Hello, Investors,

It’s green time, everywhere.

BTC futures are hitting $75k already, the market is touching $2t and we are wondering… When is high too high already?

Let’s explore.

Side note: I’m speaking at the HIT Games Conference this Thursday and Friday. They have amazing gaming topics and you can attend for free, strongly recommend 👍

What is BRC-20 and how to invest in it?

In the blog, we dive into BRC-20 since this area is closely linked to the rising BTC price and in my view, this can be the “degen” space of 2024 similar to ETH-based NFTs in 2021.

Full article at 👉 https://blog.metainvestor.gg/ 

BTC on the levels not seen since 2021. Time to sell?

Short answer - not at all.

Let’s go deeper.

Last week I was writing about the Chinese pouring money into the economy (here).

That’s important because Chinese investors buy foreign assets (US) and the US market goes up (s).

But, the most important tap is still off - the FED has yet to turn it on.

That’s still a major factor to consider this year.

When it comes to BTC, there is still plenty of space to grow.

The question is, is BTC the right asset to buy?

I mentioned a few times over the past year in this newsletter that I favor ETH. It’s my biggest position and until spring last year, I had no BTC position.

Why?

I prefer the idea of blockchain to power specific use cases and with BTC I was struggling to find that utility/value - I won’t use it as a currency for payments, so it’s more of the digital gold in my eyes. And I prefer tech infra stocks over gold.

Now back to the future.

Last year ETH was lagging behind BTC, and it still is.

Below we see Jan’23 until today, BTC +212% while ETH “mere” +131%

But this year the consensus is more towards ETH outperforming BTC, because:

1. ETH ETF is coming - we saw the playbook already.

2. Bitcoin is the leader, but after BTC rises people rotate into altcoins - including ETH or SOL.

3. And this is my favorite - while people expect BTC halving, they’re often ignoring that 25-35% of ETH is locked (staked) which reduces the supply (s, s, s)

My take

I don’t expect the spot ETF approval to have the same magnitude as with BTC. There is much less awareness on the market about ETH vs. BTC.

It is still very positive for 2 reasons:

1. New money, not seen until the approval,

2. Awareness - when traditional investors get bombarded with news about ETH and not only BTC, they start doing the homework and dive into “What is ETH”? This will unlock more adoption and use case exploration.

However, I expect the same playbook as with BTC - buy the rumors, sell the news.

That means a rising price for the next ~3 months or so, and of course a dip if any sign of delaying approval.

Rotation into altcoins can be tricky. Investors need to find the right balance between the time they want to spend on analyzing the altcoins and risk:return they aim for.

The simple way is to focus on the “blue chips” and big projects, or a sector investing in popular narratives - RWAs, DePIN, AI, GameFi, BRC-20, SoFi/DeSo.

The supply:demand is the law, it must play out.

With the rise of liquid staking and restaking, people are more and more motivated to lock their ETH somewhere, reducing the circulating supply.

As long as this model works (yield > risk, scams, hacks), the circulating supply will squeeze and this will multiply the effect of new money (spot ETF, typically “bull-only” investors), further increasing the price.

One thing to add. I’m not reducing my BTC buyings yet, because I’m watching the BTC/BRC-20 space and I expect to see more BTC DeFi platforms and use cases later this year.

This could be a strong catalyst to start moving BTC around, possibly locking as well, further reducing the supply - even more than halving itself.

To sum up,

• I’m bullish on ETH, still buying

• Don’t reduce my BTC yet because of the incoming DeFi hype

• Altcoins are on the table already, focusing on big tokens and narratives rather than chasing 100x on low caps - ofc I bought some meme coins, don’t worry, just it’s a small portion of the portfolio.

Yield on stablecoins exploded —> over 20% with no lock-up.

• With the raging bull market comes more borrowing. That increases the yield (demand) on stablecoins.

My take: When even Binance’s simple flexible earn offers 10%+ on a single stablecoin, that’s a good day to hold some cash. And they give 22.45% right now.

Lending still sits at 35% from the 2021 bull run (s), but the supply is scattered.

Starknet announces airdrop (s)

• Starting in 5 days (20 Feb), eligible wallets can claim 7% (over 700 million) STRK tokens.

• It’s much more than just Starknet users that are eligible.

• These include Sorare users, ETH stakers, Immutable adopters, and many different kinds of developers, EIP approvals, etc.

My take: This made me open my Sorare account and I saw a few cards I “bought almost 3 years ago”. Anyway, free money, check it out and be very careful of fake links and scams.

Citibank enters Avax’s Spruce Subnet (s)

• Spruce is the subnet for financial institutions (s) and is already being used by WisdomTree, T. Rowe Price, and Wellington Management.

• Citi’s proof-of-concept demonstrated how smart contracts could enable greater automation and potentially enhanced compliance controls for investors and issuers.

My Take: RWAs have great potential and use of blockchain (secondary market). JPM already collabs with Avax, now Citi enters their subnet.

These are all bullish signals for Avalanche and their specific subnet architecture, which could result in Avax being one of the top blockchains at the end of 2024.

My biggest belief is in ETH, AVAX, IMX, and MATIC. Solana is right after, still not 100% sure about it but definitely an important project to consider.

Genesis to sell $1.6b of Greyscale shares (s)

• A judge to allow the bankrupt lender Genesis to sell its shares of Grayscale’s funds

• Estimates are $1.3b in Bitcoin ETF ($GBTC), the remaining $300m in Ethereum and Ethereum Classic funds.

• The motion does not set up a timeline and allows Genesis to sell as they decide.

My take: I hope they don’t dump all at once and rather DCA out to get better prices. One way or another, with $500m+ daily inflows in the BTC ETFs, this shouldn’t make that big impact.

Frax Launches Modular Layer 2 Blockchain (s)

• Frax is a top 20 DeFi protocol and is about to launch Fraxtal, an OP Stack-based Layer 2 network.

• FXS (governance token, not ETH) stakers will get rewarded, most probably airdropped new tokens of the network.

My take: I did my math and don’t like the chances ($360m locked already), keeping my ETH elsewhere (mainly Eigen). My biggest problem is that I don’t see the USP, it’s more of a yet another L2.

MorpheusAI started their fair lunch

• Stake your stETH and get a % of the fair launch tokens.

• Fair launch = all the tokens, but you will get them over 16 years.

My take: I love fair launches, in combination with AI, which is today very centralized, I think such a project is a great idea - and we can see it from the numbers as they already have $175m staked (s). But it’s too high and again, would require a lot of ETH to make sense, which I don’t want to spend here. I will consider other options such as providing the compute power.

Stay awesome,

Matt.