Gotta collect 'em all • Letter 132

Eureka y’all, Bitcoin is officially larger than silver when comparing by ETF net asset value, and this is Colton from Hedgehog, the app that helps you buy baskets of cryptocurrency and automate your digital asset exposure wherever you custody funds.

Yessir, that’s $27B in value across all Bitcoin ETFs, compared to silver’s total ETF NAV of $11B. The next giant to fell is gold at a whopping $96B, but given that the BTC ETFs have only been around for a week, a quadrupling in size over time doesn’t seem far-fetched.

Onto the news!

Coinbase cries, “Collectibles!”

Coinbase defended itself in an initial hearing with NY’s District Court yesterday, and put forward a very aggressive defense against the SEC, who hopes to expand its control over crypto markets, which have traditionally been deemed the jurisdiction of the CFTC.

The gist of the argument is that crypto tokens don’t give you any rights over the underlying organizations that issue them, and so they are indistinguishable from a collectible: as reported by Bloomberg, “It’s the difference between buying Beanie Babies Inc. and buying Beanie Babies,” say the Coinbase attorneys.

Now this ignores a whole class of governance tokens like the Ethereum Name Service, or OP, but I’m sure there’s a sophisticated argument somewhere in there that helps them carve out those tokens. The court has not dismissed the case out of hand, but we expect that we’ll be hearing a more definitive response in the coming months.

Rich ecosystem, poor ecosystem

CoinGecko released a report on the history of tokens listed on their platform and they claim they’ve seen over 24,000 new projects listed since 2014. Since then, they’ve also seen just over 14,000 projects go belly up, either from rugpulls (ie scams), or from lack of momentum during the bear markets.

It turns out the prior scenario tends to be more common, as they see an increase in project shutdowns during bull markets, suggesting that groups will spin up a token, then take the ICO cash and run, or else test out a new meme and quietly fold if it doesn’t catch on.

In some sense, this is a heartening metric. It means that you should weight your new deposits toward bearish periods and then rebalance with a momentum strategy as projects thrive in the bull runs. That being said, it pays to have a strong filter for inclusion into your index, even something as simple as including only tokens with a contract age greater than six months.

Themes, themes, for every deal

More analysis coming in the new year from every corner. Check out some breakdowns of the annual reports from Binance, Messari, and CryptoKoryo.

I’ve been a bit of a degenerate lately trying to use lesser known chains and protocols. It’s still a pain in the butt! What’s your favorite lesser known ecosystem?

Keep hedging,
— Colton</p>