On this week’s e-newsletter, Will Owens considers the all-time highs achieved by bitcoin and gold; Marc Hochstein examines the nice print of ICE’s blockbuster $2 billion funding in Polymarket; and Lucas Tcheyan previews the upcoming debut of Solana ETFs.
Bitcoin and Gold Hit Report Highs
Bitcoin broke above $126,000 this week, setting a new all-time high alongside gold, which crossed $4,000 per ounce. The twin rally in laborious belongings underscores how buyers are concurrently chasing returns and looking for refuge from inflation. The continuing U.S. authorities shutdown seems to have pushed buyers towards perceived “safer” belongings, whereas silver has been flirting with $50 per ounce. In keeping with Glassnode, almost 97% of BTC’s circulating provide is now in revenue. The cluster of BTC bought round $117,000 has flipped into key help, one thing Galaxy’s Alex Thorn has tweeted about recently. Some whales, together with one who sold 3,000 BTC on Hyperliquid this week, are taking earnings, however small and mid-sized holders proceed to build up. That each bitcoin and gold set recent all-time highs in the identical week says extra in regards to the macro regime than “crypto euphoria.” Bitcoin’s rally displays a broader institutional repricing of digital shortage. Gold now trades above $4,000 per ounce, silver has examined $50, and but market sentiment stays muted (CoinMarketCap’s Crypto Fear and Greed Index remains only at neutral), far under the retail-driven mania of 2021.
OUR TAKE:
Not like the euphoric frenzy of 2021, that is an institutional repricing of shortage. Bitcoiners have been preaching this for the reason that Genesis Block. This “debasement commerce” doesn’t simply randomly finish, as a result of governments don’t cease debasing their currencies.
The query on everybody’s thoughts in crypto now could be whether or not the four-year cycle nonetheless applies, or if this cycle marks a structural shift. At Galaxy Analysis, we consider this one is completely different on account of a softening regulatory setting, stronger institutional flows, and broader mainstream adoption.
A pullback into the $117k help zone right here could be solely wholesome and never bearish. For now, Bitcoiners wish to see if returns can catch as much as what gold has accomplished this 12 months. Gold has already been pricing the price of belief for hundreds of years.
I favored investor Jeff Park’s description this week: Bitcoin as a “purification commerce” somewhat than a “debasement commerce.” Capital is migrating towards what’s scarce, everlasting, and incorruptible. The system is not collapsing. It’s refining itself.
Or because the cinematic Donnie Darko reminds us: “Destruction is a type of creation.” – Will Owens
ICE’s $2b Guess on Polymarket — and on the Worth of Prediction Information
Intercontinental Trade, the mum or dad of the New York Inventory Trade, agreed to take a position as much as $2 billion in Polymarket, the businesses announced Tuesday. The deal is the seventh-largest fairness funding in a crypto firm and the biggest non-public funding by a conventional Wall Avenue agency, in response to Messari knowledge, and values the blockchain-based prediction market platform at $8 billion. That’s up almost 7x the valuation in Polymarket’s most up-to-date funding round this 12 months and up 22x from a spherical earlier than the November 2024 election. Along with the good chunk of change, ICE mentioned it plans to “change into a worldwide distributor of Polymarket’s event-driven knowledge, offering prospects with sentiment indicators on subjects of market relevance.” The 2 corporations will even work collectively on tokenization initiatives, in response to ICE. In the meantime, Polymarket founder and CEO Shayne Coplan hinted {that a} POLY token could also be within the works, and MetaMask announced a plan to combine Polymarket into its pockets (together with perpetual futures buying and selling).
OUR TAKE:
The funding and imprimatur of an iconic Wall Avenue establishment are part of a outstanding reversal of fortune for Polymarket and its 27-year-old founder, Shayne Coplan, whom Bloomberg has dubbed the world’s youngest self-made billionaire. Practically a 12 months in the past, within the waning days of the Biden administration, the FBI raided Coplan’s house as a part of an investigation into whether or not Polymarket was permitting U.S. customers to entry the platform in violation of an earlier settlement with the Commodity Futures Buying and selling Fee. Underneath the Trump administration, nonetheless, the feds dropped the investigation, and Polymarket acquired QCX, a CFTC-licensed trade, paving the way in which for the platform to return to the U.S. market. A pariah no extra, Coplan was invited to business roundtables on the White Home and a joint SEC-CFTC occasion. Donald Trump, Jr., whose agency participated in an earlier funding spherical, joined Polymarket as an advisor.
