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GM. This is Milk Road, the crypto newsletter that's as irresistible as a 'Buy One, Get One Free' deal.
It’s Friday. Let’s boogie:
- The dark horses of crypto 👀
- Trade strategy of the week: call options 🤑
- The British Museum is coming to the metaverse 🍪
Prices as of 10:30 AM ET
THE DARK HORSES OF CRYPTO 👀
It’s been a good year for crypto tokens.
- BTC: +76% YTD
- ETH: +57% YTD
- Altcoins (like XRP, SOL, BCH, and MKR) are +100% YTD
Talk about 50 Shades of Grey Green.
But there have also been a handful of other investments that have seen BIG returns.
We call ‘em the Dark Horses of Crypto. These are the underdogs. The unexpected winners that not many investors had on their radar at the beginning of the year.
Today we’re gonna talk about 2 of them…*drumroll*...
1/ COINBASE STOCK ($COIN)
The U.S.-based crypto exchange had a rocky start to the year.
In March, it received a Wells Notice. This is a warning that regulators identified violations of securities laws and is often followed by legal charges.
(Wells Notice = a notice that things are not well)
In June, it got sued by the SEC. Regulators charged the exchange for acting as an unregistered broker, listing securities tokens, and failing to register its staking program.
But fast forward to today…
Coinbase’s stock ($COIN) is up 30% over the last 30 days and is up 176% year-to-date.
Why? 2 big reasons…
- Coinbase has been named the “surveillance-sharing service” for multiple Bitcoin ETFs. BlackRock, Fidelity, VanEck, Ark Invest, Valkyrie, and Invesco all named Coinbase in their applications.
- XRP was rulednot a security by a judge. This was big for Coinbase because XRP was one of the main securities the SEC charged the exchange with listing. (If XRP isn’t a security, Coinbase can’t get in trouble for listing it)
Coinbase has seen what we like to call: Success-by-association.
2/ Bitcoin miners
2022 was a rough one for Bitcoin miners.
As the price of Bitcoin crashed, so did mining profits. And it got to the point where companies were losing money by mining.
It’s called “second-hand rekt”.
As a result - a few mining companies went bankrupt, some were forced to sell off their reserves in order to keep the lights on, while others shut down their mining rigs for the crypto winter.
Fast forward to today… Bitcoin miners are back. Mining profits are flowing in again and stock prices for publicly traded companies have skyrocketed.
Here are some of the best-performing companies (year-to-date)...
- Core Scientific: +1,250%
- Iris Energy: +430%
- Riot Platforms: +425%
- Bitfarms: +300%
And just like that, Bitcoin miners are back on the winner’s podium of investments.
THE GREAT CRYPTO COMEBACK OF 2023
It’s been a fun summer so far for the crypto world: Institutions are diving in with ETFs, Gary and the SEC were handed an L with the XRP lawsuit, and numbers are going up.
These headlines have brought some major excitement to the industry. Let’s not forget that after being declared “dead”, Bitcoin rallied over 5,000% in 2016 and ~1,300% in 2021.
Could another major rally be in Bitcoin’s future?
Well, the Milk Man is gonna bring in some experts to explore this. That’s why we partnered up with the Digital Currency Summit.
This online event will give you insights from 27+ experts on:
- Which assets are making up most of their portfolio
- DeFi protocols poised for major growth and adoption
- Emerging NFT innovation that’s on the verge of going mainstream
The event takes place from August 15-17. And Milk Road readers can reserve a free ticket now!
INVESTMENT STRATEGY OF THE WEEK: CALL OPTIONS
Bitcoin is up big this year (+76%). But as of late, prices have been flat and stuck between $29,000 - $30,000.
It’s been one long game of crypto table tennis…
Now investors are all wondering one thing: Where should I put my money?
Well, one alternative is a call option. This is something that gives traders the option to buy an asset at a specific price, before a later date.
If investors are bullish on an asset, call options could be a good strategy to optimize returns.
Let me give you a quick analogy.
Let’s say I want to invest in some chickens and lay some eggs. (tired of the overpriced ones at the grocery store)
I go to an auction house and find some for $1000.
But, I’m still not sure if I want to buy them. (my wife might kill me if I randomly come home with chickens)
So the auctioneer cuts me a deal: he’ll hold the chickens for me, at the agreed price, until the end of the month.
We sign a contract and in return, I pay him a small fee.
Then two weeks later, I get a call from the auctioneer. He gives me crazy news…instead of laying eggs, the chickens are laying bricks of cash.
The whole town knows and the money-printing chickens are on national news.
Now everyone wants to buy some of these chickens. The price skyrockets from $1000 —> $10,000.
The good news: the auctioneer and I still have our deal at a flat rate of $1000.
So I drive to the farm, buy the chickens for $1k, and immediately go sell them in the parking lot for $10k. *cha-ching*
The same thing can be done in crypto.
And according to Markus Thielen (head researcher at Matrixport), now might be a good time for Bitcoin investors to switch over to call options.
Here’s why:
- Bitcoin trading volume and volatility have decreased. Bitcoin’s 30-day realized volatility has declined to 28% (the lowest since January).
- As volatility decreases, investors historically look toward buying call options. Because options contracts are priced based on the expected volatility of the underlying asset, it’s cheaper to buy them when volatility is low.
- He suggests investors lock in some YTD gains with Bitcoin now and rotate those profits into buying call options. Investors cash in on profits and the call option allows investors to get back into the game if there’s another pump.
It’s a pretty interesting strategy and if the rally continues, call options could lead to big gains.
But as always, remember the golden rule…
Milk Road Rule #1: Always DYOR (do your own research)
BITE-SIZED COOKIES 🍪
Backers dropped the Little Legends charitable NFT project earlier this week. Partnered with Shoes That Fit, holders benefit from unique NFTs, private events, and rewards and get to help provide sneakers to those in need.**
The British Museum is partnering up with Sandbox to launch new NFT collections. The British Museum will also create its own immersive space within the Sandbox metaverse.
Sequoia Capital slashed its crypto fund by 65%. The fund size has shrunk from $585M → $200M throughout the crypto downturn. Yikes.
Shiba Inu launched its new layer 2 bridge for public testing. This will allow users to bridge tokens from Ethereum <-> Shibarium (Shiba Inu’s new layer 2 blockchain).
A handful of crypto companies are teaming up to create a new web3 security benchmark called “The Rekt Test”. Immunefi, Solana Foundation, Fireblocks, and other web3 security specialists are all cooperating to create The Rekt Test in order to decrease hacks and fraud.
**This is sponsored content.
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ROADER REVIEW OF THE DAY
VITALIK PIC OF THE DAY
— Milk Road Images (@MilkRoadImages)2:35 PM • Jul 28, 2023
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
