Axios Crypto

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🍊 Bitcoin must've liked that softer-than-expected inflation print β€” it's on the rise toward $65K. Plus, what 13Fs reveal and meme-stock coins.

Today's newsletter is 1,064 words, a 4-minute read.

1 big thing: πŸ₯ž Bitcoin, hold the ZIRP

Illustration: Gabriella Turrisi/Axios

Coiners have been worried that the end of the free-money era would blunt bitcoin's next rally.

The big picture: True, bitcoin is a risk asset, which tends to do better when interest rates are low, and poorer when rates are high β€” but ending there would oversimplify what factors are driving price of the world's oldest cryptocurrency.

Bitcoin has a limited history. It was born during the reign of zero interest rate policy, known as ZIRP, and doesn't have a long record of stacking cakes without it.

  • Many folks are now keenly focused on things like inflation prints, to divine whether the U.S. is in position to cut rates, which should give BTC a bigger boost.

Between the lines: "ZIRPlessness," however, might matter less to bitcoin than one might think.

  • "Bitcoin has never been a yield network," Noelle Acheson, author of Crypto is Macro Now newsletter, said, explaining how higher rate policy makes DeFi yields look relatively riskier. That presents a bigger drag for ether than bitcoin, she notes.
  • Crypto shop Pantera Capital echoed: "As interest rates have risen over the past couple years, blockchain has been able to rally."

Case in point: BTC posted new records in the first quarter.

In terms of U.S. rate policy, most seem to think a cut will come later, rather than sooner, but if the economy shows signs of weakening, maybe Federal Reserve chair Jerome Powell will have more leeway, Acheson said.

The intrigue: Whereas monetary policy uncertainty might keep bitcoin moving sideways in the near term, some think geopolitical tension is a booster.

  • "Where there was speculation on bitcoin at low interest rates, now there's kind of safety in bitcoin at high interest rates," Ryan Rasmussen, a researcher at Bitwise Asset Management, said.
  • 🧡 That bitcoin-as-safe-haven narrative is one that Hong Kong issuers of spot bitcoin ETFs have told Axios is important to their clients.

What we're watching: Where bitcoin's next boost could come from is uncertain β€” easing in Europe or Asia or in the U.S., or from greater potential reach from product distribution, or a large investor coming in, Acheson said.

The bottom line: At large, bitcoin is a macro asset and tied to the short-term trades of macro investors, but what moves the price of bitcoin is narrative, "more than correlation, or valuations, and to be honest, interest rates, although [what people say] about interest rates do matter," Acheson said.

2. πŸ“„ Bitcoin in TradFi paperwork

Illustration: Natalie Peeples/Axios

Bitcoin stands to get a boost from TradFi paperwork.

Between the lines: Filings are rolling in from institutional investors that detail their recent holdings, and they're unveiling buyers of the January-launched spot bitcoin ETFs.

  • They included big hedge funds like Renaissance Technologies and random ones, registered investment advisers and even Wisconsin's pension fund.
  • The institutional buy-in of bitcoin is so notable, at least one meme-stock trader seems to be associating 🍊 with Wall Street. (Scroll for moreπŸ‘‡)

Flashback: Tracking these filings, known as 13Fs, is sport β€” people like to try to borrow investment wisdom from Pershing Square's Bill Ackman, Citadel's Ken Griffin or Berkshire Hathaway's Warren Buffett.

  • πŸ“Έ Try, because 13Fs are filed quarterly, and are an incomplete, backward-looking snapshot of holdings over a period of time.
  • Hedge funds, mutual funds, trusts, pension funds, insurance companies and RIAs file these on a lag.

Zoom in: Some folks made a lot of hay about big banks holding bitcoin ETFs and were gently chided for mistaking market makers' holdings for bets, but the natives weren't wrong to be enthused.

πŸ’­ Our thought bubble: If traditional finance behaves predictably, as it does, the next quarter's 13F filings will very likely include new names, inspired by this quarter's buyers.

Worthy of your time: Bitwise's Matt Hougan is bullish about 13Fs for a different, but equally compelling reason specific to adviser behavior.

3. Charted: πŸ“ Bitcoin yardstick

The line chart shows the daily fluctuations in the ratio of Bitcoin's market cap to its hashrate from April 10 to May 13, 2024. The ratio experiences several peaks and troughs throughout the period, fluctuating between 1.7 and 2.4, indicating volatility in the relationship between Bitcoin's market value and computational power.
Data: Ycharts; Chart: Axios Visuals

Bitcoin's not expensive right now by one measure.

Zoom in: The bitcoin or hashrate yardstick is a metric used to determine whether the price of the world's largest digital asset is expensive or inexpensive.

  • ✌️ Generally, a ratio above 2 indicates a relatively more expensive BTC.

Between the lines: Think what the price-to-earnings ratio is for stocks.

  • Take the total market cap of bitcoin and divide by the hashrate (energy required to expand and secure the network).
  • When buying stocks, one generally wants to buy when P/E ratios are lower relative to history, or peer stock ratios, or the market or by whatever level some financial analyst deems appropriate.

Flashback: The metric was flashing a neutral signal in the first three months of the year, per Fidelity Digital Assets Q124 report, saying bitcoin was considered "cheap" for zero days in the quarter.

  • "This should be carefully considered because a higher standard deviation of the mean has historically preceded bull markets," according to that report.
  • The yardstick was at 3 or above right before the 2021 peak.

πŸ’­ Our thought bubble: Take it with a grain of salt.

  • πŸ”­ Per Wintermute chief Evgeny Gaevoy's observation: Charts, graphs and pattern-watching are just "astrology for men."

4. 🚴 Catch up quick

πŸ’΅ Haun Ventures founder Katie Haun confirmed that the firm invested in late-stage crypto survivors Fireblocks and Chainalysis. (Axios)

πŸ«₯ Lawyers for Ryan Salame are asking the court for a lenient sentence of 18 months after the former FTX executive pleaded guilty to charges including conspiracy to make unlawful political donations. (CoinDesk)

πŸ‡ΊπŸ‡Έ Stablecoin issuer Circle is shifting its global headquarters to the U.S. from Ireland. (CoinDesk)

🎰 Betting market Polymarket's Series B funding round included Peter Thiel's Founders Fund and Ethereum co-founder Vitalik Buterin. (Decrypt)

5. πŸ˜΅β€πŸ’« Meme-stock coins

Screenshot: @joemccann (social media)

The reappearance of the meme-stock trade looked like a threat to crypto, until crypto coined those too.

Between the lines: 🧸 Roaring Kitty looked bearish for crypto because Keith Gill and his crew would divert capital and attention to stonks.

  • A controversial manosphere influencer named Andrew Tate claimed he pulled money out of bitcoin and put it into GameStop to "take down" Wall Street.

The intrigue: Crypto's answer to that: Simply coin stocksπŸ‘†

What we're watching: There's a slew of them out there already β€” memecoins with tickers like GME, AMC and NVDA.

These aren't to be mistaken for tokenized stocks β€” they don't represent shares in the company nor are they reflective of underlying fundamentals.

  • πŸ€” GME-options traders aren't exactly driven by fundamentals either.

This newsletter was edited by Pete Gannon and copy edited by Carolyn DiPaolo.

Sooooo.... meme stocks or memecoins or meme-stock coins? β€”B & C