Past the eye-popping valuation and Coplan’s comeback, we surprise what precisely ICE plans to do with Polymarket’s knowledge. That data is already publicly out there onchain, and the percentages are printed on Polymarket’s web site and up to date (apparently) in actual time. However, market knowledge providers are a significant enterprise line for ICE, one which introduced in about $1.84 billion of income final 12 months, round 15% of the corporate’s complete. ICE might consider it may possibly bundle Polymarket’s knowledge in a manner that provides worth for TradFi shoppers, maybe by delivering it immediately to the identical buying and selling screens these establishments already use in a format they’re used to. In that case, and if ICE charged for this service and gave Polymarket a lower, it’d assist clear up a longstanding problem for the latter firm, which doesn’t cost buying and selling commissions: discovering a sustained income mannequin.
Zooming out, one might argue that the true product of a prediction market platform will not be the bets themselves, however the informational sign these markets generate. If a platform might discover a solution to monetize the sign, it’d, conceivably, be capable to make cash with out charging commissions. Prediction markets combination dispersed data into value indicators. Every contract value will be interpreted as the group’s implied likelihood of an end result. Throughout many markets and over time, this creates a dataset of probabilistic forecasts—primarily a repeatedly up to date mannequin of collective expectations. In financial phrases, the bets are inputs, not outputs. The precious output is the data produced by the interplay of these bets. From this angle, it’s not outlandish to think about Polymarket’s unsung benefit lies in its potential to seize and standardize this knowledge at scale, making a high-frequency feed of real-world sentiment and prediction.
Conventional exchanges monetize buying and selling exercise via charges, however these charges introduce friction that distorts value formation. Individuals alter bids and presents to account for prices, that means market costs deviate barely from “true” collective possibilities. If Polymarket can as a substitute discover some solution to monetize the information layer, it might proceed to keep away from that friction. A zero-commission construction ought to yield extra environment friendly markets and, by extension, a cleaner, higher-quality informational product. The standard of the information improves exactly as a result of customers will not be paying to offer it.
So, we will envision Polymarket positioning itself much less as a betting venue and extra as an data infrastructure supplier. The markets are the mechanism via which it crowdsources forecasts; the enterprise, on this situation, is the commercialization of these forecasts. Pure prospects for such a product may embrace monetary establishments, hedge funds, information organizations, and AI builders looking for real-time, market-derived indicators of future occasions.
In the meantime, the doable POLY token teased by Coplan might, relying on how it’s designed, deal with one other large problem for Polymarket: sustaining belief in its contract resolutions. Greater than a 12 months in the past, tech information website The Info, citing unnamed sources, reported that Polymarket was contemplating issuing its personal token “as a manner for customers to validate the result of real-world occasions.” To these studying between the strains, that gave the impression of a shot throughout the bow for UMA Protocol, the oracle service Polymarket makes use of to resolve markets and adjudicate disputes by way of group votes. A standard complaint about UMA is that giant holders of its token can collude to resolve markets in a manner that enriches them, whatever the precise end result.
Polymarket has already taken steps this 12 months to rely much less on UMA by utilizing Chainlink to resolve markets on asset value actions. When that tie-up was announced, the businesses mentioned they have been “exploring methodologies to develop the usage of Chainlink to settle prediction markets involving extra subjective questions, thereby lowering reliance on social voting mechanisms and additional minimizing decision danger.” (Emphasis added.) So maybe Polymarket continues to be pondering of POLY as a part of the answer to its decision drawback.
