Crypto 2 – 0 SEC

The SEC is now 0 for 2 in landmark cases against the industry, with a judgement that (on a plain reading) does not paint the regulator’s actions in a favourable light.

We wrote about Judge Torres’s 13th July ruling here, and now an appellate judge has said the SEC was “arbitrary and capricious” to reject GBTC’s Bitcoin spot ETF filing.

While the SEC has predictably appealed last month’s securities decision, an appeal to the Supreme Court in this case is a far more complicated endeavour and is not a given.

In itself, this ruling is a great outcome for the industry, and the rally in GBTC and Coinbase are understandable. Nonetheless it is near-term inconsequential for spot price, and an opportunity to fade the short-term knee-jerk pump in spot and vol.

The ruling is, however, not tantamount to an approval of the application, and neither does the ruling mean that the SEC has to approve GBTC’s refilling. It remains open to the SEC to reject the refilling on fresh grounds.

Nonetheless it does cement the odds-on chance of an ultimate Bitcoin spot ETF approval, while ironically making it more likely that the SEC will kick that decision to the March final deadline (Chart 1).

Chart 1

In any case, this ruling has provided the catalyst for our B wave count, which we posted in our last update 2 weeks ago (Chart 2).

Chart 2

Based on our wave count, a final push higher to end the B wave correction is likely in the following weeks, as these 2 court rulings realign crypto in a more positive light, just as the NVDIA-led AI rally continues unabated, and other traditional proxies like Gold and Rates show some recent strength.

However we think we would likely still start Q4 near the lows as optimism on the spot ETF again fade into the backdrop with more can-kicking from the SEC side, and lack of innovation in the sector as compared to other tech sectors.

Furthermore the upcoming known event calendar including the Mt. Gox payout next month will provide short-term bearish flow pressure to come.

Nonetheless with the likely ETF approval in March coinciding with the upcoming halving sometime in April, and a sharp US economic slow down finally looking likely in Q2 – we think a big new year Q1 rally is on the cards.

However rather than timing the rally between now and then, the trade we really like now is buying a topside end Mar-24 option structure to leg into the bullish Q1-24 view.

The payout on a 30/40k call structure is looking attractive, with a limited loss and a 450% payout at the top strike (Chart 3). Such a structure earns decay on the top strike if our wave count plays out, but also gives the buyer exposure to a rally starting today.

Chart 3

More from our Library


This information contained in this website is intended as a general introduction to QCP Capital and its activities as a Digital Payment Token (DPT) service provider and is for informational purposes only.

QCP Capital is not acting and does not purport to act in any way as an advisor or in a fiduciary capacity vis-a-vis any counterparty. Therefore, it is strongly suggested that any prospective counterparty obtain independent advice in relation to any trading investment, financial, legal, tax, accounting or regulatory issues discussed herein. This website is only directed at informed and qualified investors. Your entry to this website attests that you are fully aware that trading of DPTs is not suitable for the general public and that you are an informed and qualified investor, and are also fully cognisant of all technological and financial risk(s) associated with trading Digital Payment Tokens.

In the event you intend to onboard with QCP Capital to trade in DPTs, by onboarding with us you acknowledge that you are aware of any rules and/or regulations applicable to the provision of DPT and/or financial services, the high degree of risk involved and that in no event will QCP Capital or any if its directors or employees be liable for any injury loss, claim or damage (whether direct, indirect, consequential or incidental) arising either directly or indirectly out of, or in any way connected with, the site, or its use.

If you are located, incorporated, or otherwise established in, or a citizen or resident of certain jurisdictions, QCP Capital may be unable to, or otherwise reserve its right to refuse to engage in or establish a trading relationship with you. Please contact us if you believe you have received this notice in error. QCP Capital is not registered or licensed to operate in the states of Louisiana and New York and will not be able to establish a trading relationship with you if you are resident, incorporated or have your principal place of business in New York or Louisiana.

You also acknowledge that you understand that trading in payment token derivatives (“PTD”) are also not any less risky than trading in DPTs. PTD services are not regulated by the MAS and QCP Capital is as such not licensed under the MAS to provide PTD services. You should only trade in PTDs if you are an Accredited Investor and/or have sufficient experience and knowledge in trading PTDs.

Risk Warning on Digital Payment Digital Services

The Monetary Authority of Singapore (MAS) requires us to provide this risk warning to you as a customer of a digital payment token (DPT) service provider.

Before you pay your DPT service provider any money or DPT, you should be aware of the following. 

Your DPT service provider is an exempt payment services provider pending licensing under the Payment Services Act (2019) to provide DPT services. Please note that this does not mean you will be able to recover all the money or DPTs you paid to your DPT service provider if your DPT service provider’s business fails.

You should not transact in the DPT if you are not familiar with this DPT. This includes how the DPT is created, and how the DPT you intend to transact is transferred or held by your DPT service provider.

You should be aware that the value of DPTs may fluctuate greatly. You should buy DPTs only if you are prepared to accept the risk of losing all of the money you put into such tokens.

You should be aware that your DPT service provider, as part of its licence to provide DPT services, may offer services related to DPTs which are promoted as having a stable value, commonly known as “stablecoin”.