Ben Strack

Casey Wagner

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Welcome to the On the Margin Newsletter, brought to you by Ben Strack and Casey Wagner. Here’s what you’ll find in today’s edition:



<ul class="wp-block-list">
<li>A reminder from a TradFi CEO: Banks and brokerages will ultimately go “headfirst into bitcoin.”</li>



<li>NVIDIA’s woes seem to bring the whole market down with it. But things may be looking up. </li>



<li>There’s a new politician in town, and his sights are set on Elizabeth Warren’s seat. </li>
</ul>



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<h2 class="wp-block-heading">Banks ready to go ‘headfirst’ into BTC</h2>



Bitcoin’s price is bouncing around. It was trading below $20,000 in early 2023 before <a href="https://blockworks.co/news/bitcoin-all-time-high">hitting an all-time high price</a> above $73,000 last March. BTC was trading just north of $58,000 at midday Wednesday.



“But ultimately over the next five years, as it gets invited into this party, up we go,” Howard Lutnick, CEO of financial firm Cantor Fitzgerald said in a <a href="https://x.com/howardlutnick/status/1831080474124681316?s=46">video</a> posted on X.&nbsp;



This party he’s referring to? A festival of sorts where some of the world’s biggest companies reverse bitcoin’s historic role as “an outsider to the TradFi community.”&nbsp;&nbsp;



“Banks still can’t clear [bitcoin]. Banks still can’t transact in it. Banks still can’t [custody] it…and they won’t finance it,” Lutnick added.



He paused before adding, “Yet.”



There’s a misunderstanding that TradFi players don’t want to transact in bitcoin, Lutnick claimed.&nbsp;&nbsp;



“If the regulatory environment was good, you [would] see all the traditional financial service companies — the big banks, the big brokerage companies — they’re all going to go headfirst into bitcoin,” he noted.



(Sidenote: Maybe <a href="https://blockworks.co/news/vanguard-disallows-bitcoin-etf-trading">Vanguard really is an exception</a>, as they’ve said repeatedly. Still, some believe they’ll come around.)



Lutnick pointed out that for banks to custody a client’s bitcoin, “they would have to set aside their own money equal to that amount in sort of like a jail.” This is thanks to the SEC’s Staff Accounting Bulletin (SAB) 121.&nbsp;&nbsp;&nbsp;



On that note, financial organizations said in a February <a href="https://www.sifma.org/wp-content/uploads/2024/02/SAB-121-Joint-Trades.pdf">letter</a> to SEC Chair Gary Gensler that SAB 121 “has curbed the ability of the Associations’ members to develop and bring to market at scale certain digital asset products and services.”



Though lawmakers came together in May to <a href="https://blockworks.co/news/senate-passes-resolution-to-overturn-sab121">pass a resolution that would invalidate SAB 121</a>, President Joe Biden vetoed it.&nbsp;&nbsp;



The rule has “effectively precluded” banks from <a href="https://www.duanemorris.com/articles/banks_as_crypto_custodians_may_rest_sec_bulletins_fate_0624.html">safeguarding</a> crypto, the letter added. Notice that Coinbase (rather than big TradFi banks like State Street) are custodying the BTC for spot bitcoin ETFs issued by BlackRock and a handful of others.



Speaking of State Street, the financial giant last month teamed up with crypto infrastructure provider Taurus to add tokenization and digital custody offerings. Deutsche Bank too said last year it was <a href="https://blockworks.co/news/deutsche-bank-crypto-custody-tokenization">set to establish crypto custody and tokenization services</a> with Taurus’ help.



With institutional traders looking to mitigate counterparty risk by finding trustworthy custodians, that market is projected to see a compound annual growth rate of 23% through 2028, according to a recent OKX research <a href="https://www.okx.com/learn/okx-economist-impact-report">report</a>.&nbsp;



Beyond just custody, we’ve talked before about the tokenized money market funds of asset management titans BlackRock and Franklin Templeton. <a href="https://blockworks.co/news/jpmorgan-tokenized-blockchain-portfolio-avalanche">JPMorgan</a>, <a href="https://blockworks.co/news/goldman-sachs-future-public-blockchains">Goldman Sachs</a> and others continue to <a href="https://blockworks.co/news/tradfi-blockchain-trials-mass-adoption">explore blockchain tech use cases</a>.



OKX chief commercial officer Lennix Lai told Blockworks “a point made forcefully” by financial executives at the crypto exchange’s <a href="https://blockworks.co/news/on-the-margin-newsletter-inevitable-institutional-digital-assets-involvement">second quarter roundtable</a> was indeed that greater regulatory clarity would be a significant catalyst for growth. They praised the EU’s Markets in Crypto Assets Regulation and UAE regulatory advancements, he noted.&nbsp;



While we know TradFi players have shown interest in crypto in recent years and months, hearing Lutnick’s blunt words that essentially all of them want in feels like a welcome reminder during what could be deemed a <a href="https://blockworks.co/news/empire-newsletter-crypto-trends">weird time for crypto</a>.&nbsp;



And to realize the upcoming presidential election could help <a href="https://blockworks.co/news/more-crypto-remarks-likely-coming-from-trump-harris">spur more crypto policy discussion </a>— and maybe that coveted regulatory clarity — perhaps makes the possible wait time feel more manageable.



— Ben Strack



<h3 class="wp-block-heading">$175,000</h3>



The amount Uniswap is set to pay <a href="https://blockworks.co/news/cftc-settlement-uniswap-labs">to settle allegations made by the CFTC</a>.



Uniswap, according to a Wednesday CFTC <a href="https://www.cftc.gov/PressRoom/PressReleases/8961-24">release</a>, “illegally offered leveraged or margined retail commodity transactions in digital assets via a decentralized digital asset trading protocol.”



Uniswap didn’t immediately return Blockworks’ request for comment.



In a dissenting <a href="https://www.cftc.gov/PressRoom/SpeechesTestimony/mersingerstatement090424">statement</a>, CFTC Commissioner Summer Mersinger said: “Wielding the hammer of enforcement against these DeFi protocols may result in some short-term ‘wins,’ but in the long-term, without more, it will only create problems.”&nbsp;



<h2 class="wp-block-heading">NVIDI-Oh No&nbsp;</h2>



It’s been a tough couple weeks for NVIDIA.&nbsp;



Despite beating earnings expectations last week, shares of NVDA lost as much as 7% in pre-market trading and 2% at the open on Aug. 29 — the day after its record-setting report dropped.&nbsp;



The stock had hardly pared losses before yesterday’s <a href="https://blockworks.co/news/on-the-margin-newsletter-ism-pmi-goods-disinflation">ISM report sent most stocks lower</a>. And then, just as the market was closing, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-09-03/nvidia-gets-doj-subpoena-in-escalating-antitrust-investigation">reported</a> the Justice Department had sent NVIDIA and others subpoenas as part of an antitrust violation investigation.&nbsp;



Combine all that and you get some disappointing results: NVIDIA lost roughly $279 billion in value on Tuesday. It was the largest single-day loss in market value for the US company so far in 2024.&nbsp;



It looks like we have some dip buyers out there, though. NVDA shares were up 0.7% as of 2 pm ET. The stock is down around 15% over the past five trading days but still up 9% over the month (and 126% year to date).&nbsp;



The Philadelphia Stock Exchange semiconductor index dipped to its lowest level since March 2020 on Tuesday, but was also paring losses by Wednesday, trading 0.9% higher at 2 pm ET.&nbsp;



Still, things could be worse. The VIX hit 22.6 this morning, which is a five-day high but a far cry from levels hit a month ago, when the index approached 40.&nbsp;



Analysts say the key level to watch for NVDA will be $100 (shares were hovering around $109 at 2 pm ET). I’m not one to give investor advice, but the last time shares went below triple-digits, they came back more than 30% in less than two weeks.&nbsp;



One quick note: You may have seen reports on social media that US Rep. Nancy Pelosi sold her NVIDIA shares just before news circulated that the DOJ had subpoenaed the chipmaker. These claims were fabricated; there are no filings showing Pelosi’s shares aren’t just as in the red as everyone else’s. Well, unless you bought NVDA this morning.&nbsp;



— Casey Wagner&nbsp;



<h2 class="wp-block-heading">It’s Warren v. Deaton&nbsp;</h2>



Crypto advocate and attorney John Deaton will be up against Elizabeth Warren in November for her seat in the US Senate. Deaton blew the competition out of the water last night, winning the Republican nomination with close to a 65% majority (as of this morning, when 95% of votes had been counted).&nbsp;



“Tomorrow, we begin the next phase of the campaign — an effort that will hold Elizabeth Warren accountable for her failures on the border, the unaffordable cost of supporting a family, a broken healthcare system, abandoning our ally Israel and restoring faith in our politics,” Deaton said in a statement Tuesday evening.&nbsp;