Lastly, we’re intrigued by ICE’s fleeting point out of a joint tokenization effort with Polymarket. As Coplan famous in a short interview on the TBPN podcast, Polymarket has expertise on this space – each “sure” or “no” share traded on the platform is a blockchain token tied to a real-world end result. So, enlisting its assist to tokenize the real-world belongings listed on ICE’s exchanges doesn’t seem to be a stretch. We stay up for listening to extra particulars about this shock alliance between a TradFi Goliath and a degen David on ICE’s quarterly earnings name Oct. 30. – Marc Hochstein
License to Stake: The New ETF Period
The following wave of crypto ETF launches is predicted imminently as closing deadlines for approval from the U.S. Securities and Trade Fee (SEC) method. Along with rising accessibility to a wider vary of crypto belongings past the present bitcoin and ether choices, lately up to date Solana ETF filings, in addition to commentary from main ETF analysts like Bloomberg’s James Seyffart, point out that the latest approvals are more likely to embrace staking as part of their providing. Heightened expectations observe the SEC’s approval of Generic Itemizing Requirements for ETFs in September (see Galaxy Analysis’s protection here). Beforehand, each new crypto ETF required a separate 19b-4 submitting, typically triggering as much as 240 days of assessment. The brand new framework removes that bottleneck, changing it with minimal eligibility standards that enable qualifying ETFs to checklist routinely. In keeping with Galaxy Analysis’s inside evaluation, crypto belongings that meet that standards embrace DOGE, BCH, LTC, LINK, XLM, AVAX, SHIB, DOT, SOL, HBAR, ADA, and XRP. Issuers pursuing ETFs tied to those tokens have been requested to withdraw their pending 19b-4s, as they’re now lined below the brand new requirements. With this infrastructure in place, the pipeline for altcoin ETFs is ready to speed up, and extra spot crypto merchandise are anticipated to launch within the coming months. A number of exchange-traded merchandise within the U.S. already provide staking publicity. This week, Grayscale launched the primary spot crypto ETPs in america to include staking rewards, permitting buyers to earn yield from ETH and SOL held by the funds. Different autos issued below the Securities Act of 1933, together with VanEck’s Solana Strategy ETF (SSK), are already buying and selling and embrace staking. These autos, which sit exterior the stricter Funding Firm Act of 1940 framework that governs conventional ETFs, present futures publicity to belongings corresponding to Solana and have constructed a whole bunch of thousands and thousands of {dollars} in AUM. Whereas Solana ETF launches have been beforehand anticipated as early as this week, the federal government shutdown has launched delays as a result of formal S-1 approvals (nonetheless required below the Basic Itemizing Requirements framework) should look forward to the SEC to return to work. At this level, nonetheless, it’s a query of when, not if.
OUR TAKE:
As a brand new set of crypto ETFs comes on-line, consideration will now shift to flows. Bitcoin ETFs have been among the many most profitable ETF launches in historical past, attracting almost $170 billion in inflows. Ethereum ETFs, whereas slower to begin, have since gained momentum with roughly $31 billion in holdings. However these two belongings are the biggest and most generally understood in crypto. The following slate of ETFs targets belongings which can be far much less acquainted to conventional allocators. In a crowded market, they’ll needn’t solely a powerful narrative but additionally the basics to justify inclusion in funding portfolios.
There are some out there proxies for demand. Bitcoin and Ethereum ETFs maintain between 6% to 7% of the entire provide of their underlying asset. If Solana matched that ratio, for instance, it could translate to $8 billion to $9 billion in potential flows over the following two years. It is a extremely optimistic situation that overlooks materials variations in notion and use case. Ethereum is more and more considered as a worldwide settlement layer for stablecoins and DeFi. Solana, in contrast, continues to be seen primarily as a client chain the place exercise is pushed by hypothesis. Reflecting that distinction, a note printed by J.P. Morgan analysts Thursday forecasted $1.5 billion in first-year flows for Solana ETFs, based mostly on comparisons between early inflows to SSK and Ethereum’s ETFs, in addition to citing Solana’s heavy reliance on memecoin buying and selling. Furthermore, the truth that BlackRock, the biggest BTC and ETH ETF issuer, has but to file or point out curiosity in launching extra single-name ETF merchandise might additional hamper curiosity.
