5 – 🖤 Sunrise, Sunset

el Prof

May 24, 2024

GM HEARTLAND

It’s the start of an era and the end of one. As a new age of institutional crypto adoption dawns, the titular “doge” of the doge meme and the face of Dogecoin has passed on. R.I.P. Kabosu. Alexa, play “Sunrise, Sunset.”

—El Prof, Muhammed & Chad

MONEY MONEY MONEY

TOKEN

PRICE CHANGE

PRICE

Solana ($SOL)

-0.23%

$169.55

Helium ($HNT)

-12.65%

$4.28

Pyth ($PYTH)

-2.22%

$0.44

Solend ($SLND)

+0.00%

$0.57

(Price changes reflect past 7 days as of 5.24.24)

  • You can hardly tell how bullish the public sentiment is with how stable $SOL based tokens have been over the last week.

  • Well, on second though, stability is far from the norm. So maybe “relatively flat” speaks volumes.

ETH ETFs: A New Dawn for Crypto

Sit down, Michael Saylor. Less than a month ago, the professional crypto critic issued a bleak forecast for Ethereum, Solana, et al: “None of them will be wrapped by a spot ETF, none of them will ever be accepted by Wall Street.”

Today? Well…

The SEC just approved spot $ETH ETFs. This marks an historic moment for the industry, opening up a new avenue for investors to gain exposure to one of the biggest crypto names on the market.

For many, directly investing in cryptocurrency can be daunting due to exchange security risks and complex wallet management. Ethereum ETFs offer a familiar and potentially safer way to gain exposure to the world’s second-largest cryptocurrency by market capitalization.

Let’s delve into what Ethereum ETFs are, the potential benefits they hold for investors, and how they might impact the Ethereum market.

What are Ethereum ETFs?

Imagine a stock market instrument that tracks the price of ether ($ETH), the digital currency that fuels the Ethereum blockchain network. That, in essence, is an Ethereum exchange-traded fund (ETF). Similar to a Bitcoin ETF, it allows investors to benefit from price fluctuations in the underlying asset, ether, without the need to directly buy and hold the cryptocurrency itself.

While Grayscale trusts previously offered a similar investment in Ethereum, Ethereum ETFs differ in terms of accessibility and fees. The initial offerings come from a variety of established financial institutions, including VanEck, BlackRock, and Fidelity. Investors should research the specific features and fees associated with each ETF before investing, and consider consulting with a financial advisor or further online resources to determine if Ethereum ETFs align with your investment goals and risk tolerance.

Benefits of Ethereum ETFs

The approval of Ethereum ETFs signals yet another step in institutional adoption of crypto investing, bringing several advantages with it:

  • Accessibility: For those intrigued by Ethereum’s potential but hesitant to navigate the complexities of buying and holding digital assets, Ethereum ETFs provide a more traditional investment avenue.

  • Diversification: Adding Ethereum ETFs to a portfolio could introduce a new layer of diversification, potentially reducing overall risk. Since Ethereum’s price movement might not perfectly correlate with traditional assets like stocks or bonds, its inclusion could help smooth out portfolio volatility.

  • Legitimacy: The SEC’s stamp of approval brings a level of regulatory clarity and oversight to the $ETH market, potentially boosting investor confidence and legitimizing cryptocurrency investments as a whole.

Potential Impact on Ethereum Price

When spot Bitcoin ETFs were approved in January, the “gold” of crypto surged to an all-time high. Many expect the “silver” to follow suit. The surge in demand and mainstream exposure could drive up the price of $ETH, with some analysts predicting a potential rally.

Beyond the potential price boost from the ETF effect, Ethereum’s future potential as a platform for smart contracts and decentralized applications (dApps) could be another significant factor influencing its long-term value.

It’s important to note, however, that like any investment, Ethereum ETFs might come with expense ratios and limited control over the underlying asset. In other words, if the ETF wave materializes, buying $ETH directly may be the way to ride the crest.

Looking Ahead

We’ve made no bones about our horse in the race for crypto adoption. But just because we’re not in love with the Ethereum ecosystem doesn’t mean we’re not excited about this development — if not because of what it means today, then certainly because of what it might mean tomorrow.

—Muhammed

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The Politics (And Economics) Of Memes

As a palette cleanser from last week’s moment of clarity, I decided to write something lighthearted and fun this week. Politics was an obvious choice.

Granted, I’m not interested in a polarizing discussion, as all political debates in our divided climate tend to gravitate toward these days. I’m talking about two topics Americans of every stripe can get behind: money and memes.

Among the many “get rich quick” avenues in the DeFi space, meme coins are capable of getting you the richest the quickest — if you don’t bankrupt your life’s savings first. That’s because meme coins are, in effect, a decentralized extension of prediction markets.

For the uninitiated, prediction markets are gambling sites enabling you to bet on the likelihood of future events and their outcomes. These can be familiar bets like boxing fights, but are typically more geared toward elections, social events, or other specific contests. As a data scientist, I believe prediction markets are some of the purest ways to gather data about individuals and their beliefs, because the monetary risks they are taking reflect a certain magnitude of conviction in their beliefs on a future outcome.

While meme coins are ephemeral and don’t necessarily “end” in the way events or elections do, they do act as a proxy for the ebbs and flows of the cultural discourse. As such, they give us an avenue for collecting financial value from the awareness that certain brands or topics give off at their moments of peak public relevancy.

But what brands or topics? Well, the ones people are meme-ing, of course. Beyond the OG meme coin $DOGE (R.I.P. Kamuso) or its chief competitor Shiba Inu ($SHIB), many meme coins align with specific celebrities, cultural artifacts, or events.

For example, $MILK, a somewhat tasteless coin dedicated to Sydney Sweeney, surged around her SNL appearance. I had the pleasure of taking a position weeks before. Here’s how I rode the wave.

The key to success in prediction markets is, predictably, predicting. First, I figured meme coin investors and fans of Sweeney’s, um, work overlapped to a certain degree. It helped that her X account was hacked to shill the coin, explicitly drawing a connection between the two. As soon as the excitement from that initial exposure died down, I bought in. Then, as the web3 hype machine began to roll and the extremely online crowd convinced themselves the meme coin tweet would get called out on live TV, many more investors took positions, driving the price higher.

But it wouldn’t be wave-riding if there wasn’t a wipeout. I made what I thought was a shrewd prediction: buy the dip, sell the opening monologue. Short of Sweeney actually calling out the coin on SNL (which obviously did not happen) it was a safe bet that excitement would peak early in the show, before reality began to sink in for the straggling HODLers. Problem is, I made that prediction publicly. Maybe I shouldn’t have tweeted it out, because “sell the monologue” turned into a rush of people front-running the first minute of the show. Prices peaked earlier that afternoon. But I 10x’d anyway, so it’s hard to have regrets.

I don’t say all that to brag, but to set the scene for the real life bets that took me to this perspective. There are meme coins for almost anything, and not every host of SNL is going to drive a shitcoin pump-and-dump. But by closely examining the intersection of crypto investors and culture icons, these meme coins can be a legitimate pathway to very serious gains. Which brings me to said perspective.

I, and several of our playhaus team members speculating in our local NFT Central community telegram channel, have compiled portfolios with heavy exposure to political meme coins like $TREMP and $BODEN, the latter of which just went viral in NYC. These investments were made in light of former President Donald Trump’s comment that he “will build a crypto army” — not to mention the passage of decidedly pro-crypto acts by the government, and crypto’s progression toward a bipartisan issue that will remain at the forefront of the political conversation, regardless of the ultimate electoral results.

With the rise of AI and deepfakes, the centralization of political discourse on social sites, and the rise of decentralized encrypted communication and financial transfer protocols, crypto is, in the immortal words of Derek Zoolander, so hot right now. I unironically believe political meme coins are the vehicles best positioned to capture that heat. These tokens might just represent the future of discourse, or at least another avenue for monetization and value capture. Regardless of your politics, you don’t have to sit on the sidelines while this wave rides by. No matter who wins in November, $TRUMP and $BODEN could both come out on top.

—El Prof

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