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GM everyone. This is 2036, the crypto newsletter that pays you.
Here’s what we’re serving up today 🍲: it’s only Thursday, but this week has already been one of the most important in crypto all year. Most people aren’t paying attention (because prices aren’t 📈). But the game is changing.
Let’s dig in.
🥔 Today’s meat and potatoes
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In case you missed 2036 this week, crypto’s been on a tear:
Grayscale won its lawsuit against the SEC to allow the conversion of its Grayscale Bitcoin Trust (GBTC) into an ETF.
Paypal launched its own stablecoin.
The Financial Accounting Standards Board in the US approved an accounting metric that’ll make it 100X easier for large corporations to hold crypto on their balance sheet.
… and that’s not even everything.
After the Grayscale win, we wrote this:
An Ethereum ETF will also inevitably come to the US.
That’s why we’re keeping all eyes on $ETHE, Grayscale’s Ethereum investment product.
Because if GBTC is up, ETHE will be right behind.
And that’s exactly what happened.
Yesterday, Van Eck and ARK Invest filed for Ethereum ETFs in the US.
This means that institutions are not coming just for Bitcoin but for Ethereum too (we explained why yesterday).
This is BIG news because:
1/ Crypto is a highly illiquid asset class.
Over 70% of all the bitcoin in circulation is held by people who have not sold in the last 12 months. They’re holders who won’t easily sell.
But institutions don’t buy $10 or $20 of bitcoin at the time. They buy tens - if not hundreds - of millions of dollars at a time.
This creates a demand shock that crypto has not seen before in its 14-year history as institutions - not retail - pile into crypto for the first time.
2/ This demand shock will be followed by a BIG supply shock.
The bitcoin halving is happening in April 2024.
That’s just a few months after the bitcoin ETF is expected to be approved (between October ‘23 and March ‘24).
The halving will decrease the supply of new bitcoin, which historically has pushed prices substantially higher.
crypto has historically rallied for 480 days after the halving
That means we’ll have:
a demand shock as institutions enter the space
a supply shock as the bitcoin halving reduces new bitcoins on the market.
Even if the halving only applies to bitcoin, a rising tide lifts all boats. Altcoins will skyrocket.
3/ In ETF-land, speed is everything.
Over the next few months, the world’s biggest financial companies will do everything in their power to either:
Get their bitcoin ETF approved before everyone else (that’s what Grayscale is doing), or
Make sure everyone gets approved at the same time
i.e. either they get preferential treatment or no one does.
Welcome to traditional finance.
We’ve said this before - but $GLD and $IAU are practically the same gold ETF.
Despite $IAU being 40% cheaper, $GLD is twice as big - because it launched two months before $IAU.
So, the race for both a Bitcoin and Ethereum ETF is officially ON.
And it could be much bigger and faster than most of us expect.
Despite this tsunami of good news, the Crypto Fear and Greed index sits at just 41.
That’s low relative to the abundance of good news.
If you’re a buyer, this is great news. The time to be greedy is when others are fearful.
Ethereum is lower than last week, but the discount on $ETHE is slowly narrowing.
In retrospect, this could be one of the most mispriced periods in crypto ever.
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