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March 4, 2023

🥛 The best investment strategy of the year?

GM. This is Milk Road. We’re like that first sip of coffee on a Saturday morning. Deep breath in… deep breath out… ahhhhhh.

Here’s what we’re serving up today:

  • Wanna bet against Jim Cramer’s stock picks?

  • Numbers of the Day: Silvergate causes panic

  • Tether used phony docs to access accounts

SHORT JIM SATURDAY

Two ETFs that track Jim Cramer’s stock picks launched on Friday — and already, over 270,000 shares have traded of the Short Jim fund and… only 14,000 of Long Jim.

Here are the two new products:

  • A Long Cramer Tracker ETF (LJIM) that’ll back shares of what Cramer likes

  • A short one (SJIM) that’ll deliver returns by either short-selling his picks or buying shares that he warns against

Here’s how it’ll work: The fund’s manager (Matthew Tuttle) and his team will watch Cramer’s daily TV spots as well as monitor his Twitter account to build the portfolios, which will hold between 20 to 50 companies.

If you need an intro: Cramer’s a bigwig finance guy who appears on CNBC and has a rep for being the most polarizing thing since pineapples on pizza for all the wrong calls he’s made.

The internet’s even thought up a name for doing the opposite of what he predicts: the “Inverse Cramer” (you can follow along with his picks via a Twitter account of the same name).

So it’s not surprising that there’s now an ETF giving investors what they want: a fund to short his calls. In honor of the launch, let’s look at Cramer’s biggest crypto misses:

1/ Coinbase

Cramer tweeted on April 14, 2021, that the crypto exchange will likely soar to $475. It went public that same day and closed at $328.28 a share.

It’s been almost exactly two years since, and Coinbase has plummeted, to $63 as of Friday, dropping 86% in 2022 alone.

This is probably one of his worst calls ever, but to be fair, he made it at a time when the industry was flying mighty high, and Coinbase was the first big-time crypto startup to go public. Stimulus checks were going out, cash was flooding the market, and crypto would peak a few months later.

Little did we all know…

2/ FTX

Cramer was one of the biggest cheerleaders of FTX… and we all know that was a $16B disaster.

Remember when he called SBF “the new JP Morgan” in June 2022? Before the idea of him being a fraud was even a blip on the radar? And Sam was the Robin Hood of the industry, bailing everyone out?

Good times.

3/ Bitcoin

And in the most recent example of making an oopsie call, Cramer said in early January that it’s a good time to get out of crypto because it can’t be trusted and the whole market is a “sham.”

Just 11 days later, BTC shot up from $17K to over $22K.

Cramer, my man. Was getting picks right not one of your New Year’s resolutions?

The Milk Road Take: The Feds approved this sh*t, but we still don’t have a Bitcoin ETF?? Smh.

Everyone and their mother has been trying to create a Bitcoin ETF the past few years, but the SEC has said "no" each time out of fear of market manipulation.

But a couple of ETFs that depend on what one single person (Cramer) says? Yeah, that’s totally cool.

We want to hear from the Roadies — you going Long Jim or Short Jim?

INTRODUCING DEFI FOR BITCOIN WITH MINTLAYER

I’ve been reminiscing about the good ol' days.

When Milk was delivered to your front door, and dollars were backed 1:1 by real gold.

Now you have to go the store to get your milk and the dollar is backed by a promise from the government.

This is the exact problem with wrapped Bitcoin tokens on layer 2 blockchains.

You don’t know if wrapped Bitcoin is backed by real Bitcoin or by a guy with a ‘fro who used to live in the Bahamas.

Here’s why that sucks:

  • You have to rely on the promise that the proof of reserves are legit. But are they?

  • Relying on wrapped tokens for functionality (what are these wrapped tokens really back by? 🤔)

  • Token bridges get hacked when you’re moving on and off (Axie infinity, anybody?)

The solution? Bitcoin. REAL Bitcoin.

Bitcoin is great, but it’s kinda boring.

It’s like gold. It looks good, it's worth a lot of money, but you can’t really do anything with it.

But that changes today, with Mintlayer. Mintlayer is bringing DeFi to Bitcoin with a layer-2 solution for Bitcoin that enables smart contracts, NFTs, and more.

The cool thing?

Mintlayer removes the need for token bridges or wrapped Bitcoin and allows you to swap tokens on the network 1:1 with your real Bitcoin.

CLICK HERE TO BUILD THE FUTURE OF DEFI ON BITCOIN

NUMBERS OF THE DAY

$185M — The amount of crypto liquidations in a 45-minute span on Thursday.

News of Silvergate delaying their 10-K caused crypto to go into panic mode on Thursday:

  • Ethereum lost $10B of market cap in less than 10 minutes

  • Bitcoin lost $23B of market cap in less than 10 minutes

  • A total of $211M was liquidated on the crypto market Thursday, the second highest total in 2023

Even though no one wants to see $185M worth of liquidations in less than an hour, it wasn’t THAT bad of a day considering a major crypto bank seems to be going down in flames.

44% — How much BUSD’s (Binance’s stablecoin) market cap has fallen in the past 3 weeks.

The issuer behind BUSD, Paxos, has been in more legal trouble than an NFL player.

  • On February 12th, the New York District of Financial Services ordered Paxos to stop minting and issuing BUSD

  • On February 13th, the SEC issued a Wells notice (meaning it is considering enforcement action) to Paxos

Since then, BUSD has lost ~$7B in market cap. As of yesterday, BUSD’s market cap was below $9.5B for the first time since June 2021.

And just to add salt to the wound, Coinbase is delisting BUSD on March 13th.

$8.9B of FTX funds are confirmed missing.

Yesterday, the Wall Street Journal confirmed the exchange can’t locate $8.9B worth of customer funds.

How did this happen?

FTX lent $9.3B of customer assets to Alameda Research, which only had around $475M of cash on hand as of Jan. 31st.

The court filing also revealed FTX owes customers $1.6B worth of Bitcoin but only has $1M worth of Bitcoin on the books. Oops

Imagine the price of Bitcoin if Samuel actually bought it instead of shoveling the cash to his money-burning sister company…

17.1M — Staked ETH that will be unlocked in early to mid-April.

Three things in life are certain -> death, taxes, and Ethereum devs delaying network upgrades.

This time, the Shanghai Upgrade (the next Ethereum network upgrade after The Merge) was delayed from March to the first or second week of April.

Once the upgrade is live, 17.1M of staked ETH (~$26.5B), or 14% of the supply, will be unlocked.

That means it’s time to sell, right? After 6 months of staking ETH, these holders are going to cash in, right?

Maybe, but maybe not. Some people think the upgrade will actually increase the number of staked ETH, because it will increase flexibility for direct and liquid stakers.

Plus, ETH is only up 11% since the Merge date, so it’s not like there are monster gains to be cashed in (yet).

MILK & COOKIES

The opener for the ETH Denver ceremony Thursday was a song making fun of SBF and Do Kwon. It’s almost as cringey as what those guys actually did…

Binance.US is operating an "Unregistered Securities Exchange", according to an SEC official. Gary G takes #nodaysoff

Stablecoin giant Tether set up bank accounts using fake documents and shell companies, the Wall Street Journal reported.

MILKY MEME

🤣🤣

That's a wrap for today. Stay thirsty & see ya next time! If you want more, be sure to follow our Twitter (@MilkRoadDaily)

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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.