Deaton likely owes a good portion of his success to his funding. As of mid-August his campaign had raised $1.7 million — $1 million of which was a loan from Deaton himself. He has not repaid himself any amount, FEC filings show.&nbsp;



Industrial engineer Robert Antonellis — Deaton’s runner-up in the primary with 26% of votes — had raised $46,449 for his campaign as of mid-August, per FEC <a href="https://www.fec.gov/data/candidate/S4MA00291/">filings</a>. About half of this amount was a personal loan from Antonellis.&nbsp;



It’s still a bit early for polling, but Warren has a strong track record against Republican candidates. She defeated GOP incumbent former Sen. Scott Brown in 2012 with 53% of votes. In 2018 she won against Republican Geoff Diehl, 60% to 36%.&nbsp;



So far, <a href="https://blockworks.co/news/more-crypto-remarks-likely-coming-from-trump-harris">crypto remarks from presidential hopefuls</a> Donald Trump and Kamala Harris have been very one-sided. But with Warren vs. Deaton now confirmed, I’m expecting this race to be far more crypto-centric.&nbsp;



Here’s a review of Warren’s crypto track record:&nbsp;



<ul class="wp-block-list">
<li>Last year she penned a letter to crypto exchanges and lobbying groups accusing them of <a href="https://blockworks.co/news/senator-warren-on-crypto-partnerships">undermining bipartisan efforts</a> to regulate the industry by hiring ex-government officials. </li>



<li>In January she said the SEC <a href="https://blockworks.co/news/sec-wrong-bitcoin-etf-elizabeth-warren">shouldn’t have approved spot bitcoin ETFs</a>, stating that regulators were “wrong on the law and wrong on the policy.” </li>



<li>In May she doubled down on her stance that crypto companies need far more robust anti-money laundering policies. </li>
</ul>



Meanwhile, Deaton has emerged as a pro-crypto candidate — despite not having a formal digital assets platform on his website. He became a leader of the so-called “XRP army” in 2021 when he <a href="https://blockworks.co/news/elizabeth-warren-challenger-senate">championed token holders</a> during the SEC’s lengthy lawsuit. His campaign started accepting crypto donations in March.



Deaton has expressed interest in debating Warren, although nothing has been scheduled yet. Should the two face off, I’d be willing to bet that “bitcoin” is mentioned and golf handicaps are not.&nbsp;



— Casey Wagner



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul class="wp-block-list">
<li>Bitcoin was trading at about $57,900 just after 2 pm ET Wednesday — up 0.8% in the last 24 hours but a 2.5% drop from seven days ago. ETH, down just slightly in the past week, has also seen a lift in the trailing 24 hours, amounting to about 1%.</li>



<li>The net capital flowing out of US spot bitcoin ETFs totaled $288 million on Tuesday. This marked the highest single day of outflows for the category since May 1, Farside Investors data <a href="https://farside.co.uk/bitcoin-etf-flow-all-data/">shows</a>. </li>



<li>Speaking of crypto ETFs, Tuesday marked the ninth time in the last 11 trading days that the largest spot ether ETF — BlackRock’s iShares Ethereum Trust (ETHA) — saw zero flows. Net outflows for the segment now total $525 million since the US spot ether funds’ <a href="https://blockworks.co/news/nine-us-spot-eth-etfs-live-post-approval">July 23 launch</a>.   </li>



<li>After Riot Platforms yesterday <a href="https://blockworks.co/news/riot-questions-bitfarms-proposed-acquisition">criticized Bitfarms’ proposed acquisition</a> of Stronghold Digital Mining, <a href="https://blockworks.co/news/bitfarms-defends-pending-acquisition-riot">Bitfarms fired back</a>. The company said the comments made by Riot (its largest shareholder) were “misleading,” adding that Riot is “attempting to acquire Bitfarms at a discounted price.” </li>
</ul>



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Banks and brokerages will ultimately go ‘headfirst into BTC’: TradFi CEO

Felix Jauvin

Today, enjoy the On the Margin newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/onthemargin" target="_blank" rel="noreferrer noopener">Subscribe to the On the Margin newsletter</a>.



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Welcome to the On the Margin Newsletter, brought to you by Ben Strack, Casey Wagner and Felix Jauvin. Here’s what you’ll find in today’s edition:



<ul class="wp-block-list">
<li>Many braced for NVIDIA’s Q2 results. Felix breaks down the main takeaways.</li>



<li>A closer look at the situation OpenSea potentially faces after getting a Wells notice from the SEC.</li>



<li>How specific will Harris and Trump get about crypto policy before the election? An industry exec weighs in.     </li>
</ul>



<h2 class="wp-block-heading">NVIDIA &#8211; Priced too perfectly?</h2>



Let’s set the record straight: NVIDIA is an incredible company achieving incredible things.&nbsp;



At the forefront of the emerging AI revolution, NVIDIA has grown its quarterly income at a staggering rate:



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1200" height="614" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png" alt="" class="wp-image-91180" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png?w=1200 1200w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-56.png?w=80 80w" sizes="(max-width: 1200px) 100vw, 1200px" /></figure>



As we went into yesterday’s earnings release, the company had huge expectations to live up to. It was priced to perfection.&nbsp;



With that priced-for-perfection story, the outcomes quickly became one of what makes trading markets so difficult — the game between what is expected versus what the actual outcome is. That is what drives markets.



@Alpha_Ex_LLC had a <a href="https://x.com/Alpha_Ex_LLC/status/1828798383848325442/photo/1">fantastic analysis</a> breaking down the implied volatility of the move expected from NVIDIA’s earnings.



For those not as deep in the weeds of options and how they price implied moves, the chart below shows a breakdown of the implied volatility (IV) of the stock right before each earnings release. This recent earnings release had the highest IV of all in recent memory.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="805" height="424" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-55.png" alt="" class="wp-image-91179" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-55.png?w=805 805w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-55.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-55.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-55.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-55.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-55.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-55.png?w=80 80w" sizes="(max-width: 805px) 100vw, 805px" /></figure>



What this translated to is the options market implied a move of 11% after the earnings report. As of time of writing, the stock is down 3.4%.



Therefore, even if you were directionally right on NVIDIA’s stock movement (a degen that yolo’d buying a call or a put, for example), you likely lost money from the resulting IV crush. This is because the actual move was less than the implied premium that was baked into the price of the option.



Setting aside wonkish options talk, the second leg of this quarter’s NVIDIA story was one of a stock that, as mentioned above, was priced for perfection.



One thing is clear from these excellent charts from regular On the Margin guest Andy Constan: Despite continuous beats in earnings versus consensus expectations, the delta of those surprises is actually heading lower and shines a light on just how much perfection has been baked into the darling of this equity bull market.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="866" height="563" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-57.png" alt="" class="wp-image-91181" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-57.png?w=866 866w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-57.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-57.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-57.png?w=395 395w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-57.png?w=401 401w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-57.png?w=337 337w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-57.png?w=80 80w" sizes="(max-width: 866px) 100vw, 866px" /></figure>



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="866" height="563" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-54.png" alt="" class="wp-image-91178" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-54.png?w=866 866w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-54.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-54.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-54.png?w=395 395w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-54.png?w=401 401w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-54.png?w=337 337w, https://blockworks-co.imgix.net/wp-content/uploads/2024/08/image-54.png?w=80 80w" sizes="(max-width: 866px) 100vw, 866px" /></figure>



In terms of what’s next, that’s anyone’s guess. What we do know is as we move through future quarterly results for this AI leader, we will naturally get closer to a slowing growth rate and a corresponding compression in upside surprises as analysts get a better handle on whether the company finds a more sustainable growth rate.



— Felix Jauvin



<h2 class="wp-block-heading">$58.7 million</h2>



The current market cap of EURC, Circle’s Euro-backed stablecoin. It’s nothing compared to its dollar-backed counterpart, USDC; but EURC has been on the rise this summer as MiCAR regulations come into effect.&nbsp;



After its launch on Base, EURC’s issuance rate increased by almost 40%, and its market cap is now up around 70% from a month ago.&nbsp;



<h2 class="wp-block-heading">Another day, another (pending) lawsuit&nbsp;</h2>



NFT marketplace OpenSea yesterday revealed it received a Wells notice from the SEC. If you’ll recall from the several Wells notices we’ve covered, it’s a warning from regulators that there’s a possible lawsuit/enforcement action coming.&nbsp;



It’s not the first time we’ve seen the SEC go after NFTs.&nbsp;



Regulators in September 2023 charged and settled with the project “Stoner Cats 2.” Per the settlement, the NFT issuer agreed to cease and desist from offering the NFTs and pay a $1 million fine. SC2 also agreed to destroy all NFTs in its possession and issue a notice of the order on its website and social media channels, the SEC said.



