October 20, 2021 | Issue #191

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Yay ETF... BUT

The first Bitcoin futures ETF launched this week under the symbol BITO, bolstering an incredible recent run in the price of the cryptocurrency (we are sitting ~$66k at publication). According to Bloomberg, the ETF was the second-most traded in history.

One could say this is a long time coming, as the Winklevoss Twins originally wanted to launch a Bitcoin ETF all the way back in 2013! Hell, here at CoinSnacks, we have been reporting on Bitcoin ETF filings since we launched this newsletter back in the ICO dark ages of 2017.

So congratulations to the Bitcoin market. BUT (and this is a big but), caveat emptor... retail investors should be wary buying into this ETF.

Although it may seem like a great way to gain exposure to the Bitcoin market, futures-based ETFs are not to be trifled with. You have contango, backwardation, and more. Long story short, your Bitcoin exposure is at the whim of futures speculators and not the spot price of Bitcoin at any given point in time. As always, just because it's hyped and says ETF does not mean it is "safe."

If you want real exposure to BTC, buy it directly.

If you really want to go through an ETF, we suggest waiting for GBTC (story below) or a similar offering.

Grayscale Up Next?

Alright, now that we have covered the potential pitfalls of investing in a futures-based BTC ETF, let's take a look at what Mr. Gensler, our trusty, "retail-protecting" savior from the SEC could do to actually help investors.

He could quickly and easily approve the Grayscale Bitcoin Trust (GBTC) to be converted into a spot ETF. Right now, the Trust is the largest Bitcoin investment vehicle in the world, holding approximately 3.5% of all Bitcoin in circulation.

So, why would it be epic for him to support the notion of GBTC converting into an ETF?

Because it would immediately close the discount that GBTC is trading at, and in turn, produce more than $8 billion in gains for investors overnight.

And right on cue (and as promised), GBTC has submitted its filing to convert into an ETF. Not only that, but DCG, the owners of Grayscale, announced a plan to increase their buyback of GBTC to $1 billion.

Your move Gary.


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Coinbase Strategy Teardown: How Coinbase Grew Into The King Midas Of Crypto

You know Coinbase (COIN), but do you really know Coinbase?

CBInsights just dropped some research that examines Coinbase’s strategy, financing history, product offerings, business initiatives, threats, and future opportunities. They dig into how Coinbase operates, how it’s capitalizing on cryptoasset speculation, and what it’s doing to push forward blockchain technology.

In CoinSnacks, not only do we discuss cryptoassets, but we also cover crypto-stocks, and with Coinbase as the leader of the latter's pack, it is worth investors' time understanding what the future holds for the company.

Want more Coinbase? Pair it with "The Paradoxes of Coinbase" from The Generalist.

Never Sell Again

Well, by now it should be quite obvious that BTC is at an all-time high. Now, what’s next?

The team at Ecoinometrics has you covered. Here's what you need to know:
  • This dip will have lasted ~200 days. That makes it the second-longest correction in a post-halving bull market right next to what happened in the middle of the 1st cycle.
  • The only addresses that have not been accumulating coins over the past 30 days are the small fish (less than 1 BTC owned). Everyone else is buying.
The team also believes that there's no reason large holders are going to sell anytime soon.
  • The current market value to realized value (MVRV) ratio sits around 3. That means in aggregate, hodlers are up 3x on unrealized profits. This MVRV region is historically the goldilocks zone from which parabolic moves develop. The expected return when Bitcoin’s MVRV is in this zone is 35-50% (in other words, don't sell).

Is your portfolio adequately exposed to high-potential alts?

Bitcoin has been on a tear recently, and if history shows us anything, it's that altcoins are next up.

Crypto Pragmatist is an email newsletter that gives you all the information you need to confidently invest in altcoins.

Subscribe to their free weekly newsletter for data-backed crypto investing research, or check out their paid subscription for bi-monthly in-depth altcoin reports.

Tether Bounty Program

Hindenburg Research, an investment firm that is well known for short-selling and exposing fraud, has announced a reward of up to $1,000,000 for "exclusive details" on the "supposed reserves" backing Tether (USDT), the world's largest stablecoin.

“We feel strongly that Tether should fully and thoroughly disclose its holdings to the public. In the absence of that disclosure, we are offering a $1,000,000 bounty to anyone who can provide us exclusive detail on Tether’s supposed reserves.”

Much of the internet (Tether included) was quick to try to laugh off Hindenburg, but those who wish to ignore Hindenburg do so at their own peril.

This is the same investment firm that originally claimed that hype-stock-of-the-year, Nikola (NKLA), and its CEO, Trevor Milton, were a major fraud. Go ahead and check out Nikola's stock chart to see how it's doing.

Earlier this year, Hindenburg also announced a short on Ebang, a Chinese Bitcoin ASIC manufacturer. Hindenburg is currently up more than 60% on that trade as well.

New York Joins Crackdown on Crypto lending, Seemingly Targeting Nexo and Celsius

This week, the New York Attorney General announced cease and desist letters to two cryptocurrency lending firms.

Now we don't know for sure what the two firms are, but in classic government style, there was an oopsie.

The Attorney General redacted the names of the firms under scrutiny. However, the cease-and-desist retained the names "Nexo Letter," while the request for information was labeled "Celsius Letter" upon initial publication, seeming to implicate both Nexo and Celsius.

Another three firms received requests for information on corporate ownership and handling of user deposits, yet they remain unidentified.

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