As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week's top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.
SEC TO ALLOW BITCOIN FUTURES ETFS TO TRADE: The Securities and Exchange Commission, is poised to permit the first U.S. Bitcoin futures exchange-traded fund to begin trading, Bloomberg’s Katherine Greifeld, Vildana Hajric, and Benjamin Bain reported Thursday, citing people familiar with the matter. It is unlikely that the SEC will block the products from beginning to trade next week, according to Bloomberg's sources. Unlike the other Bitcoin ETF applications previously submitted to the regulator that were rejected, the proposals by ProShares and Invesco (IVZ) are both based on futures contracts and were filed under mutual fund rules, which SEC Chairman Gary Gensler said provides "significant investor protections.”
COINBASE SHARES DIGITAL ASSET POLICY PROPOSAL: Faryar Shirzad, Chief Policy Officer at Coinbase, stated in a Thursday post to the company's blog: "Today, we're pleased to introduce our new regulatory framework, entitled Digital Asset Policy Proposal: Safeguarding America's Financial Leadership - dApp. We hope this document will animate an open and constructive discussion regarding the role of digital assets in our shared economic future. Our goal is to thoughtfully and respectfully engage in the debate, and to offer good-faith suggestions for how the U.S. financial regulatory framework should adapt to two critical developments: The blockchain-driven and decentralized evolution of the internet; The emergence of a distinctive asset class that is digitally native and empowers unique economic use cases. We understand that high-level proposals don't become law overnight - nor should they. But what they can do is evolve the debate in ways that are helpful for everyone, including members of Congress who are increasingly focusing on this area."
The company also announced on Tuesday its upcoming NFT marketplace. Sanchan Saxena, VP of Product, Ecosystem, at Coinbase announced in a blog post: "Today, we're announcing Coinbase NFT, a peer-to-peer marketplace that will make minting, purchasing, showcasing, and discovering NFTs easier than ever. Just as Coinbase helped millions of people access Bitcoin for the first time in an easy and trusted way - we want to do the same for the NFTs." As of October 14, the waitlist for the upcoming NFT marketplace appears to have nearly 1.5M sign-ups based on the ranks being assigned for joiners new to the list.
Following that news, BTIG analyst Mark Palmer noted that his bullish thesis on Coinbase has been predicated on his belief that, as the company diversifies its business and its revenue model becomes less dependent on retail transaction fees, the stock's multiple would expand to reflect its enhanced stability. While he has focused primarily on Coinbase's institutional prime brokerage platform as the driver of that diversification and continues to view it as critical to the prospects of the company and the stock, Palmer believes the "immediate and emphatic reaction" of retail customers to its announcement on a non-fungible token marketplace by the end has demonstrated its ability to accelerate the transformation of its franchise. Palmer has a Buy rating and a price target of $500 on the shares. Meanwhile, JMP Securities analyst Devin Ryan raised the firm's price target on Coinbase to $330 from $300 and kept an Outperform rating on the shares. The analyst noted the announcement on the NFT launch has been met with enthusiasm, and press reports indicate that the wait list for early access to the marketplace reached over one million signups in its first day. The analyst believes an NFT marketplace represents both a logical extension of Coinbase's business and potentially a tremendous long-term opportunity. Tuesday's announcement also highlights Coinbase's ability to leverage its unique scale, resources, and experience to move into emerging areas of the crypto economy as the company innovates and evolves its business model, Ryan contended.
FACEBOOK CRYPTO ENGINEERS JOIN ANDREESSEN HOROWITZ: Venture capital firm Andreessen Horowitz's Anthony Albanese, announced Monday in a blog post that two Facebook (FB) cryptocurrency engineers, Nassim Eddequiouaq and Riyaz Faizullabhoy, have joined the venture capital firms crypto team. "Nassim and Riyaz are phenomenal engineering and security leaders with a proven track record in blockchain and infrastructure, and are passionate about working to advance the entire crypto ecosystem. They've worked together for years across multiple companies to build world-class security systems in complex regulatory environments, and as part of our operating team, will closely consult with the projects in a16z Crypto's portfolio to apply rigorous security measures and technical guidance. Before joining a16z Crypto, Nassim and Riyaz co-created the crypto custody infrastructure for the Novi wallet at Facebook. Together, they served as engineering and technical leads for many aspects of the project to enable its vision of safely and securely bringing crypto to billions of new users," said Albanese, in part.
DA DAVIDSON INITIATES CRYPTO STOCKS: DA Davidson analyst Christopher Brendler initiated coverage of Marathon Digital (MARA) on Thursday with a Buy rating and $65 price target. The company's focus on leveraging hosting partners allowed them to purchase over 130,000 top-of-the-line machines, the analyst said, further noting that Marathon's new rigs are already coming online and its top line is set to grow by over 100%, but the stock's enterprise value is at just 4-times expected FY23 EBITDA. Brendler also initiated coverage of Riot Blockchain (RIOT) with a Buy rating and $42 price target. The analyst cited the company's largest mining operation in the U.S. providing them with scale, along with its "cheap" power and experienced management team. Brendler also initiated coverage of Core Scientific (XPDI) with a Buy rating and $16 price target. The analyst said the company is "best-in-class" in a business all about scale, with an accomplished management team and a "strong" underlying foundation. Additionally, Brendler initiated coverage of Hut 8 Mining (HUT) with a Buy rating and $20 price target. The analyst said Hut 8 is the firm's top pick in the bitcoin miner space on valuation, saying the company is set to scale rapidly. Brendler added that earnings growth is set to "materially exceed" expectations.
JPMORGAN CEO CALLS BITCOIN ‘WORTHLESS’: J Morgan Chase (JPM) CEO Jamie Dimon said cryptocurrencies will be regulated by governments and said he personally believes bitcoin is "worthless," Reuters’ Elizabeth Dilts Marshall and David Henry reported Monday, citing comments made at a conference. "No matter what anyone thinks about it, government is going to regulate it. They are going to regulate it for (anti-money laundering) purposes, for (Bank Secrecy Act) purposes, for tax," Dimon said. He later added, "I personally think that bitcoin is worthless. I don't think you should smoke cigarettes either."
CRYPTO STOCK PLAYS: Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia (NVDA) in select research. Overstock (OSTK), Ideanomics (IDEX), Riot Blockchain, Pareteum (TEUM) and SRAX (SRAX) are other stocks that have been touted, or promoted themselves, as a way to play the crypto theme.
PRICE ACTION: As of time of writing, bitcoin rose roughly 10% this week to $59,919 in U.S. dollars, according to TradeBlock.
Bitcoin
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Bitcoin
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Bitcoin
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Dogecoin
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Litecoin
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Ethereum
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Invesco
-0.015 (-0.06%)
Coinbase
+ (+0.00%)
Ticker changed to META
+0.005 (+0.00%)
Marathon Digital
-0.01 (-0.02%)
Riot Platforms
+ (+0.00%)
Power & Digital Infrastructure Acquisition
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Hut 8 Corp.
-0.005 (-0.05%)
JPMorgan
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AMD
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Nvidia
-0.01 (-0.00%)
OSTK
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Ideanomics
+ (+0.00%)
Pareteum
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Srax
-0.01 (-0.17%)