The inclusion of staking, nonetheless, removes a key structural headwind. With SOL staking yields above 6% APY, staking makes ETF publicity extra engaging and neutralizes one of many largest drawbacks of ETF buildings – dilution from un-staked holdings. The rise of digital asset treasury companies, which supply each a type of leverage in addition to staking yields, additional raises the bar for ETFs to compete on construction and efficiency. Early indications from filers like Bitwise level towards low long-term charges of 0.2% and no charges for the primary three months and the primary $1 billion in AUM.
Maybe most attention-grabbing is the convergence and rising competitors, now underway between conventional finance and crypto. As ETF issuance expands past Bitcoin and Ethereum, the SEC is concurrently accelerating approvals and steering needed for tokenized variations of conventional belongings to commerce on-chain. SEC Chairman Paul Atkins has beforehand said that tokenization is the following step for enhancing market effectivity, and this week said the SEC is trying to formalize an “innovation exemption,” enabling corporations to construct on crypto rails as early as the top of this 12 months (notice: the federal government shutdown might delay this timeline).
The actual competitors isn’t between ETFs — it’s between methods. Will Wall Avenue soak up crypto quicker than crypto absorbs Wall Avenue? The reply will resolve which rails the following period of finance runs on. – Lucas Tcheyan
Chart of the Week
Hyperliquid’s builder program turns distribution right into a associate channel. Apps and wallets that combine Hyperliquid and route consumer move obtain a share of buying and selling charges, which provides them a direct incentive to advertise onchain perpetual futures contained in the interfaces individuals already use. The thesis is that income sharing can scale adoption quicker and extra effectively than direct consumer acquisition by the venue.
Charges tied to builder exercise have compounded from about $8 million in early June to only over $30 million by early October, with momentum clearly selecting up in late August and thru September. A number of large companions nonetheless anchor the bottom, however the rising layers from smaller contributors sign a widening lengthy tail. The story will not be solely bigger totals, but additionally broader participation that makes the community more durable to dislodge and fewer dependent on any single outlet.
Income and participation are rising in tandem. Payment revenue from builders and referrals climbs from roughly $20 million to greater than $50 million over the interval, whereas the depend of energetic builders advances from about 200-350. That pairing tells a much bigger story than progress alone. As extra companions plug in and earn, the mannequin scales with out relying on a single channel, strengthens liquidity via added move, and deepens alignment with integrators who now share within the upside.
The information factors to a distribution flywheel. Every new builder provides a motivated advertising and marketing floor inside wallets and apps, which brings incremental order move, which deepens liquidity and improves execution, which in flip lifts charges and makes this system extra engaging to the following builder. The broadening lengthy tail reduces dependency on any single associate and makes volumes extra resilient.
For integrators, this system converts product visitors right into a recurring income line with out standing up a full trade. That income line raises switching prices and tightens alignment with Hyperliquid. For the venue, buyer acquisition prices shift to companions, protection inside client interfaces expands, and the model competes much less on direct visitors and extra as a dependable backend utility.
If the pattern holds, this mannequin will strain centralized exchanges and rival perps chains that rely on captive entrance ends, as a result of wallets can change into the default brokerage layer whereas the trade recedes into infrastructure. Potential dangers stay, together with focus in just a few prime builders and sensitivity of associate engagement to payout phrases, however the trajectory in {dollars} and energetic builders suggests actual community results are forming. — Christopher Rosa
Different Information
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🗽 Coinbase Launches Crypto Staking in New York State
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🚀 Plume Token Surges After SEC Approval
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📈 ZCash Surges Extra Than 140% Pushed by Institutional Entry
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🤖 QumulusAI Secures $500M for AI Compute Infrastructure
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₿ Sq. Introduces Bitcoin Cost Answer for Retailers
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🇯🇵 Softbank’s PayPay (Not Pepe) Acquires Stake in Binance Japan
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🏛️ Crypto Invoice Progresses in Senate Amid Authorities Shutdown
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🏦 Citi Joins Visa in Supporting BVNK for Stablecoin Funds
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📊 S&P Introduces Crypto and Inventory Index
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