What’s different about the OpenSea situation is that the SEC wouldn’t be going after issuers this time. It would be going after the platform.&nbsp;



Sound familiar? It should.&nbsp;



Back in 2020 the SEC sued Ripple over its XRP token. Years (and millions of dollars later), a court partially sided with securities regulators, ruling that institutional sales of XRP were considered unregistered securities offerings. Ripple got a partial win too, though, when the judge declared that retail sales on secondary markets (i.e. exchanges) were not securities.&nbsp;



Since the Ripple suit, though, we’ve seen the SEC change its strategy. Lately it’s been going after exchanges. Coinbase, Binance, Kraken — the list goes on. In each suit, the SEC claims the exchange is operating as an unregistered securities broker for listing tokens securities regulators claim are, well, securities.&nbsp;



I’ve posed the question before, and I’ll do it again: Are we going to see more lawsuits against individual issuers, either of tokens or NFTs?&nbsp;



Legal experts, if you have answers/predictions/comments, I’d love to hear them!



– Casey Wagner&nbsp;



<h2 class="wp-block-heading">More crypto talk coming from presidential hopefuls?</h2>



Some expect the election’s potential impact on crypto to be rather binary. Trump and the Republicans are good for crypto; Harris and the Dems would more likely be bad for the industry (or at least not as good).



The Trump-would-be-better-for-crypto narrative has “more substance to support it” at this point, said 0x general counsel Ashley Ebersole.



After all, the former president in July <a href="https://blockworks.co/news/donald-trump-speaks-bitcoin-2024">made some promises at Bitcoin 2024</a> in Nashville and has said he would <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-bitcoin-mining-meeting">support American bitcoin miners</a>.&nbsp;



That said: “Harris is new enough that her policy positions are still being built out in a lot of areas, not just in crypto,” Ebersole told Blockworks.&nbsp;



Harris comes from a Biden administration that has shown “relative hostility” toward crypto, the 0x executive (and former SEC senior counsel) argued. President Biden <a href="https://blockworks.co/news/house-fails-to-override-anti-sab121-veto">vetoed</a> a resolution set to invalidate the SEC’s Staff Accounting Bulletin (SAB) 121 and many believe SEC Chair Gary Gensler has treated the industry unfairly via his agency’s enforcement actions.&nbsp;



So it’s her move.&nbsp;



An adviser for Kamala Harris’s campaign, when asked about crypto, did <a href="https://link.mail.beehiiv.com/ss/c/u001.ZaVO_gulYIDHwTR9OqetU2S1xhiHFIg-m9gXBpy71-1zTtMRRqv_NKdw9uiJaq1WOx4yc7a_84M5E8h0NR3yX6Bf67JMNEV3WMYSuRILAhz5wLi10gP0Fz2VO7nrFDlnjMPy_xhqFvG3L5R1xMC9AKmjGlwmEaoiqjKn6aF6K5bzOhqRxIgyaYyiNQmeyzJnmdfTYu3-Gvi3srnbdy6U2AANx5aeTcxe778cIi9MXpZ8tdDARG3VvS_5LMLHzh0Mraw5sPCPkFe3MPsKEj81aHcjWlVpv0uUdTUTgGG5T5fah79b8v0f2-JGmp22ceIjK7nvhiEU2YvMZNEbTbFjk_okK6fy2Uozp2dc2vlTGhsLlNq6YyxrrRtBNvlZXPWF/495/m9zoh8MYRV-KOxfqJJAmpQ/h17/h001.dWMdUpKLYOtkOB7xunoXfduyKNthcViEs9ur8zgS3MA">tell Bloomberg News</a> last week: “She’s going to support policies that ensure that emerging technologies and that sort of industry can continue to grow.”&nbsp;



A burning question remains: How specific will these candidates get on crypto-related policies prior to Nov. 5?&nbsp;



Trump may not feel the need to offer more concrete crypto policy details unless forced to do so.



“If Vice President Harris were to come out and suddenly make a bunch of blustery statements about crypto and maybe even go a step further and say, ‘On day one I’m going to do X, Y and Z,’ then I think that would require a [fuller] response from the Trump side to at least keep things in parity.”



The first presidential debate between Trump and Harris is set for Sept. 10. Crypto industry watchers will be listening for a question about the space. If not addressed explicitly, remarks about innovation or regulatory agencies more broadly could be helpful.&nbsp;&nbsp;&nbsp;



But at the end of the day, “Talk is cheap and you can say a lot of things,” Ebersole said. “Actually taking action is what will be the real catalyst here for a change in policy.”



Those actions — from either candidate, if elected — could take the form of actively working with Congress to pass crypto legislation, the 0x executive noted. Or it could be a more “silent” approach that involves simply stacking agencies with crypto-forward leaders (Trump said he would fire Gensler).   



Because a lot can happen in two months, it seems patience remains the name of the game.



Check out a full version of my interview with Ebersole tomorrow at Blockworks.co.



— Ben Strack&nbsp;



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul class="wp-block-list">
<li>Speaking of OpenSea, the platform has facilitated about 58% of the $62.75 billion in total NFT trade volumes since August 2020. Check out Blockworks editor David Canellis’ <a href="https://blockworks.co/news/opensea-nft-volumes-have-given-way-to-solana-and-bitcoin-platforms">story</a> for more details on where NFT activity takes place. </li>



<li>BTC and ETH have each seen a nice bump in the past 24 hours — rising 2.4% and 1.7%, respectively, as of 1:30 pm ET. Bitcoin’s price of roughly $60,500 is below an apparent resistance level of $65,000 displayed last week, according to YouHodler risk manager Georgios Parfenidis. “A strong breakout of this level can indicate a potential uptrend,” he noted.</li>



<li>The US spot ether ETFs saw slight net inflows of roughly $6 million on Wednesday, Farside Investors data shows. This ended a nine-day net outflows streak. The “first catalyst” for more inflows into these funds in the months and years ahead is education, Grayscale’s John Hoffman <a href="https://blockworks.co/news/education-required-to-spur-eth-etf-outflows">told Blockworks</a>. </li>
</ul>



<hr class="wp-block-separator has-alpha-channel-opacity"/>



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A deeper look at NVIDIA earnings and the baked-in premium

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Welcome to the On the Margin Newsletter, brought to you by Ben Strack and Casey Wagner. Here’s what you’ll find in today’s edition:



<ul class="wp-block-list">
<li>How the historical “reputation risk” for advisers and institutions allocating to crypto has, in some ways, inverted. </li>



<li>NVIDIA is about to drop its Q2 results. Here’s what to know beforehand. </li>



<li>What to make of Russia’s crypto-related tests, set to start in the coming days. </li>
</ul>



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<h2 class="wp-block-heading">More institutions viewing digital assets as ‘inevitable’</h2>



There used to be “reputation risk” for financial advisers and institutions allocating to the mysterious crypto segment.



That has changed as regulatory developments (and in turn, tools to gain access to the category) continue to proliferate.&nbsp;



“What we’ve seen now with the spot bitcoin and spot ethereum ETFs is that risk, in a lot of ways, has inverted,” said Grayscale Investments managing director John Hoffman. “Investors now see they have potential career risk and reputation risk if they have not done the work on this asset class.”



The reason for this? Hoffman told Blockworks: “Their clients are asking them about this space now in a much more pronounced way than we’ve ever seen before.”



This matches up with a collection of surveys and executive commentary bundled into a Wednesday OKX <a href="https://www.okx.com/learn/okx-economist-impact-report">report</a>. The findings reflect sentiments from a Dubai roundtable discussion hosted by the crypto exchange in Q2.&nbsp;



Asset management and banking customers seeking out this exposure coincides with institutional recognition that crypto assets have low correlation to equities and fixed income —&nbsp; making them a good portfolio diversifier.&nbsp;



Crypto can act like other commodities (namely gold), serving as a hedge against inflation, Capmetric chief executive Rams Kanouni notes in the report. Many perceive stablecoins as alternatives to cash.



Regulatory disclosures this year have indicated that institutions — from hedge funds and RIAs, <a href="https://blockworks.co/news/wisconsin-discloses-blackrock-ibit-shares">to the state of Wisconsin</a> — are holding bitcoin ETFs.&nbsp;



Hunting Hill Global Capital added exposure to the BlackRock and Bitwise BTC funds in Q2. Founder Adam Guren told Blockworks that crypto not only offers high return potential, but can also counter traditional market volatility and unlock greater portfolio diversification.



Decisions to increase or decrease the firm’s holdings will hinge on market liquidity, political tailwinds for crypto products and opportunities for strategic ETF trades, he added. Hunting Hill’s evaluation of crypto credit markets will also be crucial to such assessments.



