The SEC just approved a new ETF application from Grayscale, combining Bitcoin, Ethereum, Solana, XRP, and Cardano into one product. This represents a major breakthrough for regulatory approval.
BTC and ETH, which already have available spot ETFs, make up more than 90% of the product’s composition. Still, this sets a few big precedents for the US ETF market.
According to the SEC filing, Grayscale’s new ETF will heavily weigh towards Bitcoin; 80.20% of its value goes to it. ETH will represent 11.39% of the ETF’s value, XRP 4.82%, Solana 2.78%, and Cardano 0.81%. Technically, this will be the first US spot ETF that’s tied to these major altcoins, but BTC and Ethereum make up more than 90% of the fund. These assets already have spot ETFs.
Still, this is a major signal from the SEC. Several firms are attempting to create bundled products and altcoin ETFs alike, but Grayscale finally won the race. Hopefully, this indicates some similar approvals in the near future.
Welcome to the US Crypto News Morning Briefing—your essential rundown of the most important developments in crypto for the day ahead.
Grab a coffee to understand why the share price of Cantor Equity Partners Inc. (CEP) is seeing downside pressure while the share price of Strategy’s stock (MSTR) is increasing. CEP is the company behind 21 Capital, a newly established firm imitating Strategy’s Bitcoin model.
Crypto News of the Day: Max Keiser Issues 21 Capital Warning as CEP Shares Sink
Twenty One Capital’s ambitions to become the next major corporate Bitcoin player are under fire. The share price of its holding company, Cantor Equity Partners Inc., is bearing the brunt of overhead pressure.
The CEP stock price is down by over 6% in the last five trading days. Meanwhile, the share price of its market rival, Strategy (formerly MicroStrategy), is up by over 7%.
Headed by James Mallers, Twenty One Capital presented as Strategy’s inadvertent market rival, or peer. It introduced BTC-native metrics like Bitcoin Per Share (BPS), effectively challenging Strategy’s model, where investors have indirect exposure to Bitcoin through MSTR stock.
In a recent US Crypto News publication, Bitcoin pioneer Max Keiser said institutions must “Saylorize” or die. Nevertheless, despite Twenty One Capital extending the “Saylorization” trend, the CEP stock price continues to endure downward pressure while Strategy’s stock price is gaining.
Against this backdrop, investors hoped that hype around Cantor Equity Partners Inc.’s planned SPAC merger could reverse the trend, but this appears to be false hope. Notably, the merger would see CEP stock listed under the new ticker XXI.
“Cantor Equity Partners (CEP) announced a merger with bitcoin treasury company Twenty One Capital in a $3.6 billion merger,” reports indicated.
The announcement propelled shares of the SPAC vehicle, Cantor Equity Partners (CEP), sharply higher, but now momentum is fading.
Investors who hoped for a post-merger rally have watched the stock drift downward toward the mid-$20s over the past five days.
BeInCrypto contacted Max Keiser for insights into why this is happening, with the Bitcoin maxi blaming it on Twenty One Capital’s model mimicking Strategy.
Mimicking Strategy Could Be Detrimental, Max Keiser Says
According to Max Keiser, Twenty One Capital’s attempt to mimic Strategy could prove far riskier and less effective.
“There’s a big difference between a company with a Bitcoin treasury strategy and a Bitcoin strategy company,” Keiser told BeInCrypto.
Keiser says Strategy is leveraging its heft as a company with lots of Bitcoin, harnessing volatility to buy more BTC. However, Cantor Equity Partners Inc. or Twenty One Capital does not meet that standard.
“CEP is a company that is looking to buy lots of Bitcoin, which is very volatile. I question if they can effectively harness that volatility like Strategy does,” he added.
Twenty One Capital is the third-largest corporate Bitcoin holder after Strategy and Bitcoin mining firm MARA Holdings. Data on Bitcoin Treasuries shows Strategy holds 568,840 BTC, while MARA holds 48,237 Bitcoin tokens.
Meanwhile, after Tether acquired 4,812.2 Bitcoin (now held in an escrow wallet as Twenty One Capital prepares to complete a SPAC merger with Cantor Equity Partners), Twenty One Capital holds 36,312 Bitcoin tokens.
Corporate Bitcoin holders by portfolio size. Source: Bitcoin Treasuries.
In the interview with BeInCrypto, Keiser articulated that trying to copy Strategy’s model without the infrastructure, discipline, or scale puts 21 Capital in a precarious position.
“A Bitcoin strategy company is inherently riskier, with no clear path to be as competitive as Strategy in leveraging market volatility to capture more Bitcoin,” he stated.
Further, despite the surge in interest from investors hoping to jump on what appeared to be the “next big BTC play, Keiser believes the long-term winner is already clear.
“Ultimately, the big winner will continue to be Strategy, with dozens of knock-offs trying to catch them, failing to generate the same returns, but increasing demand for Bitcoin substantially. That ends up benefiting STRATEGY proportionately more than the knock-offs, with less risk,” he concluded.
This aligns with a sentiment from Steven Lubka, the Head of Swan Private Wealth. As BeInCrypto noted in one of the US Crypto News publications, Lubka said the inadvertent competition between Twenty One Capital and Strategy will ultimately bode well for Strategy.
“Ironically, someone throwing the gauntlet at Microstrategy, ‘we want to become the most successful company in Bitcoin, ‘ Only makes Microstrategy more valuable,” Lubka remarked.
Charts of the Day
Strategy’s MSTR stock price performance. Source: Google Finance
This chart shows Strategy Inc.’s stock price rose by $28.61 or 7.28% over the past five days, closing at $421.61 on May 14.
Cantor Equity Partners (CEP) stock price performance. Source: Google Finance
This chart shows a 5-day decline in Cantor Equity Partners Inc.’s stock price, down by 6.22% since May 7. CEP closed at $29.84 on Tuesday and is attempting a slight pre-market recovery.
Byte-Sized Alpha
Here’s a summary of more US crypto news to follow today:
Layer-1 (L1) coin LTC is today’s top gainer, climbing 10% in the past 24 hours. The double-digit surge comes following a regulatory setback, as the US SEC delayed its decision on Canary Capital’s application for a spot Litecoin ETF.
However, the current LTC token upward momentum may be on shaky ground as technical indicators suggest a potential bearish reversal.
On Tuesday, after the SEC called for public comments on Canary Capital’s application for a spot Litecoin ETF, LTC plunged to a two-week low of $81.03.
However, the resurgence in trading activity across the broader crypto market over the past day has helped LTC rebound from this dip. It now trades at $91.68, with daily trading volume exceeding $850 million.
But, there is a catch. Key technical and on-chain indicators suggest a potential bearish reversal in the short term, as buyer exhaustion appears on the horizon.
For example, despite LTC’s rally, its Chaikin Money Flow (CMF), which measures buying and selling pressure, has declined, forming a bearish divergence. Readings from the daily chart show that this momentum indicator is declining and poised to breach the center line.
A CMF bearish divergence occurs when the price of an asset makes higher highs while the indicator makes lower highs. This suggests that buying pressure is weakening despite rising prices. The trend indicates a potential reversal or loss of upward momentum in the LTC market.
Moreover, on-chain readings show that LTC’s Network Realized Profit/Loss (NPL) is rising, indicating that coin holders are sitting on unrealized gains and may be tempted to sell. At press time, the NPL sits at 1.7 million.
This metric reflects the net profit or loss of all coins moved on-chain, based on the price at which they were last moved. A rising NPL suggests increasing profitability across the network.
This, in combination with LTC’s weakening buy pressure as reflected by its CMF, heightens the risk of short-term selling pressure as traders look to lock in profits.
Can Litecoin Hold Its Gains?
With strengthening bearish pressure, LTC buyers risk facing exhaustion soon. If new demand fails to come into the spot markets to support the LTC token rally, it could lose its current gains and fall to $82.88.
However, a bullish shift in market sentiment could prevent this. If buying activity soars, it could drive LTC’s price to $95.13. A breach of this resistance could catapult the altcoin toward $105.04.
