ethbtc

Why I think ETH is a highly asymmetric long here (1 post, very simple, no thread) I discussed the below on my stream yesterday (around $2700) but I believe very few people have thought about ETH (from a price perspective, not technical) more than I have from both sides (short & long). This is the first time I have bought a meaningful amount of spot ETH since 2021, and herein are the reasons: 1. Coinbase's +30% move on 11/6 Pent-up demand was clearly demonstrated yesterday with Trump winning: this logically follows given that coins (which have universal penetration) are better liquid proxies and +EV that can participate in price discovery going into, and around, Trump's election odds vs. the more binary bet that CB was. CB is a US-domiciled Company where the unlocking of regulation is highly relevant. This pertains to not only developing novel revenue streams (perps in the US) and facilitating seigniorage <> BASE chain but also the primitive "easy" stuff - having consistent access to bank accounts, highly visible vendor OpEx, reliable cash collection methods - stuff that most companies take for granted otherwise. Coinbase and its derivatives (staking, DeFi) are fundamentally most tied to Ethereum as a primitive - both in terms of price (more highly correlated than other assets) and ethos. This "lag" in price between CB <> ETH is the gap that I am targeting being lifted. 2. ETHA volumes and ETF expectations With record ETHA volumes yesterday and today (with noticeable flows on both CB and Kraken), I believe ETF flows will be constructive. The flows do not have to be eye-popping as the reference benchmark is effectively zero. Over the last 2 weeks, cum'l flows have been ($75)M - and that is leading into the election with ETHBTC and ETHSOL eroding vastly over October. I believe that even modest flows - as long as they are continuous - will be enough to lift & generate back-end demand. ETH remains the only vehicle with an ETF product other than BTC where a) flows are visible and b) available for immediate injection. 3. Valuation gap If we are to believe that Trump unlocks "new capital" coming in: we must ask whether or not this new capital verges more highly on the side of retail or institutional. Put in other words - why has "[this participant]" not participated yet? I believe that ETH is the superior intersection for institutional entry - which is in some ways proven by its lack of appetite in the summer. New capital did not show up - which is more linked to the low seasonality and unwillingness to evaluate "digital silver" where fund managers were either taking vacations or rolling-off new decisions. Today, Bitcoin is at its MC all-time high. Solana breached a new MC all-time high today. ETH is ~30% down from its 2024 high and ~45% down from its prior all-time high. Trad evaluates opportunities in a different way than retail does. They search for two things: a) precedents and b) implied discounts. There will be individuals who look at price history amongst managers and relate: why has Ethereum slowed behind and does it deserve to be the only laggard here? In the air where everything else re-rates, I believe dry powder will be less comfortable bidding assets where value seems stretched vs the discount that ETH appears to be at. 4. Clearance of supply The fulcrum of why I was short the ETH ETF in August was two reasons: 1) supply and cost basis from previous cycles did not have an organic opportunity to participate in 2024 given the rehashing of multiple LST/LRT farms (where ETH was staked) and, 2) most alt managers were heavily overweight ETH as beta to their benchmark (BTC). When other assets (memes, SOL, etc) received a bid post-liquidation wick on 8/5, crypto-native funds were displaced and had to reorganize their emerging re-allocation strategy (which I believe now is heavily overweight SOL). Today, I believe that most individuals/participants who remain in ETH are anchored to a vastly different price anchor than where BTC/SOL strategists are. It is by far the most challenged asset to-date, and where supply for other assets may form at reasonable junctures (at ATH, +5% from ATH, etc), existing ETH stewards are likely targeting terminal prices set much higher than today. 5. What the market has shown Excitement about upcoming catalysts are splashy: - a surge in DeFi coins (all ETH-adjacent) looking for the cash flow switch - rumor-milling (underdiscussed in the midst of BTC ATH excitement) of "staking" enabled for the ETH ETF (which creates yield and aligned to the thread below which I wrote earlier this year) ---------------------------- In summary, the reasons which I believe have led to ETH lagging this year - a poor showing on the ETH ETF from low seasonality, existing over-weight supply and in the midst of this unreasonable price expectations - are likely now reversed and can enable material price discovery. ETH has been the most over-used short leg to hedge majors and alts after August, and this complacent positioning lays the groundwork to me for a violent repricing. I am hedging this with shorts elsewhere (persistent with my view on BTC's glass ceiling)