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29th June 2024 > > Good ETFs & bad ETFs.


Spot SOL ETFs are most welcome. A 2x leveraged MSTR ETF is just a dumb idea.

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BTC very briefly breached $60k to the downside yesterday evening, but oh so briefly. Four straight days of (small) inflows to the ETFs is an encouraging trend but I do wonder how much of that is due to a more favourable basis tempting the hedgies into the cash and carry trade. Those are the weakest hands of all, simply playing the arbitrage, with no conviction in the underlying asset.

Curious Cryptos’ Commentary – Spot SOL ETF

Alex2036 drew this little wrinkle to my attention.

The Grayscale Solana Trust (GSOL) has a Net Asset Value of $55. With a price around $145 per SOL, each share in the trust confers ownership of approximately 38% of one SOL.

The clearing price per share? A whopping $400, giving an implied price of over $1,000 per SOL.

If that was to come to pass, that’s a near 8x return on simply buying SOL today.

Right on cue, GSR issues a report about the potential price impact of a spot SOL ETF:

You should never put too much store in anyone’s price estimate given the uncertainties in the world, but I do recommend reading this report as it is a nice little summary of SOL itself, the current regulatory landscape in the US which regular readers know all about, a discussion about the extent of decentralisation and how to measure it, and a pricing conclusion.

For the record, the range given is 1.4x to 8.9x after a potential spot SOL ETF is launched.

Curious Cryptos’ Commentary – Leveraged MSTR ETF

MicroStrategy (MSTR) uses debt and equity to buy BTC for its balance sheet. It is a leveraged play on the price of BTC, and forms a core element of the stock portion of the CC Treasuries portfolio.

T-Rex has filed for two new ETFs providing 2x leverage on the performance of MSTR, one long and one short.

Bloomberg ETF analyst, Eric Balchunas, opines:

“T-Rex just filed for the first-ever 2x Microstrategy $MSTR ETFs.. these are a near-lock to be most volatile ETFs ever seen in the US, will likely be in the neighborhood of 20x the volatility of SPX. The ghost pepper of ETF hot sauce.”

This is a product that really should not see the light of day. The SEC will likely wave it through, making it readily available as an investment for a raft of investors for whom it is entirely unsuitable.

The SEC is simply not fit for purpose.

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