The Path To $100k BTC
Don’t gaze directly into the…orb?
Yeah, the orb. There’s a new super controversial project called Worldcoin which is co-founded by former Y Combinator President, Sam Altman that is scanning retinas in exchange for crypto. I’m just going to put this article here for you in case you are interested. Very creepy and dystopian IMO. Thankfully, the rest of crypto Twitter agrees:
Now that the fun fact of the day is out of the way, I can congratulate all you hodlers on a new all time high for Bitcoin! It has been a bumpy road. Well deserved.
Obviously, we have to talk about the ETF that launched this week with the second ETF launching today. Funnily enough, the Valkyrie ETF launching today changed its ticker name to BTFD (Buy The F’ing Dip) — I love this space.
To go off script for a moment, Valkyrie wasn’t the only crypto company with jokes this week as FTX has memed itself into another massive funding round. Sam Bankman-Fried’s Bahamas-based crypto exchange said Wednesday it had raised $420,690,000 in a Series B-1 funding round from 69 investors. If anyone else did this it would mark the market top, but SBF gets a pass. What a boss.
Back to the matters at hand. It appears the launch of the futures-based ETFs were more than just a buy the rumour, sell the news event as we saw BTC rip through $67k on Wednesday — albeit, with a hint of FOMO as we settled down to the low 60s on Thursday.
After executives from ProShares (who probably own <1 BTC combined), rang the bell at the New York Stock Exchange on Tuesday morning, the Fund topped $1 billion in trading volume on its first day making it one of the most successful ETF debuts in history. Imagine what a spot BTC ETF will do…
A futures based BTC ETF means the fund tracks bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME). Or, In other words, the ProShares ETF doesn’t hold BTC at all, it just bets on the future price of bitcoin. In the coming weeks or months you will probably hear the term “contango” if you haven’t already. As it becomes more prevalent, I will do a deeper dive on it but for now you just need to know that its effect stems from the fact that a futures based BTC ETF can trade higher or lower than the spot price of Bitcoin.
A futures based BTC ETF is just alright… I mean, I guess we can say that we have an ETF but it feels less euphoric than I thought it would after 4 years of patiently waiting to be honest. This whole move from the low $40s to new all time highs in a swift move has felt rather bland in my eyes. There’s either a hell of a lot more room to run before folks start getting really excited or I’ve got my blinders on in this cycle.
Another fun fact:
The price of Bitcoin at the time was $68…
What we saw at the desk — Dan Wright
The week started off on a bang with the US Bitcoin Futures ETF(BITO) making its debut on Tuesday. We were net buyers going in while we watched the momentum push BTC and ETH to new all time highs. As a trader (Dan) it was very exciting to watch as we haven’t seen these levels since the leverage fueled days of April. We saw some profit taking on the highs going into Thursday’s trading session but that was quickly bought up with support holding at 62k on BTC/USD and 4k on ETH/USD. BTC/USD currently up 44% on the month with lots of momentum heading into year end.
Pension funds are here
Tons of individuals across Canada are about to enter retirement and are depending on pensions to live out what should be their golden years with some form of comfort. Sadly, most of these public pensions have always played it safe which makes a lot of sense. They have a fiduciary duty to the individuals they invest on behalf of and can’t afford to gamble with their livelihood. Unfortunately, and honestly, very sadly, playing it safe doesn’t really cut it these days. In Canada, like most of the world, but mostly worse, money printing has been wild and inflation has skyrocketed. The 60/40 portfolio is more like 60/0 these days which means that these public pension funds will have a very difficult time delivering on their obligations because their ability to outperform inflation (real inflation) has been crippled.
Dreary, yeah. Thankfully, though, Canadian pensions seem to have turned a new leaf. Not just Canadian pensions — this week a pension fund for firefighters in Houston has made a purchase in bitcoin and ethereum. The Houston Firefighters’ Relief and Retirement Fund’s (HFRRF) purchase marks the first time a public pension plan in the U.S. has announced an investment in digital assets. The fund announced that it has invested $25 million in bitcoin and ether.
Canadian pension plans, on the other hand, decided to go a different route. Instead of investing directly into Bitcoin, they decided to take a lateish-style venture-equity approach by investing in companies in the crypto space instead. Not ideal, but a good start.
Last week, the Caisse de dépôt et placement du Québec (CDPQ) — an institutional investor that manages several public and parapublic pension plans and insurance programs in Quebec — participated in a US$400m investment in Celsius Network, a cryptocurrency interest and lending platform (valuing the company at $3bn). I don’t want to be too critical here because I think they’re thinking about this the right way, but I think they missed it this go around. The headline from CTV News kind of says it all.
How about the Ontario Teachers Pension Plan…they simply just purchased spot BTC right? Wrong. I think they did a bit better than The Caisse but just marginally. This week, the OTPP’s venture arm, Teachers’ Innovation Platform (TIP) cut corners to get exposure to get their crypto exposure by participating in the $420m B-1 funding round for FTX Trading Ltd. owner and operator of FTX.COM, a leading global cryptocurrency exchange (valuing the company at $25bn).
There’s no doubt that there are very smart folks making investment decisions at these public pension funds. I just can’t wrap my head around their thesis around the cryptocurrency space. I guess it could simply be that they aren’t yet comfortable with holding the underpinning asset in this burgeoning ecosystem.
Bitcoin should be looked at as a venture-equity investment, without operator risk and with a ton of liquidity. Seems like a no brainer to me.
In case you missed it…
- Fixed income behemoth, PIMCO is buying crypto https://www.cnbc.com/2021/10/20/pimco-cio-daniel-ivascyn-says-his-firm-is-putting-capital-to-work-in-cryptocurrencies.html
- Walmart has quietly been selling BTC https://www.coindesk.com/business/2021/10/21/walmart-has-quietly-begun-hosting-bitcoin-atms/
- Peter Thiel feels underinvested in BTC https://www.cnbc.com/2021/10/21/peter-thiel-on-bitcoin-i-feel-like-ive-been-underinvested-in-it.html
- Paul Tudor Jones prefers BTC over Gold https://www.cnbc.com/2021/10/20/paul-tudor-jones-says-crypto-is-his-preferred-inflation-hedge-over-gold-right-now.html
- Texas Firefighters Pension Fund buys BTC & ETH https://cointelegraph.com/news/pension-fund-for-texas-firefighters-reportedly-allocates-25m-to-bitcoin-and-ether
- More on FTX’s raise https://www.prnewswire.com/news-releases/ftx-trading-ltd-closes-420-million-series-b-1-funding-round-301405473.html?tc=eml_cleartime
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