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| | | Good afternoon. So Elon Musk recently dropped some more Dogecoin jokes memes on his X account. And guess what? DOGE prices only surged ~5% before stumbling back down the very next day. | Jobs reports? Interest rates? No. THAT’s how you know the economy is getting a little tighter. | Today’s Stories:
🐑 A WULF in Sheep’s Clothing
😧 Solana ETFs Stumble
🎢 Got Leverage? | Today's newsletter is 815 words, a 4-minute good read. |
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TeraWulf Targeted By Short Sellers. Meanwhile Major Investors Take a Stake |
Short selling firm Grizzly Research has published a report on TeraWulf (WULF), a $1.8 billion ESG-focused bitcoin miner claiming that the company is a self-dealing operation with a team wholly lacking in crypto-mining experience. |
Grizzly claims that the “incredibly small operating team has a history of large business failures and a history of overpromising and underdelivering.” |
The firm also claims that the company has deep ties to “pump and dump” investors. |
And they aren’t the only ones. Only 10 days ago, Hunterbrook Media also called the company into question stating: |
“TeraWulf claims over 93% of the energy it uses at its keystone New York facility is renewable — but the New York Power Authority, which supplies 45% of the facility's energy, told Hunterbrook Media: ‘None of the power that NYPA provides the firm can be claimed as renewable power.’” |
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After speaking with New York and federal regulators, Hunterbrook found that the only way the company can “legally substantiate its zero-carbon claims” is “through purchasing renewable energy credits (RECs),” but that doing so would increase the company’s “operating cost by an estimated 60%.” |
Hunterbrook also alleges that the company only leases its facilities and is self-dealing by paying fees to entities and individuals with ties to TeraWulf’s CEO. |
Major Hedge Funds Bite Back |
Almost immediately after the two short sellers reports, Steve Cohen’s hedge fund Point72 disclosed a 1.3% stake in the company, sending the stock over 30% higher over the past 5 days. |
There are also some relatively immaterial buys from Stanley Druckenmiller and George Soros, but the news will of course drive headlines and chatter. |
Overall, we don’t know why the funds are buying. It could be just a sector allocation trade… or it could be something more. |
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Solana ETFs Stumble |
Bitcoin ETFs… ✅ |
Ethereum ETFs… ✅ |
Solana ETFs… ❌ |
This week the SEC rejected two prospective spot Solana ETF applications from CBOE on behalf of 21Shares and VanEck. |
As reported by The Block, the denial followed conversations between the SEC and issuers over concerns that SOL is a security. |
| Eric Balchunas @EricBalchunas | |
| Nice flow chart showing how the Solana ETF filings never made it past Step 2 (the SEC failed to ack them) = DOA. So the exchanges withdrew 19b-4s altho the issuers' S-1s are still active. A snowball's chance in hell of approval unless there's change in leadership via @JSeyff | |
| | | 3:36 PM • Aug 20, 2024 | | | |
| | 386 Likes 81 Retweets | | 28 Replies |
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What’s Next? |
We may see new amendments to filings that would argue for Solana's status as a commodity. Despite the withdrawal’s of the 19b-4s, VanEck’s Head of Digital Assets, Matthew Sigel, reminded everyone on X that they’re still in the fight. |
| matthew sigel, recovering CFA @matthew_sigel | |
| | Replying to@matthew_sigel | For the record, VanEck believes SOL is a commodity, much like BTC and ETH. This belief is informed by evolving legal perspectives, where courts and regulators have begun to recognize that certain crypto assets may function as securities in primary markets but behave more like… x.com/i/web/status/1… | | | 8:26 PM • Aug 19, 2024 | | | |
| | 123 Likes 21 Retweets | | 16 Replies |
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Got Leverage? |
Last week, Defiance Investments, a thematic ETF issuer, announced the launch of MSTX – a long (1.75x) leveraged ETF targeting MicroStrategy (MSTR). This ETF now holds the title of the most volatile ETF in U.S. history, with a 30-day average volatility that's 12x higher than the S&P 500. |
Not stopping there, Defiance followed up with SMST, a short (-1.5x) leveraged ETF targeting MicroStrategy, catering to those looking to bet on a decline in MSTR prices. |
In essence, MicroStrategy (MSTR) has always been a leveraged play on Bitcoin, and now, with MSTX and SMST, traders have leveraged options on MSTR in both directions. |
Unsurprisingly, these high-risk, high-leverage ETFs have seen strong interest, with MSTX pulling in $22 million in volume on its first trading day – setting a record for day-one performance among leveraged ETFs. |
| Eric Balchunas @EricBalchunas | |
| $MSTX saw $22m in volume today, which may be a Day One record for a leveraged ETF. What a country. | Eric Balchunas @EricBalchunas HEAT WAVE: Here's a look at the most volatile ETFs in the US and how $MSTX is estimated to begin life today at the top spot. But look for this "volatility barrier" to be broken in the future as issuers look to push 'hot sauce' envelope, especially if $MSTX finds an audience. |
| | | 8:45 PM • Aug 15, 2024 | | | |
| | 230 Likes 26 Retweets | | 10 Replies |
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| Global Markets Investor @GlobalMktObserv | |
| US NON-FARM PAYROLLS HAVE BEEN REVISED DOWN BY A WHOPPING 818,000 THIS IS FOR THE 12 MONTH PERIOD THROUGH MARCH 2024 This revision is the largest since 2009, the last year of the Great Financial Crisis Truly insane. | |
| | | 2:35 PM • Aug 21, 2024 | | | |
| | 103 Likes 33 Retweets | | 6 Replies |
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