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📌 JPMorgan’s Crypto Stock Basket, GBTC Halts Trading, and Crypto “Savings Accounts”

March 10, 2021 | Issue #159

 MUST READS 

JPMorgan Wants to Launch Crypto-Related Stock Basket


In the latest sign of Wall Street players warming to Bitcoin, the largest U.S. bank wants to issue a debt instrument linked to cryptocurrency-focused companies.

JPMorgan’s proposed "Cryptocurrency Exposure Basket" would have positions in 11 companies total (see below). It does not invest directly in cryptos, according to the prospectus.

Here's the full list:
  • MSTR (20%)
  • SQ (18%)
  • RIOT (15%)
  • NVDA (15%)
  • PYPL (10%)
  • AMD (5%)
  • TSM (5%)
  • ICE (4%)
  • CME (4%)
  • OSTK (2%)
  • SI (2%)

Rapid reaction: So no Galaxy Digital Holdings (GLXY)... but they include Overstock (OSTK). Really?
 

Insitutional Adoption


Bitcoin is back above $50k. Our guess is that the latest round of institutional adoption had a lot to do with it:
  1. Norway's Aker, the country's third-largest oil and gas producer, Forms Bitcoin Subsidiary
    Norwegian energy giant Aker put 100% of its cash reserves (around $58 million) in Bitcoin and announced the launch of a new company, Seetee, that will be dedicated to investing in companies building out critical Bitcoin infrastructure and applications.
     
  2. Bitcoin trading and custody services provider NYDIG raises $200 million
    NYDIG - a company that has been done an incredible job helping onboard institutions and high-net-worth individuals to Bitcoin – has as raised an additional $200M from investors/partners that include Morgan Stanley, New York Life, MassMutual, and others

Further Reading: Check out Aker's Shareholder Letter
 

Grayscale Halts New Investments in GBTC After Trading at 15% Below Bitcoin


Grayscale Bitcoin Trust (GBTC) is having quite a week...

It all started when GBTC began trading at a 15% discount to NAV, or the price of the Bitcoin the trust holds. But here's the thing, GBTC's discount has NEVER been that low.

Traditionally, GBTCs premium is ~30%. At that level, it allows all sorts of arbitrage opportunities that would take up more space than we can explain here. Here's a good primer.

But now, with recent competitors entering the market, the premium has become a discount.

Due to this, two things happened: (1) Grayscale began halting all new investments, and (2) Digital Currency Group (DCG), the parent of GBTC, announced the decision to buy up to $250M of the fund.

Why is DCG buying shares of its own fund?

Well, in a sense, it is the buyer of last resort as there is no redemption process in place for GBTC. Or perhaps DCG knows that there's a good chance GBTC will be approved as an ETF soon. Based on what Grayscale is hiring for right now, this isn't too far-fetched.

In other words, by buying GBTC at a discount today, DCG in the future could redeem shares for Bitcoin and capture its own arbitrage (aka make a whole lot of money) if the fund soon springs into an ETF.

Ok, so what’s this all mean for the future of GBTC? The way we look at it there are three potential solutions:

(1) GBTC becomes an ETF and allows redemptions...
(2) GBTC stays trading at a discount to NAV, or...
(3) GBTC lowers its fees to become more competitive.

What will happen? ¯\ (ツ) /¯. But as they say, not your keys, not your coins.
 

Bitcoin Savings Accounts


Cryptocurrency trading platforms will pay you 6%, 8%, even 12% or more, on what some of them call “savings accounts.”

You might think these are much the same as deposits at a conventional bank. They aren’t. In fact, these purported “savings accounts” are nothing like what a traditional bank offers.

Here's why you should proceed with caution...
 

 SPONSORED 

How to Invest in Cryptocurrencies


There’s no doubt that the cryptocurrency space has seen astronomical growth over the last few months.

And with multinational corporate backing pouring in - from companies like J.P. Morgan and MasterCard - it’s hard to deny that cryptos are here to stay.

The only trick is getting a foot in the door before other investors take notice.
 

 DEEP DIVE 

UnMixed Motives


Did you know the academic paper intro-ing Google to the world condemned advertising?

Do you care about your privacy?

Most importantly, have you ever wondered why search for crypto sucks?

Here's a thought-provoking piece by Devin Walsh on the need for greater transparency (and decentralization) in search engines and algorithms.
 

The Frustrating, Maddening, All-Consuming Bitcoin Energy Debate


Gotta love it when "top climate journalists" get called out... especially when it comes to Bitcoin. Here's another great deep dive by Nic Carter that highlights the reality of Bitcoin’s energy consumption.
 

Vitalik Buterin on Understanding Ethereum, Life Extension, and More


Naval Ravikant, Vitalik Buterin, and Tim Ferriss recently teamed up to talk all things crypto. Tune in here.
 

 SPONSORED 

These “Timed Stocks” Are Rocketing


“Timed Stocks” are stocks that, thanks to the federal government, have a preset countdown “timer” attached to their share price.

And the exact moment — down to the second — the timer hits zero, the stock can skyrocket.

One investor has tracked hundreds of these launches. And during a historic online event on Thursday, March 18, at 8 p.m. ET, he’ll lay out the proof...

Click here to learn more.
 

 REGULATORY FRONT 

U.S. Prosecutors Discussing Surrender Agreement with Former BitMEX CEO Arthur Hayes


Arthur Hayes, the cofounder of BitMEX and the highlight of a recent profile from Vanity Fair, could surrender to U.S. authorities as soon as next month, prosecutors told a New York judge during a February hearing.
 

John McAfee Charged with Securities Fraud for ‘Pump and Dump’ Cryptocurrency Scheme


Federal prosecutors unsealed a case against McAfee and his executive advisor and bodyguard Jimmy Gale Watson Jr., claiming the pair earned nearly $2 million by urging Twitter followers to invest in cryptocurrencies like Reddcoin and Dogecoin, then selling off their own holdings as the price rose.

McAfee allegedly used his verified Twitter account, which currently has around 1 million followers, to recommend a “Coin of the Day” or “Coin of the Week.” The indictment says McAfee claimed to have no stake in these altcoins; in reality, McAfee would allegedly buy large quantities beforehand using bitcoin, then offload them again after his followers had driven up the price.

You're next, Elon. 😃
 

 TWEET OF THE WEEK 

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