OKX cites a survey that institutional investors expect crypto holdings to make up 7.2% of their portfolios by 2027. Guren noted that current crypto allocations typically span from 1% (conservative) to as high as 10% — a range <a href="https://blockworks.co/news/advisers-bitcoin-etfs-client-portfolios">consistent with financial advisers</a> I spoke with a few months back.



Others who are less interested in specific crypto assets may wait for the real-world assets tokenization boom.&nbsp;



About a third of hedge funds labeled tokenization as the most significant future market opportunity in a 2023 survey. Financial titans <a href="https://blockworks.co/news/blackrock-tokenized-fund-trading-circle-usdc">BlackRock</a> and <a href="https://blockworks.co/news/stablecoin-with-yield-franklin-templeton">Franklin Templeton</a> already offer tokenized money market funds, while others like State Street also look to make a splash in the segment.&nbsp;&nbsp;



“What’s clear is that institutions see digital assets as inevitable, as…securities, bonds and central bank digital currencies are tokenized on the blockchain,” OKX chief commercial officer Lennix Lai told Blockworks.&nbsp;



An additional point made “forcefully” throughout the roundtable, he added, was that more <a href="https://blockworks.co/news/kamala-harris-crypto-policy-reset-outlook">regulatory clarity will be critical</a> for further institutional adoption.&nbsp;



Citi Services’ Jagadeshwaran Kothandapani posed, for example, whether fiat currencies operating as tokens on distributed ledger technologies are deemed as currencies (for regulatory purposes), or as assets.&nbsp;



Then there’s the timeline to consider. Lai said he was struck by participants&#8217; confidence in the speed and scale of this revolution.



SkyBridge Capital founder Anthony Scaramucci is quoted in the report as saying mainstream consumers will “seamlessly” be transacting on blockchains in the next 10 years, without realizing it.&nbsp;



Many seem to be on the same page. Now, it all just has to keep unfolding.&nbsp;



— Ben Strack&nbsp;



<h3 class="wp-block-heading">9</h3>



The number of consecutive trading days the US spot ether ETF segment has tallied net outflows. The investor capital has mainly exited the higher-priced Grayscale Ethereum Trust (ETHE), while competing products have not been able to fully offset the leakage.&nbsp;&nbsp;&nbsp;&nbsp;



Bitcoin funds in the US have avoided this type of streak, seeing net inflows during eight of the last nine days. The highest outflow run for the spot BTC segment was seven days (occurring twice, in April and June).&nbsp;&nbsp;



<a href="https://blockworks.co/news/education-required-to-spur-eth-etf-outflows">Further education about Ethereum</a> — particularly among financial advisers and institutional investors — is likely to be a flow catalyst coming out of the summer doldrums, and beyond.&nbsp;



<h2 class="wp-block-heading">NVIDI-Ya better not crash&nbsp;</h2>



A major economic data point drops this afternoon after the close: NVIDIA Q2 results.&nbsp;



NVIDIA so far has been the <a href="https://blockworks.co/news/on-the-margin-newsletter-stocks-ai-returns">major winner of the AI boom</a>. Shares are up 158% year to date and up close to 2,900% over the past five years.&nbsp;



Analysts are calling it the <a href="https://www.cnbc.com/2024/08/27/nvidia-is-worlds-most-important-stock-adds-pressure-to-q2-earnings.html">most important</a> stock in the world. NVIDIA’s earnings today are either going to solidify or undermine the AI narrative markets seem to love so much. Given that it’s now more than 6% of the S&amp;P 500, its earnings are going to have a ripple effect on tech stocks and beyond.&nbsp;



No pressure, right?&nbsp;



NVIDIA’s revenue <a href="https://blockworks.co/news/on-the-margin-newsletter-nvda-market-breadth">has shown triple-digit growth</a> over the past three quarters, and analysts are expecting today’s report to be no different. Expectations call for revenue to show a 112% increase during the past quarter, which would be a slower pace than the company’s performance earlier in the year.&nbsp;



The key figures to listen for on today’s earnings call will be what execs are forecasting for next quarter. Demand to build out AI capabilities will be crucial for sustained growth.&nbsp;



“Good news feels baked in; bad news, not yet,” Noelle Acheson, author of Crypto is Macro Now, said of NVIDIA’s earnings impact.&nbsp;



Markets seem to have relatively recovered from their decline driven by Japanese interest rate and US job market woes earlier this summer. NVDA shares were trading at roughly $124 at 2 pm ET Wednesday — down from a high of about $136 in July.



Good luck to NVDA holders. Or really I should say: Good luck to anyone that holds anything.&nbsp;



— Casey Wagner



<h2 class="wp-block-heading">Russian crypto moves&nbsp;</h2>



Russia is poised to start testing out crypto exchanges and cross-border crypto payments, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-08-26/russia-close-to-starting-trials-of-crypto-payments-exchanges">reported</a> this week. The move comes after <a href="https://blockworks.co/news/russian-financiers-could-turn-to-crypto-to-sidestep-us-european-sanctions">a slew of international sanctions</a> have made it difficult for Russian businesses and entities to facilitate payments.&nbsp;



The country’s trials for such systems are reportedly set to begin on Sept. 1.



US officials in June announced <a href="https://www.cov.com/en/news-and-insights/insights/2024/06/us-government-issues-new-us-sanctions-and-export-controls-targeting-russia-and-belarus-for-continued-aggression-against-ukraine-update-on-european-sanctions-developments#layout=card&amp;numberOfResults=12">greater restrictions</a> on foreign banks and entities helping Russian businesses settle payments for exports.&nbsp;



The following month, Russia’s parliament passed bills to legalize crypto mining and pave the way for crypto cross-border payment testing under the country’s central bank. Putin signed the bills into law a few weeks ago.



OFAC, which oversees sanctions in the US, “takes the view that its sanctions apply to activity conducted in cryptocurrency,” according to Steptoe &amp; Johnson attorney Evan Abrams.



Still, concerns around how and if Russian entities could use cryptocurrencies to evade sanctions imposed by the US and other countries <a href="https://blockworks.co/news/russian-financiers-could-turn-to-crypto-to-sidestep-us-european-sanctions">swirled in 2022</a> as regulators across the world tried to isolate the country from the global financial system.&nbsp;



Russia’s latest move into the crypto space has other implications beyond potential sanctions evasion, industry experts say.



“America has a choice,” CoinFund President Chris Perkins told Blockworks. “It can allow its adversaries, like Russia, to lead in their adoption of emerging technology, like crypto payments. Or it can pass principles-based stablecoin policies that improve the system and enhance national security.”



— Casey Wagner



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul class="wp-block-list">
<li>OpenSea became the latest company to <a href="https://blockworks.co/news/sec-issues-wells-notice-opensea-nfts">receive a Wells notice from the SEC</a>. CEO Devin Finzer <a href="https://x.com/dfinzer/status/1828791832009953706?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1828791832009953706%7Ctwgr%5E977dfb76b8aa41c03c7a9362269e82f8fc51cfd3%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fblockworks.co%2Fnews%2Fsec-issues-wells-notice-opensea-nfts">said</a> the agency believes NFTs on OpenSea are securities, while noting that the marketplace is “ready to stand up and fight.” </li>



<li>Bitcoin’s price briefly dropped below $58,000 mid-day Wednesday before bouncing back up to $58,690 by 2 pm ET. Ether had dropped to roughly $2,460 earlier before rebounding to $2,500.</li>



<li>Speaking of crypto prices, XBTO Global CEO Philippe Bekhazi said recent drops could be attributed in part to the <a href="https://blockworks.co/news/empire-newsletter-crypto-telegram-centralization">arrest of Telegram co-founder Pavel Durov</a>. “Telegram is home to many crypto discussions and deals, and as we don&#8217;t yet know the extent of the crackdown, there is some fear and nervousness across the community,” Bekhazi said in an email. French police released Durov from custody and transferred him to court for questioning, CNN <a href="https://edition.cnn.com/2024/08/28/tech/pavel-durov-telegram-custody-released-intl/index.html">reported</a> Wednesday.</li>
</ul>



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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Digital assets involvement becoming “inevitable” for more institutions

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Welcome to the On the Margin Newsletter, brought to you by Casey Wagner. 



We hope our US readers are enjoying a long holiday weekend. Today’s (abbreviated) edition is all about how stocks performed during the first half of the year.&nbsp;



We’ll see you back here Monday for our regularly scheduled programming. 



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<h2 class="wp-block-heading">AI led US equities to the top during H1, but can they continue?&nbsp;</h2>



If you recall, our Wednesday edition focused on how crypto has performed so far this year.&nbsp;



Today we talk about stocks, which also had a pretty spectacular run in the first six months of 2024. And unlike crypto, they don’t seem to be losing steam.&nbsp;



The S&amp;P 500 and Nasdaq Composite indexes gained 14.5% and 18.1%, respectively, during the first two quarters of the year. The Dow Jones Industrial Average lagged behind, posting modest gains of around 4%, but remaining in the green nonetheless.&nbsp;



Typically, a strong first half means the final six months of the year will similarly post returns. But given the outsized returns of a few individual winners (looking at you NVIDIA), it’s hard to know whether the momentum can continue.&nbsp;



NVIDIA’s stock posted a 150% gain during the first half of 2024, accounting for more than a third of the S&amp;P’s total returns. Super Micro Computer Inc. was the top-ranking stock in the S&amp;P for the first two quarters of the year, soaring a whopping 213%.&nbsp;



The question now is whether the AI companies can sustain their rallies. NVIDIA stumbled a bit towards the end of June after becoming the <a href="https://blockworks.co/news/on-the-margin-newsletter-nvda-market-breadth">most valuable company in the world</a>, but shares are still up more than 10% over the past 30 days.&nbsp;



Morningstar analyst Jordan Klein sees more investors moving from semiconductor stocks into software stocks, citing Adobe and Salesforce’s rallies. It’s not a sign semis are in trouble per se, but it’s a trend worth noting, he added.&nbsp;



The other elephant on the trading floor <a href="https://blockworks.co/news/on-the-margin-newsletter-republican-sweep-markets">is, of course, rate cuts</a>. Investors went into 2024 expecting six interest rate slashes. Now, most traders would be happy for just one.&nbsp;



The Federal Reserve has <a href="https://blockworks.co/news/federal-reserve-interest-rates-unchanged">held interest rates steady</a> for almost a year and central bankers continue to insist that additional data is needed before any decisions can be made. Markets are still hopeful for the first cut to come in September, with Fed Fund futures markets calling for a 66% chance, according to data from CME Group.&nbsp;



Powell this week was coy when giving remarks at the ECB event in Portugal, declining, of course, to give any sort of timeline. He did however note that central bankers are aware they are treading a fine line. Cutting rates too quickly threatens to derail the progress already made on bringing down inflation, while waiting too long risks losing economic momentum.&nbsp;



For the first part of the year, though, markets clearly had no issue with the Fed’s policy. We’ll have to see whether traders start to get antsy as we move into the fall.&nbsp;



— Casey Wagner



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



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On the Margin Newsletter: Traders rode the AI wave to sky-high returns during H1, but what now?

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Welcome to the On the Margin Newsletter, brought to you by Felix Jauvin, Ben Strack and Casey Wagner. Here’s what you’ll find in today’s edition:



<ul class="wp-block-list">
<li>What NVDA’s impressive run means for market breadth. </li>



<li>When and how BTC’s price could break out of its current range. </li>



<li>The SEC has apparently ended its Ethereum investigation. But Consensys isn’t totally in the clear.</li>
</ul>



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<h2 class="wp-block-heading">NVIDIA grinds higher in a world of dispersion</h2>



This week, NVIDIA became the world’s most valuable company, surpassing both Microsoft and Apple.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXcphEtlW0G2eHJmhl5Ed8TaiUYd30jEjJaScL4G8hgVSjF_T3MeXUy6C4kE4Cd-9iB9151gtunVVS8c74_leTkSkwITxo2lJKUVavxuRVefnah3jkXanCSsvLtO2YOSRk295ehSvs4_blFqzSdf4Ju_UZU?key=dSv6d0WqwBiFg5M83z9zlA" alt=""/></figure>



And let me tell you — some days I feel like I’m the only one who’s never bought or sold NVDA. I have no shame in saying I’ve missed the entire run. To those who have made generational gains and have the confidence to actually lock them in, I salute you.&nbsp;



This NVDA run is a good bellwether of an interesting dynamic going on in markets these days; the vast majority of the returns are coming from a few select stocks, and market breadth is very narrow.



As seen in the breadth index below, we are currently at 19 — whereas the 30-year average is at 35:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXdTVAhylZq1Iu_cXmBA4V2bA9ATKDV6tMhSDkpa7BiASau-Y1pWfu0mVnY46Zw4Iwl-KAdarOvUkpsFCm-65eY7-g2ujW9jEvBYrUAIwreiWFzlpPWuTAExyTqNbFMkRHHuJC4xur82jVscJRQhLRA-gLuo?key=dSv6d0WqwBiFg5M83z9zlA" alt=""/></figure>



Another simple way of looking at this dispersion in breadth is comparing the S&amp;P 500 Equal Weight index to the SPX Market Cap weighted index. Despite historically remaining somewhat in line, the market cap-focused index has been soaring higher while the one with an equal weight has flatlined: 



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="2564" height="1770" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/06/RSP_2024-06-20_09-03-49-1.png?w=1024&amp;h=1024" alt="" class="wp-image-88171" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/06/RSP_2024-06-20_09-03-49-1.png?w=2564 2564w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/RSP_2024-06-20_09-03-49-1.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/RSP_2024-06-20_09-03-49-1.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/RSP_2024-06-20_09-03-49-1.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/RSP_2024-06-20_09-03-49-1.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/RSP_2024-06-20_09-03-49-1.png?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/RSP_2024-06-20_09-03-49-1.png?w=372 372w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/RSP_2024-06-20_09-03-49-1.png?w=378 378w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/RSP_2024-06-20_09-03-49-1.png?w=317 317w, https://blockworks-co.imgix.net/wp-content/uploads/2024/06/RSP_2024-06-20_09-03-49-1.png?w=80 80w" sizes="(max-width: 2564px) 100vw, 2564px" /></figure>



 This dynamic is making for one of the most interesting charts I’ve seen in a long time. Implied correlations between indexes and the stocks that make up those indexes is hitting an all-time low:



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXctltnUrvCEubT6m33ccJohgu1fWLaGaJy2eWyNn8_fcLAS-LKl8jAs-pqvfCkXmOYiHj2tgESljwGMziPb0MC8HEzYCHaBbUotJDfl-2oSy5yjccXY4lYjYjVs_8S78zOMPJT1zZZAF8qDx8XfolSolf0H?key=dSv6d0WqwBiFg5M83z9zlA" alt="" style="width:841px;height:auto"/></figure>



What does this all boil down to? That we are in a true stock pickers market right now. If you aren’t holding the handful of (mostly AI/tech narrative-driven) stocks that are actually hitting new all-time highs, you’re missing most of the rally. No one wants to own consumer staples these days; everyone wants to own the picks and shovels powering the AI revolution.



My theory on why there’s been such a lack of breadth in the market is two-fold:



<h2 class="wp-block-heading">Upward earnings revisions</h2>



There is a solid fundamental reason why the outsized returns are only coming in the mega-cap tech stocks: They’re the only companies seeing significant positive earnings revisions. As our world becomes increasingly more online and digital and less offline and “real,” it makes sense that it’s these few companies that are seeing most of the gains.



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXfWC9StZy-jD2KOr95stOiZtfEP_oYDHeeLdEG8H07qPsO6yyXktUiqCayL-yrPtyMCD4AuiEYH1r16RJIEd4jyoSo8zrHhvC9s5mMTN-VNDUdKNF34usgMJZDttao-Ht8xba22QJr8z2atr6bwd8boH7aU?key=dSv6d0WqwBiFg5M83z9zlA" alt="" style="width:655px;height:auto"/></figure>



<h2 class="wp-block-heading">Liquidity constraints</h2>



The other slightly more bearish take is that with the Fed Funds Rate at the highest in decades and the cost of living increasing faster than wages, there’s simply less money available to pump up all stocks. Since most of this liquidity is brought into the market through a passive bid to index ETFs such as SPY and QQQ (which are market cap weighted), they are the only things that are really going anywhere.&nbsp;



The big question for me is whether this very narrow breadth is a sign of a top forming in equities, or whether the breadth will broaden out and we see it continue higher as other companies outside of the Mag7 join the party.&nbsp;



In a world of secularly higher inflation and higher fiscal deficits — and knowing that equities are a nominal asset (revenues go up when inflation goes up, due to price increases) — I tend to lean towards the rally continuing and broadening.



— Felix Jauvin



<h2 class="wp-block-heading">72</h2>



The percentage of “wealthy” Americans (with at least $3 million in investable assets) — aged 21 to 43 — who say “it is no longer possible to achieve above average investment returns by investing solely in traditional stocks and bonds.” 



I guess none of them got in on NVDA early enough. 



The statistic comes from Bank of America’s latest <a href="https://ustrustaem.fs.ml.com/content/dam/ust/articles/pdf/2024BoA-PB_Study_of_Wealthy_Americans.pdf?utm_source=substack&amp;utm_medium=email">survey</a>, which also found that 28% of that age group prefer crypto to traditional investments when it comes to growth opportunities. Only 4% of wealthy investors 44 or older said the same.



<h2 class="wp-block-heading">BTC’s game theory-fueled boost coming?</h2>



While some have gone on record predicting BTC could hit $100,000 by the end of the year, it appears patience will be key.&nbsp;



Crypto prices (obviously) don’t always go up, and you don’t have to look beyond this past month for evidence.&nbsp;



Bitcoin dipped below $65,000 again on Thursday. It was trading at roughly $64,980 at 2:15 pm ET — down 9% from a month ago.



While Galaxy Digital CEO Mike Novogratz was on the <a href="https://blockworks.co/news/100k-for-btc-is-no-pipe-dream">$100,000</a> BTC price prediction train earlier this month, he did note that sort of price rise in 2024 could be dependent on whether BTC transcends the $73,000 resistance level in the short-term.



That has not happened, and the Fed choosing to <a href="https://blockworks.co/news/federal-reserve-interest-rates-unchanged">hold interest rates</a> steady last week <a href="https://blockworks.co/news/bitcoin-etf-outflows-hawish-fomc-meeting">didn’t help</a>.&nbsp;



Despite the $100K outlook, Novogratz also said earlier (in May) that a <a href="https://blockworks.co/news/mike-novogratz-crypto-us-election">“consolidation phase”</a> was possible — at least until rates come down, or the US election in November.&nbsp;



LMAX market strategist Joel Kruger said Thursday that BTC could remain in its current range for several more weeks, noting summer months “can often translate to apathetic conditions.”



Globe 3 Capital CIO Matt Lason believes BTC is primed to see a rally in the next month or two amid a forced liquidity increase caused by currency fluctuations or economic impacts of high interest rates. He cited another reason too: game theory.&nbsp;



“There has been an increasing stream of corporations and pension funds <a href="https://blockworks.co/news/bitcoin-treasury-strategies">adding bitcoin</a> to their treasury,” Lason told Blockworks. “We feel this will not only continue but ramp up as other companies and pension funds look to keep pace with their competition.”&nbsp;



Game theory is also playing out with investment advisers that now have easier access to BTC via US spot ETFs, he noted. Spot ether ETFs are expected to launch sometime this summer.&nbsp;



“Some of the large firms still have yet to embrace bitcoin, but that is changing quickly,” Lason added. “As the old saying goes: ‘Slowly at first, then suddenly.’”&nbsp;



— Ben Strack



<h2 class="wp-block-heading">SEC (sort of) spares Consensys </h2>



The SEC has apparently <a href="https://blockworks.co/news/sec-drops-ethereum-consensys-investigation">opted against</a> bringing charges against Consensys after its investigation into the Ethereum Foundation, the blockchain software company said Tuesday.&nbsp;



​​An SEC <a href="https://x.com/AlexanderGrieve/status/1803241977942528211">letter</a> (which the agency failed to authenticate) indicates Consensys is in the clear after the end of the so-called Ethereum 2.0 probe that first came to light in April.



An SEC spokesperson told Blockworks the agency “does not comment on the existence or nonexistence of a possible investigation.”



The industry largely took the whole situation as a win. ETH gained as much as 3.6% on Wednesday after Consensys proudly <a href="https://x.com/Consensys/status/1803230653120659641">posted</a>: “Ethereum survives the SEC.”&nbsp;



There remains, of course, the matter of the Wells notice the SEC <a href="https://blockworks.co/news/consensys-files-lawsuit-against-sec">sent Consensys</a> in April. It stated the agency planned to charge the company with securities violations involving its MetaMask wallet. An enforcement action has not yet been taken — at least not publicly — but is very much still on the table.&nbsp;



If you remember, Coinbase said it had <a href="https://blockworks.co/news/sec-serves-coinbase-in-latest-alleged-crypto-securities-violation">received</a> a Wells notice in the spring of 2023. The SEC filed charges against the exchange roughly 10 weeks later. Based on that timeline, Consensys could be sued in a matter of days.&nbsp;



We already know though that Consensys, like Coinbase, is ready for a fight. The company preemptively sued the regulator in April, alleging the SEC had overreached its authority and “unlawfully” attempted to regulate the crypto industry.&nbsp;



It’s clear the industry appreciates Consensys’ efforts, although we know no one envies its legal bills.&nbsp;



— Casey Wagner



<h2 class="wp-block-heading">Bulletin Board</h2>



<ul class="wp-block-list">
<li>MicroStrategy <a href="https://blockworks.co/news/microstrategy-bitcoin-holdings-worth-nearly-15b">revealed its buy</a> of nearly 12,000 more bitcoin so far in the second quarter. The business intelligence firm’s BTC holdings (totaling 226,331) are now worth roughly $15 billion.   </li>



<li>Bitcoin mining giant Marathon has <a href="https://blockworks.co/news/marathon-digital-europe-venture">expanded</a> its operations to another continent. Its pilot project in Finland aims to use heat from its datacenter in the country’s Satakunta region to heat a town of about 11,000 people.</li>



<li>Amended registration statements, or S-1s, for the slate of planned US spot ether ETFs are expected to roll in by tomorrow. Fund group Bitwise, which submitted <a href="https://www.sec.gov/Archives/edgar/data/2013744/000199937124007581/bitwise-s1a_061824.htm">one</a> Tuesday, also shared an <a href="https://x.com/BitwiseInvest/status/1803789737620078875">ad</a> poking fun at “Big Finance.” </li>
</ul>



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On the Margin Newsletter: What NVIDIA’s impressive run means for market breadth

David Canellis

This is Cheatsheet, a primer on what’s happening in crypto today.



Bitcoin just set another all-time high above $73,000, but It’s looking a lot like altcoin season.



That’s not to be confused with memecoin season: Multiple cryptocurrencies for various layer-1 networks have finally outperformed the dog tokens across multiple days.



Toncoin (<a href="https://blockworks.co/price/ton">TON</a>) has extended its rally for a third day, again the star performer of the top 100 after gaining nearly 21% — now up by nearly two-thirds over the past week.&nbsp;



TON is now the 13th largest cryptocurrency by market cap, ahead of polygon (<a href="https://blockworks.co/price/matic">MATIC</a>), chainlink (<a href="https://blockworks.co/price/link">LINK</a>) and tron (<a href="https://blockworks.co/price/trx">TRX</a>). TON-powered trading bot BananaGun continues to burn more ETH than layer-2 Arbitrum and MetaMask, which signals higher on-chain activity.



THORChain (<a href="https://blockworks.co/price/rune">RUNE</a>) has the rest beaten for weekly gains, however, after a 16.4% rally in the past day and has now more than doubled in seven days.&nbsp;



The network is built as a liquidity network for powering cross-chain token swaps. THORChain daily volume hit an all-time high yesterday of $639.6 million.



Bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) is meanwhile up 1.5% and ether (<a href="https://blockworks.co/price/eth">ETH</a>) is about flat and still 17% below its own price record, changing hands for $4,050 as of 7:45 am ET.



<h2 class="wp-block-heading">On-chain mail</h2>



Rising prices have DeFi’s total value locked (TVL) metric posturing to reclaim levels not seen since the Great Terra Implosion of 2022, now more than $104 billion. But dollar bias beware.



<ul class="wp-block-list">
<li>Ethereum’s apps have felt slight net ETH <a href="https://defillama.com/chain/Ethereum">outflows</a> over the past month, losing about 80,000 ETH ($324.3 million).</li>



<li>Layer-2s Arbitrum and Optimism have lost almost 15% of their ETH over the same period (nearly 205,000 ETH worth $830.5 million).</li>



<li>Maker, the collateralized debt protocol behind DAI, has 25% less ether after losing about 770,000 ETH ($3.11 billion). Its dollar-denominated TVL is still up 15%.</li>
</ul>



The Maker situation, perhaps the result of rising popularity for liquid staking and restaking, has led to rate hikes and an “accelerated proposal” to <a href="https://twitter.com/MakerDAO/status/1766177247868621229">prepare</a> the protocol to meet anticipated demand for DAI with fewer deposits. Tron, Binance Smart Chain, Polygon and Avalanche apps have also seen net outflows denominated in native tokens, per DeFiLlama.



But not all networks are seeing the same trend. Solana apps now have more than 27% more SOL than this time last month — the equivalent of 4.81 million SOL ($731.6 million) — even as the price of SOL swelled 45%.



Solana derivatives DEX Jupiter and Parcl, a platform to gain leveraged exposure to real estate assets, have pulled in much of that SOL. Tron and Sui apps have also attracted more native tokens over the past 30 days.



