Crypto Tonight: Ian's Crypto Journal
Bitcoin ETFs and NFT Foxes
Hey everyone, welcome to Ian’s Crypto Journal. These essays are some thoughts I’m collecting around different areas of crypto I’m researching and learning about. Feel free to email me at [email protected] if you want to share some thoughts!
Crypto Tonight’s Spotify Playlist Of The Week
Idk if you all know this but I love music. I spent some of the weekend and Monday AM researching and writing this piece, so naturally I had to listen to something. I feel bad for my neighbors who must have thought there was some sort of EDC Vegas afterparty here.
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Bitcoin ETFs (and Retail Investors) Are Coming
For years my mom has asked me how to buy crypto, mainly Bitcoin. I keep telling her to just download Coinbase and shit (if you’re into Ethereum, though, use Rainbow...disclosure I’m an investor so Mike sorta pays me to say this).
But at the end of the day, others don’t trust crypto enough to buy it, but still want exposure to #gainz. That’s just how capital works—even more so in crypto. Capital perpetually chases the highest yield. For the last 10 years, retail has believed the highest yield was in the tech and startups sectors. Now, it seems the highest yield was actually in crypto all along.
Now that mainstream media has caught on, retail investors are realizing this too. Many boomers are still apprehensive about *touching* crypto, but want to invest in it *safely* (my evidence for this btw is Coinbase’s stock, which trades...bizarrely. Almost as if it trades on the whims of retail investors who follow CNBC headlines).
There’s a lot of concern on Twitter from different groups of crypto enthusiasts about Bitcoin ETFs. In my opinion, this is a good thing for crypto, but more importantly, an inevitability. If crypto is digital gold, shouldn’t there be similar financial products too? Back in the day people wanted to put money into gold—a stable yet growing asset—but it was hard for retail investors and institutions to go and buy physical gold cause why the fuck would you? So, gold spot ETFs and futures popped up.
This is where things get interesting, and I’m gonna dive deeper into a future post: most of the complaints around the Bitcoin ETFs are around the fact that the futures ETFs are getting approved and Bitcoin spot ETFs aren’t yet. Spot ETFs are when you hold the underlying asset and price the ETF based on where the asset is trading. Futures ETFs are essentially contracts where you’re agreeing to buy the asset at a predetermined price.
Spot ETFs typically trade lower than Futures ETFs. Long term, this should create some interesting implications for the Wall Street crypto trading community. If both spot and futures ETFs get approved, we could see situations where there’s a clear arbitrage between spot and Futures ETFs, or circumstances when the futures Bitcoin market is mispriced due to retail confusion...a bunch of random things. All of this should create new investment opportunities in a nascent market—a trader’s dream come true.
Retail FOMO for Bitcoin has arguably never been higher. With new Bitcoin ETFs hitting the public markets soon, expect crypto trading craziness to come to Wall Street too. And, for all the naysayers, check the Bitcoin price since all this ETF news came...net net, this is (probably) a good thing.
Editor’s Note: Ian wrote this on Monday; as of publishing, Blockworks reports that the Proshares ETF launched today traded over $500 million in volume in just 2 hours.
One thing I’m very grateful and appreciative of is knowing folks that are much smarter and more creative than me. It serves as a daily dose of inspiration. So when I was catching up on Mario Gabriele’s incredible solo publication, The Generalist, over the weekend, I was hyped to see his first NFT drop: Philosophical Foxes.
Most NFTs are something along the lines of CryptoPunks or Bored Apes—a collection of images that are slightly different. But, Mario’s project flips this on its head a bit. In “Philosophical Foxes,” the NFTs are essentially characters with their own personalities and characteristics, based on 5 core principles.
Foxes have thoughts
Foxes have philosophies
Foxes have virtues and baggage
Foxes have secrets
Foxes accumulate backstory, over time
The end result is incredible: all these foxes have a different story, and it feels like the beginning stages of a movie and a game at the same time. Some have secrets that are only accessible to the owners. Owners can also develop and change their foxes persona over time, by purchasing “ownerless thoughts.”
All this stems from a really strong thesis from Mario: developing and nurturing great IP takes time, and NFTs are enabling new methods of IP development. Some, like Bored Apes and CryptoPunks, outsource a lot of the IP development to the community. Instead, “Foxes” creates the IP and naturally turns the owners into storytellers too.