster Fuller ||

Hello everyone! There are only 76 days left in 2023. I just thought I’d share that with you.

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IN THIS NEWSLETTER:

• Is BTC finally reacting?

• Zimbabwe, tokens and economic orthodoxy

• Consumer sentiment takes a hit

• The implied volatility in long bonds is higher than for stocks

WHAT I’M WATCHING

Is BTC finally reacting?

I’ve been talking about how puzzling it is that BTC wasn’t reacting more to the considerable tailwinds accumulating behind it. Despite a shift in US rates expectations and a strong uptick in geopolitical tension, the price had been drifting, even while gold started to move.

(chart via TradingView)

That finally seems to have changed:

(chart via TradingView)

On Friday, the BTC price started heading up, perhaps as expectation mounted that the SEC would not challenge the recent ruling against them in the case brought last year by Grayscale. You may recall that the judges unanimously agreed with Grayscale that the SEC had been applying inconsistent reasoning to its rejection of Grayscale’s request to turn its GBTC trust into an ETF, while allowing BTC futures ETFs to list.

With the window to appeal now firmly closed, the SEC has to reconsider its ruling. It could still come up with another reason to reject Grayscale’s proposal. But it’s getting increasingly likely that it will go ahead and approve all the current proposals at once, possibly before the end of this year.

The SEC acceptance of the judge’s ruling is not the only sign moving the needle on this. Last week, both ARK/21 Shares and Invesco/Galaxy submitted updated proposals, suggesting a constructive dialogue with the SEC which definitely did not happen the last time around. Bloomberg analysts James Seyffart and Eric Balchunas now place a 90% probability on a spot BTC ETF being approved before the next hard deadline, which is January 10.

Why it matters:

Debate is heating up around whether the spot BTC ETF approval is priced in. Coinbase analysts say yes, partially. I don’t agree, not yet, anyway. I confess that I haven’t read the original report, I’m getting my impressions second-hand here, and I’m sure they make some good points. But here’s why I’m not convinced: