November 10, 2023
Greg Cipolaro

Research Weekly - Expectations Rise for an Imminent ETF Approval


  • Hopes rise for an imminent approval of an ETF, but a final decision may still take some time.
  • Conclusion of the SBF case is a stark reminder of the responsibilities industry participants.
  • The memecoin craze comes back, again benefitting miners.

End of Comment Rebuttal Period Results in Calls for an Imminent Decision on Spot ETFs

As the public comment rebuttal period for many spot ETFs came to a close on Wednesday, November 8th, industry watchers were left eagerly anticipating an imminent decision on the spot ETF applications. The news of the approaching decision sparked a surge of interest and resulted in a notable rally in prices. The industry is now feeling a heightened sense of urgency, as the possibility of a government shutdown looms. The inability to sign a spending bill has increased the likelihood of this shutdown commencing at the end of the day on Friday, November 17th.

While the SEC has until January 10th, 2024, to either approve or deny these applications as we don't think they play favorites, it is highly unlikely that the agency would rush such a significant decision. Despite the uncertainty surrounding the potential duration of a government shutdown, it is worth noting that the longest shutdown in history lasted 34 days. Even if a similar scenario were to occur, the SEC would still have ample time to meet the early January deadline.

In addition to the potential government shutdown, another factor for the SEC to consider is the SBF case (see below), which remains fresh in the minds of many. The SEC may prefer to distance their decision from the trial and give the green light once things have settled down. Moreover, a recent report from CoinDesk has revealed that the agency has just initiated discussions with issuer Grayscale, who is hopeful to convert the Grayscale Bitcoin Trust (GBTC) into an ETF. This highlights the agency's ongoing deliberations and the potential impact on the approval of spot ETFs.

While the industry is undeniably excited about the prospects of an approved ETF (as are we), it may be necessary to temper short-term expectations. The decision-making process is complex and requires careful consideration of various factors. It is crucial to remain patient and allow the SEC the necessary time to make a final decision. Rest assured, we will continue to closely monitor developments and provide updates as they unfold.

SBF Guilty Verdict Concludes a Dark Chapter

Last week, the jury in the Sam Bankman-Fried (SBF) case found him guilty of all seven criminal counts, an outcome that signifies the end of a dark era for the digital asset industry. Unfortunately, it also provided an opportunity for critics to take aim at the industry as a whole, including the very assets themselves, particularly around valuation. While it is indeed true that certain digital assets, such as bitcoin, do not generate income and cannot be evaluated using discounted cash flow techniques, this should be viewed more as an observation rather than a critique. It is important to recognize that there are trillions of dollars invested in non-yielding assets like gold ($13.4T), silver ($1.4T), art ($1.7T), jewelry/watches ($161B), and classic cars ($138B). Therefore, it is evident that while these assets may not adhere to DCF valuation, they are by no means unsuitable for investment purposes.

Moreover, the events of 2022 have shed light on the need for greater accountability and transparency. From our perspective, the primary challenge faced by the industry lies in the fallibility of the human-led organizations that surround the technology. The infamous failure of Mt Gox in 2014 can be considered the industry's original sin, and unfortunately, this pattern continues to repeat itself. Failures of centralized organizations within the ecosystem, such as FTX, serve as stark reminders that unethical or illegal business practices introduce significant risks to any asset class, be they digital assets or not. We have long advocated for the industry to prioritize counter-party risk assessment, whether that be service providers or the digital assets themselves, through insecure technological or economic design. While names like FTX, Alameda, Genesis, Celsius, Voyager, and Three Arrows are all on the minds of investors, the collapse of LUNA/UST might have destroyed more wealth than all of those centralized entities combined.

However, as the industry experiences a rebirth and promises a new era, we fervently hope, and indeed expect, that businesses and practices become stronger and more resilient. The significance of this technology cannot be overstated, as it impacts countless individuals, making it imperative that we break free from the cycle of repeating these costly mistakes.

Meme Coin Craze Drives Fees Higher. Again.

Binance made an important move on Tuesday by adding ORDI, the largest BRC-20 token on Bitcoin's blockchain, to its trading platform. While BRC-20s had a moment in the spotlight during the memecoin frenzy earlier this year, they have since remained relatively quiet. The news of ORDI's listing caused a remarkable 50% surge in its price, igniting a wave of activity across the memecoin space on the blockchain. Remarkably, despite not having a defined use case yet, ORDI has managed to amass a staggering market cap of nearly $400 million.

This resurgence in network transaction activity has proven to be a boon for miners, as transaction fees now account for over 10% of their revenue. Prior to this announcement, transaction fees were hovering around the 15-16 sats/vByte range, but they have now skyrocketed to well over 200 sats/vByte.

While the Ordinals and BRC-20 frenzy earlier this year lacked clear utility, we are cautiously intrigued by the fact that a major exchange has listed ORDI. Our hope is that the technical community will start developing applications that leverage this technology and provide long-lasting utility.

Weekly 1-Nov-10-2023-02-36-18-9033-PM

Market Update

Weekly Markets-Nov-10-2023-02-36-05-9429-PM

The rally in bitcoin continued once again this week, with price up 4.5%. Year-to-date, the asset is up 120.9%, far outpacing any other asset class. Equities had a good week as well, with the S&P 500 up 1.5% and Nasdaq Composite up 1.7%. Commodities fell with oil down 8.4% on demand worries and while gold slumped 1.5% as real yield rose.

Important News This Week


U.S. SEC Said to Open Talks with Grayscale on Spot Bitcoin ETF Push - CoinDesk

Nasdaq Files 19b-4 for iShares Ethereum Trust - Nasdaq

Talos Integrates with CME Group to Expand Crypto Derivatives Access for Institutions - Talos

Regulation and Taxation:

CFTC Releases FY 2023 Enforcement Results - CFTC

Federal Court Orders South African CEO to Pay Over $3.4 Billion for Forex Fraud - CFTC


Celsius to Emerge from Bankruptcy with Repayment Plan Approved - Decrypt

Former NYSE President in Talks to Reboot FTX Exchange - WSJ

Ex-Cantor Execs Launch Crypto Lending Platform for Expected Bitcoin ETFs - Bloomberg

Custodia Bank Debuts Segregated Custody Accounts Service - Blockworks

Poloniex Hot Wallets Hacked With $114M Seemingly Stolen - CoinDesk

Upcoming Events

Nov 14 - October CPI reading

Nov 17 - US federal budget deadline

Nov 24 - CME expiry

Dec 13 - FOMC interest rate decision

Jan 10 - Final ETF decision deadline for the first bitcoin ETF, ARK 21Shares

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