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PLUS: SEC plot thickens
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What we’ve cooked up for you today…
🤔 Ethereum’s security status
🏃♂️ Race to own hard assets
🌊 Outflows continue
💰 And more…
MARKET WATCH ⚖️
Prices as at 7:20am ET
Only the top 20 coins measured by market cap feature in this section
ETHEREUM’S SECURITY STATUS 🤔
BREAKING: SEC and Gensler believed Ether was security for at least a year
New court filings have revealed that the SEC has been investigating Ethereum’s security status for over a year.
These court filings come as part of Consensys’ lawsuit against the SEC.
(Checkout our previous newsletter for more details on this lawsuit)
Consensys claims that the SEC approved a formal order of investigation into Ethereum in March 2023.
This investigation allowed enforcement staff to investigate and subpoena individuals and entities involved in the buying and selling of ETH.
BUT…
Subpoena recipients were instructed by the SEC to keep the investigation under wraps. (sounds a little dodgy doesn’t it…🤨)
This would explain why Gensler refused to answer whether or not Ethereum was a security during a congressional testimony in April 2023.
“He did not want to admit that his SEC had already secretly cemented its power-grab by issuing an order of investigation designating ETH as a security.”
Here’s where it gets weird…
If internally the SEC already deemed ETH a security in March 2023.
Then why did they approve Ethereum futures ETFs in October 2023?
In what world does it make sense to approve a derivative based ETF but not the spot one?
We’ll continue to bring you updates as this case develops.
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RACE TO OWN HARD ASSETS 🏃♂️
The US government debt is out of control.
Bitcoin is the only option.
That’s the latest out from Jack Mallers.
Jack Mallers is the CEO of Strike, a Bitcoin investment and payments company.
In his latest interview, Mallers was asked why he’s all-in on Bitcoin.
Here’s Jack’s simple thesis:
“More of the world is waking up to the idea that if you’ve got one currency that’s fixed in supply and then you’ve got another currency that’s being rapidly inflated in supply. Then the one that’s fixed in supply is going to appreciate in price against the one that’s being inflated.”
Jack explains that US debt to GDP has gotten out of control.
It’s currently at ~123%.
US Debt to GDP (%)
It’s practically impossible for the government to pay these debts back. The interest payments have simply gotten too high.
(Interest payments this year are projected to be more than what the government spends on defence or medicare 🤯)
The only choice they have is to print themselves out of the problem. (which creates another problem…)
“We’ve borrowed a tremendous amount of time and energy from our future in the form on money with no way of paying it back. And that loss has to be realised somewhere. Governments and central banks around the world are planning to realise that loss through debasing the currency.”
Mallers explains that the only option is Bitcoin:
“If that’s the case, it’s a race to own hard assets. And Bitcoin is the hardest, most advanced money we’ve come across in human history.”
The government finds itself in a tricky situation.
It appears that no matter what they do, it always ends up with inflation.
“High interest rates in America seem to be inflationary, low interest rates seem to be inflationary. The deficits are just too big so everything is inflationary. Which has resulted in Bitcoin just trending up no matter what.”
We have to admit, when you put it this way…
Bitcoin does sound like the only option…
OUTFLOWS CONTINUE 🌊
Time for our weekly check in on digital asset fund flows. (globally, not just the US ETFs)
And it was another poor week for the Bitcoin ETFs.
Digital asset funds saw outflows for the third consecutive week totalling $435 million.
As Bitcoin’s price momentum has cooled down, so to has the investor interest in the Bitcoin ETFs.
Last week, the outflows were entirely focused on Bitcoin and Ethereum.
Bitcoin experienced $423 million in outflows, whereas Ethereum saw $38.4 million in outflows. (7th consecutive outflow week for Ethereum)
Solana and Litecoin both saw net inflows of $4.1m & $3.1m respectively.
As always, the United States dominated the weekly flows.
Last week the US experienced $388 million in net outflows.
The negative sentiment also made its way to Canada, Germany and Sweden with outflows of $32.1m, $15.8m & $8.1m respectively.
BUT… Switzerland, Brazil and Australia all had inflows of $4.9m, $3.9m & $0.5m respectively.
CoinShares notes that a majority of the outflows were from Grayscale. (who didn’t see that coming?)
Whilst Grayscale’s outflows continue to slow down, the inflows into new issuers are also slowing down.
However, this week also marks the launch of the Hong Kong Bitcoin and Ethereum ETFs.
So it will be interesting to see how much of an impact they can have…
CRACKING CRYPTO 🥜
MicroStrategy continues stacking Bitcoin with $1.65 billion purchase during Q1. Business intelligence firm MicroStrategy announced its latest Bitcoin purchases on April 29.
Binance's CZ Will Spend Less Than a Year in Prison, Polymarket Traders Bet. Also, the CFTC wants to bar Americans from betting on elections – even though it's already illegal in most U.S. states.
Eigenlayer releases EIGEN white paper, bans airdrop for US users. Eigenlayer’s new token, EIGEN, will be used in specific applications that deal with “intersubjective agreement,” such as AI training and gaming virtual machines.
SEC has been investigating ETH for over a year, new court filing shows. The SEC in March 2023 launched its formal investigation into ether, lawyers from Consensys allege in new, unredacted complaint.
WHAT WE’RE READING 📚
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CAN YOU CRACK THIS NUT? ✍️
Select your answer below and you’ll be redirected to the results page. (answer explanation can be found after “Meme Corner”)
In crypto, what does the term NFT stand for? |
MEME CORNER 😂
Because what would the crypto world be without its share of memes?
Trivia Answer: C) Non-Fungible Token 🥳
Non-Fungible Tokens are unique cryptographic tokens that exist on a blockchain and cannot be replicated. NFTs can represent digital or real-world items like artwork and real estate.
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DISCLAIMER: The content of this newsletter is not financial advice. This newsletter is strictly educational and is not investment advice. Please be careful and do your own research.
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