Read more: <a href="https://blockworks.co/news/jito-labs-suspends-mempool-functionality">Jito Labs ends mempool functionality citing impact on Solana users</a>



<ul class="wp-block-list">
<li>Ethereum’s degen-optimized layer-2 Blast is jostling to flip Optimism for TVL, both about $1.06 billion.</li>



<li>That would make <a href="https://blockworks.co/news/blast-developers-layer-2-liquidity">Blast the second-biggest Ethereum layer-2 after Arbitrum</a>, which has more than three times the TVL.</li>



<li>Blast lending app Orbit is the fastest growing DeFi app with more than $100 million TVL over the past week, popping from $88 million to $430.9 million.</li>
</ul>



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1600" height="603" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-4.png" alt="" class="wp-image-82379" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-4.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-4.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-4.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-4.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-4.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-4.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-4.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-4.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-4.png?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">MakerDAO’s ETH deposits have trended downward all year (<a href="https://defillama.com/protocol/maker?denomination=ETH">source</a>)</figcaption></figure>



<h2 class="wp-block-heading">Crypto business</h2>



A rarity in recent weeks: MicroStrategy wasn’t the best performing crypto-related stock over the past day, even with its 12.65% rally spread before and after the bell as of 7 am ET.



<ul class="wp-block-list">
<li>Las Vegas-based bitcoin mining stock Gryphon Digital led with almost 16% gains (13.4% in the day session and 2.25% pre-market).</li>



<li>Markets barely reacted to Coinbase’s $1 billion convertible note offering, with COIN set to open 0.5% higher.</li>



<li>Ohio-based miner Griid lost almost 7%, followed by Core Scientific, which altogether shed 5.7% between the day and pre-market sessions, dragged by lackluster earnings.</li>
</ul>



<a href="https://blockworks.co/tag/coinbase">Coinbase</a>’s move to raise cash with convertible notes (a hybrid of debt and equity) may also raise eyebrows. The firm, by far the largest crypto stock on the market, already had more than $200 billion in <a href="https://www.macrotrends.net/stocks/charts/COIN/coinbase-global/total-liabilities">liabilities</a> as of the end of last year — up from $15 billion in 2021. 



(For scale, Apple, valued at more than 40 times Coinbase, has $279.4 billion liabilities, while Intel has $81 billion.)



COIN’s long-term debt has meanwhile declined 12% year on year, now around $3 billion with $5.7 billion cash on hand.



Read more: <a href="https://blockworks.co/news/coinbase-convertible-notes-offering">Coinbase announces offering of $1B in convertible notes</a>



<ul class="wp-block-list">
<li>If CleanSpark loses more ground, Coinbase and <a href="https://blockworks.co/tag/microstrategy">MicroStrategy</a> will be the only crypto stocks to beat the S&amp;P 500 over the past month.</li>



<li>MicroStrategy has now outperformed the buzzy Nvidia over the year to date — 133% to 91%.</li>



<li>Tesla and Block are now up more than 100% on their bitcoin <a href="https://bitcointreasuries.net/">buys</a> to date, joining MicroStrategy.</li>
</ul>



<h2 class="wp-block-heading">On the ground</h2>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">So many bad Maker takes the last few days in reaction to the massive rate hike The right one would be along the lines of &quot;Maker emergency yanks all lending as they run out of customer deposits&quot; In practice it&#39;s even worse than that since active borrowers are also affected…&mdash; Hasu⚡️🤖 (@hasufl) <a href="https://twitter.com/hasufl/status/1767821908655874062?ref_src=twsrc%5Etfw">March 13, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Summer is coming</figcaption></figure>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">2/7: OEV exploits the inherent delay in blockchain oracles updating asset prices. This creates opportunities for those quick on the draw to profit from these moments before the wider market catches up&mdash; IOSG Intern (@IOSG_Intern) <a href="https://twitter.com/IOSG_Intern/status/1767761203387117900?ref_src=twsrc%5Etfw">March 13, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Move over MEV, it&#8217;s oracles’ turn to be wrung out for yield</figcaption></figure>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">May you Blob cheaply, securely for eons, <a href="https://twitter.com/ethereum?ref_src=twsrc%5Etfw">@ethereum</a> <a href="https://t.co/RKzggcwDYV">pic.twitter.com/RKzggcwDYV</a>&mdash; Eli Ben-Sasson (@EliBenSasson) <a href="https://twitter.com/EliBenSasson/status/1767869045733306675?ref_src=twsrc%5Etfw">March 13, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Happy Dencun day for the blobs who celebrate</figcaption></figure>



Macauley Peterson contributed reporting.



Updated Mar. 13, 2024 at 8:45 am ET: Corrected year referenced for Coinbase liabilities.



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Cheatsheet: MicroStrategy has now outperformed Nvidia this year

<div id="highlights-block_6275825ab1861" class="highlights">
 <ul>
 <li>It’s one of the biggest penalties to date imposed by the SEC on a gaming company</li>
 <li>The gaming giant did not admit or deny guilt as a condition of the settlement</li>
 </ul>
 
</div>



Gaming giant Nvidia will pay the SEC $5.5 million for allegedly failing to properly disclose cryptocurrency mining’s impact on its revenue.



The SEC found Nvidia hadn’t communicated that cryptocurrency mining was a “significant element of its material revenue growth” throughout 2018.



The Santa Clara company’s processors were designed and marketed for gaming, but customers found they were also efficient at generating new cryptocurrency, particularly ethereum.



In particular, the SEC highlighted two Nvidia disclosures from 2018 which reported “material” revenue growth in its gaming business, even though Nvidia knew that growth was significantly driven by crypto mining.



“Despite this, NVIDIA did not disclose in its Forms 10-Q, as it was required to do, these significant earnings and cash flow fluctuations related to a volatile business for investors to ascertain the likelihood that past performance was indicative of future performance,” the SEC <a href="https://www.sec.gov/news/press-release/2022-79" target="_blank" rel="noreferrer noopener">said</a> in a press release.



Regulators considered the alleged omission misleading, as Nvidia had already disclosed the extent at which other parts of its business were boosted by crypto demand. The US securities watchdog said it created the impression that Nvidia’s gaming sector was not significantly affected by cryptocurrency mining.



Nvidia stock almost doubled between September 2017 and September 2018, a heady period for crypto markets powered by bitcoin’s first-ever surge to $20,000.



The company’s chipsets remain popular among miners, much to the dismay of gamers. Nvidia has even <a href="https://www.pcworld.com/article/395041/nvidia-lhr-explained-what-is-a-lite-hash-rate-gpu.html" target="_blank" rel="noreferrer noopener">introduced</a> so-called hash rate limiters on its newer models in a bid to curb high prices and low supply worldwide.



“NVIDIA’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market,” said Kristina Littman, who runs the SEC Enforcement Division’s Crypto Assets and Cyber Unit.



Nvidia settled without admitting or denying the allegations. The firm’s share price fell around 4% during intraday trading on Friday after news of the settlement broke.



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Nvidia To Pay SEC $5.5M for Allegedly Failing to Disclose Crypto Revenue Boost

<div id="highlights-block_61c4e71ea46b2" class="highlights">
 <ul>
 <li>The returns of Amplify Investments’ Transformational Data Sharing ETF (BLOK) total about 35% in the trailing year, while bitcoin’s price is up 115% over that time</li>
 <li>The stock prices of companies NVIDIA and Silvergate have both surged by about 130% in the past 12 months, according to Google Finance data</li>
 </ul>
 
</div>



With no ETFs available in the US that invest directly in cryptocurrencies, some investors have sought exposure to digital assets through funds holding stocks considered to be correlated to the crypto and blockchain spaces. 



But how did the returns of such ETFs &#8211; and the companies they hold &#8211; compare to bitcoin itself?



Bitcoin’s price has increased by about 115% in the past 12 months, as of 3:30 pm ET on Dec. 23, according to CoinGecko. It stood at about $51,150 at that time.



Amplify Investments’ Transformational Data Sharing ETF <a href="https://amplifyetfs.com/blok.html">(BLOK)</a>, which has more than $1.3 billion assets, primarily invests in companies developing and using blockchain technologies. 



BLOK’s top 10 holdings are NVIDIA Corporation, Coinbase, Silvergate, CME Group, SBI Holdings, MicroStrategy, Galaxy Digital, PayPal Holdings, Hut 8 Mining Corp and Hive Blockchain Technologies.&nbsp;



The fund has returned nearly 35% in the trailing 12 months, as of Dec. 22, according to FactSet data.&nbsp;



Amplify’s offering launched in January 2018, just days before two competing funds: the Siren Nasdaq NexGen Economy ETF (BLCN) and the First Trust Indxx Innovative Transaction and Process ETF (LEGR). 



BLOK’s year-to-date returns compare favorably to BLCN and LEGR, which have roughly $260 million and $145 million assets under management, respectively. BLCN has returned 8.1% over the last year, while LEGR’s returns over that span total about 19.6%.



Nate Geraci, president of The ETF Store, told Blockworks that <a href="https://cms.blockworks.co/gap-wide-between-best-and-worst-performing-blockchain-etfs/" target="_blank" rel="noreferrer noopener">the performance of various blockchain ETFs</a> has been “a mixed bag,” but called the returns of such products disappointing overall.



“The universe of blockchain ETFs has mostly underperformed the spot price of bitcoin, in some cases rather significantly,” Geraci said. “Unfortunately, the SEC has allowed these products to proliferate instead of approving a spot bitcoin ETF – a disservice to investors seeking bitcoin price exposure in their existing brokerage and retirement accounts.”



More recently launched ETFs that hold crypto-related stocks include Bitwise Asset Management’s Crypto Industry Innovators ETF (BITQ), which launched in May, and Invesco’s Alerian Galaxy Crypto Economy ETF (SATO), which began trading in October.



BITQ, which has roughly $125 million in assets, has returned -24% in the last month, while SATO, which has about $10 million assets, has returned -22%. Bitcoin’s price is down about 10% from 30 days ago, Coingecko data shows.



<h3 class="wp-block-heading">Individual stocks </h3>



California-based NVIDIA is a technology company that sells crypto mining products. The company’s stock price, which has a roughly 5% weighting in BLOK’s portfolio, was up 128% from 12 months ago, as of Thursday afternoon, according to Google Finance data.&nbsp;



Like NVIDIA, Silvergate has also seen its stock price rise more than bitcoin over the past year, surging by 134%. Bitcoin mining companies Marathon Digital and Hut 8 Mining have seen their stock prices increase by 250% and 244%, respectively, from 12 months ago.



The stock prices of CME Group, SBI Holdings and MicroStrategy have increased by about 37%, 2%, and 74%, respectively, over the span.



MicroStrategy held about 121,000 bitcoin, <a href="https://cms.blockworks.co/microstrategy-announces-new-414-4m-bitcoin-buy/" target="_blank" rel="noreferrer noopener">as of the end of November.</a>



Coinbase <a href="https://cms.blockworks.co/coinbase-direct-listing-shares-are-limited-demand-is-high/" target="_blank" rel="noreferrer noopener">went public in April</a>, becoming the first cryptocurrency exchange platform to do so. Its stock price is up roughly 16% in the last six months, according to Google Finance, while bitcoin’s price is up about 60% over that period. 



Bill Miller, the founder, chairman and chief investment officer of Miller Value Partners, said during a conversation with author William Green in October that Coinbase <a href="https://cms.blockworks.co/bill-miller-is-willing-to-go-over-the-waterfall-with-bitcoin/" target="_blank" rel="noreferrer noopener">could be “the default position for growth investors”</a> that want exposure to the crypto market without investing directly in crypto assets. 



<hr class="wp-block-separator"/>



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<hr class="wp-block-separator"/>

How Crypto-Related ETFs, Stocks Have Performed Compared to BTC

Sam Reynolds

<div id="highlights-block_611edda0c5f5b" class="highlights">
 <ul>
 <li>Nvidia posted earnings of $6.5 billion Wednesday, on strong demand for its chips in the gaming and data center industries</li>
 <li>Sales of mining chips continue to grow for the company, but have come well under expectations set out in the first quarter</li>
 </ul>
 
</div>



Graphics chip maker Nvidia’s prediction from last quarter that the company would clear $400 million in revenue fell flat as it registered only $266 million in sales of cryptocurrency mining processors (CMPs). While Nvidia was once included in indices for exposure to blockchain and crypto, analysts are now saying that the company is no longer the Ethereum proxy it once was.&nbsp;



Graphics Processing Units (GPUs) differ from Central Processing Units (CPUs) because of the way they process data.



GPUs specialize in parallel processing; to create graphics, a GPU is made up of many small, specialized cores that are able to break up a task and divide it across these specialized cores much like how a factory spreads the work across thousands of workers. While Nvidia created the GPU in the late-1990s to produce better graphics for gaming, by the early 2010s they realized that the parallel processors in the GPU could be used to assist CPUs in general computing tasks.&nbsp;



<h3 class="wp-block-heading">Stumbling into crypto</h3>



As a result, Nvidia sort of “stumbled into crypto” explained IDC Research Manager Jitesh Urbani. Just as Nvidia’s GPUs could assist servers in data centers to crunch away at a machine learning algorithm as part of an Artificial Intelligence workload, they could also crack away at the algorithms used in the mining process. 



Initially GPUs were used to mine bitcoin but as difficulty increased, bitcoin miners had to migrate over to custom-built silicon called Application Specific Integrated Circuits (ASICs). At the same time, the rise of the Ethereum blockchain meant that miners could but their GPUs to use on this chain. As time went on, Ethereum’s positioning from more than a token to trade to the “digital oil” that enables the world of DeFI meant that demand for GPUs for mining only increased.&nbsp;



But this meant that Nvidia’s core market, retail gamers, couldn’t get their hands on GPUs. The ICO-fueled crypto boom of 2017 meant that more Ethereum was needed, thus mining farms went after every GPU they could find — at the expense of gamers.&nbsp;



“Nvidia figured out there were a bunch of miners that wanted their GPU and would pay a premium for it. They certainly benefited from that gold rush, but they’ve also tried to dig deeper into that market by offering these dedicated GPUs for mining called CMPs,” Urbani said. In order to push back against miners hoovering up all the GPU supply in the channel, exacerbated by a chip shortage, Nvidia tweaked the firmware of its latest GPUs to make them uncompetitive for mining.&nbsp;



“We reduced the performance of our GPU on purpose so that if you would like to buy a GPU for gaming, you can. If you&#8217;d like to buy a GPU for crypto mining, either you can buy the CMP version, or if you really would like to use the GeForce to do it, unfortunately the performance will be reduced,” Nvidia’s CEO Jensen Huang has publicly stated.



<h3 class="wp-block-heading">The potential of DeFi</h3>



For his part, Huang doesn’t dismiss the disruptive potential of DeFi. 



“Ethereum has established itself. It&#8217;s legitimate. It&#8217;s established. There&#8217;s a lot of credibility. It works well. A lot of people depend on it for DeFi and other things,” he has been quoted as saying. “You need that blockchain to have some fundamental value, and that fundamental value could be mined. Cryptocurrency is going to be here to stay.”



Urbani points out that mining is a comparatively small part of the company’s business. Earnings releases show that graphics cards for retail comprise around 65% of its revenue, while crypto mining processors are just 7% of the company’s bottom line — and that’s bundled in with other OEM (custom chip) ventures.&nbsp;



“Nvidia has won some and lost some by catering to miners, but during this chip shortage, that capacity could be used to satisfy gamers as well,” Urbani said. “I’m not sure that their story about creating dedicated GPUs for mining, and dedicated GPUs for gaming helped garner any lost love from the consumer side of the market.”



The dark clouds hanging over the horizon is, of course, Ethereum’s move away from mining heavy Proof of Work to Proof of Stake. With the <a href="https://cms.blockworks.co/eip-1559-is-live-thanks-to-ethereums-london-hard-fork/">implementation of EIP-1559</a>, Ethereum’s move away from relying on miners has begun.&nbsp;



<h3 class="wp-block-heading">Flooding the market</h3>



All of this has begun to flood the market with used GPUs. 



“There’s now a flood of used GPUs, which are still very good for gaming — one of Nvidia’s primary businesses,” Urbani said, arguing that Nvidia now has to compete against itself. It’d be tough to market a new card to gamers, when there’s the risk of more and more cards flooding the market in the near future as miners sell off inventory in an era of compressed profitability.&nbsp;



“Why would someone buy the newest card when there&#8217;s a perfectly good card from last year available?” Urbani said.&nbsp;



Anshel Sag, an analyst with Moor Insights &amp; Strategy, plays down the risk of used cards flooding the market. Supply, Sag observes, is still tight — for now.&nbsp;



After all, Sag points out that revenue from Nvidia’s CMP division is still up but just not as much as Nvidia expected. CMP cards are not available off-the-shelf and need to be ordered in advance and orders keep coming though less than before.&nbsp;



“Demand for CMP cards appears to be flattening out,” Sag said. “But Ethereum isn’t the only crypto out there. People will mine other ERC-20 tokens. First it was Bitcoin, then it was Ethereum. Next it will be something else.”



Want more investor-focused content on digital assets? <a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Join us</a> September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket. <a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Buy it now</a>.