Thursday, Jan 11, 2024

what yesterday really meant, ETH on the move, inflation, SEC objection

“It is amazing how fast people learn when they are not insulated from the consequences of their decisions.” — Thomas Sowell  ||  

Hi everyone! So that’s done, we finally have US-listed BTC spot ETFs. What a day.

Now, I’m so glad I can get back to focusing on global adoption, transformation of markets, regulatory oversight, energy impacts, government involvement, tokenization of assets, erosion of privacy, liquidity issues, geopolitical tension, US hegemony, interest rates, shipping lanes and and and…

Oh, I was on Bloomberg TV yesterday, just before the official ETF confirmation, with Sonali Basak and Jon Erlichman! I haven’t been able to find a link to a clip yet, will post tomorrow if I do.

You’re reading the daily premium Crypto is Macro Now newsletter, where I look at the growing overlap between the crypto and macro landscapes. There’s also usually some market commentary, but NOTHING I say is investment advice. For full disclosure, I have held the same long positions in BTC and ETH for years, and have no intention to either buy more or sell in the near future.

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IN THIS NEWSLETTER:

• Bitcoin and Wall Street: More than one milestone was reached yesterday

• BTC spot ETFs: A moving and momentous dissent

• Priced in for BTC?

• ETH on the move

• Let’s not forget about the economy

WHAT I’M WATCHING:

Bitcoin and Wall Street: More than one milestone was reached yesterday

“Running bitcoin”.

This was the tweet posted 15 years ago today by Hal Finney, cryptographer and the second person other than Satoshi to run the Bitcoin protocol. Fifteen years ago, Bitcoin barely existed.

And yet yesterday it was endorsed as a feature of the global financial landscape by some of the largest investment managers in the world. From nothing to being supported by the likes of BlackRock, Fidelity, Invesco and many others, Bitcoin has undergone what will probably go down in history as one of the most astonishing progressions ever for a new technology.

What’s more, it has done so with no corporation or government entity behind it, no VC money for its operations, no internal PR team. Bitcoin’s community is perhaps not so quiet, but the protocol itself has been remarkably lacking in drama. Running quietly in the background, the asset the network generates has found its way into institutional portfolios and retail holdings around the world, regardless of national boundaries and regulations.  

An asset without jurisdiction, without controller, without issuer other than a strip of code is now accepted in the highest echelons of finance, by the largest fund managers in the largest financial market in the world.

In just 15 years. That is an astonishing progression.

But yesterday was more than a milestone for Bitcoin. It was a big step for Wall Street as well.

Bitcoin doesn’t need Wall Street. Sure, the money doesn’t hurt, but Bitcoin would work just fine without institutional interest.

It’s Wall Street that wants Bitcoin. It doesn’t need Bitcoin, but it wants it. Mainstream validation doesn’t get louder than this.

Many other “alternative” assets without issuer or jurisdiction are also supported by Wall Street. Gold, for instance, was once regarded as a niche investment for “gold bugs” who were generally regarded as being on the fringes of finance (sound familiar?). But by the time Wall Street figured out how to package exposure to gold to meet investor demand for convenience, gold had been around for millennia. Bitcoin is barely 15 years old.

And gold is a natural element, produced by the galactic forces that made the planet we live on. There’s not much due diligence to perform there.

Bitcoin was created by one or more human beings, and yet due diligence other than code revision is not possible since we don’t know who he, she or they are. Never before has Wall Street embraced a man-made asset without putting the creators through intense scrutiny.

That makes yesterday a big day not just for Bitcoin, but also for Wall Street. Trusted financial names with considerable clout have invested resources and reputation in presenting a “rebel” asset to their mainstream client base. They have done so voluntarily, despite regulatory pressure to stay away, because they have done independent research and understood that Bitcoin offers a unique diversification opportunity for their clients.

This validation occurred outside the halls of official power. It occurred in the boardrooms of finance. In a way, Bitcoin has returned power to Wall Street, reaffirming the prerogative of businesses to satisfy client demand, and the right of investors to choose what to do with their money.

Bitcoin helped Wall Street win a battle against limitations on opportunity due to illogical regulatory prejudices. And Wall Street showed that it is not as rigid in its financial thinking as most assume.

Yesterday was a big win for Bitcoin. It was a big win for Wall Street. Perhaps even more important, beyond those two milestones in image transformation, it was a big win for investors.

BTC spot ETFs: A moving and momentous dissent

Yesterday, SEC Commissioner Hester Peirce published an excellent comment on the BTC spot ETF approval.

First, the title is just beautiful: “Out, Damned Spot! Out, I Say!” Yes, a regulator is quoting MacBeth in an official document. I could weep.

Some key quotes: