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Market Dilution and Regulatory Wins: What Investors Need to Know
How the Surge in Token Launches and SEC Decisions Are Shaping Crypto
Mike Klein & Alexis Mollet
June 26, 2024
Word of the Month: Dilution
Crypto has been notorious for prolific project launches, especially during bull markets. Many of these projects unfortunately serve no real purpose and are only a vehicle for speculation,
This is a growing problem
Example: Solana saw 455,000 new token launches in May, with many being memecoins (memecoins are coins that publicly claim to have little or no fundantemal value).
Why Does This Matter?: The significant increase in the number of tokens contributes to market dilution, making it harder for investors to navigate the plethora of projects.
There’s a greater distribution of capital across the crypto ecosystem. For now, this is impacting overall market performance. Experts on Twitter have pointed out that this influx in the number of tokens may be a factor in the market's sluggish recovery.
What’s Our Gameplan?: The crypto market is evolving beyond a 'spray and pray' approach, where quality is becoming increasingly important—a trend we view as healthy.
We believe that fundamentals will continue to be drivers of long-term price appreciation. Our fund focuses on thorough due diligence and strategic investments to successfully navigate this challenging environment.
Ethereum and the SEC (A series of wins)🏛️
There’s a ton of positive regulatory momentum happening for Ethereum.
What’s Going On?: The SEC approved spot Ethereum ETFs in May 2024, and is now expected to have a formal launch in July. The SEC also dropped a recent lawsuit with Consensys, the Ethereum foundation. This is a huge win for the Ethereum community, removing a major regulatory hurdle and confirming that ETH is classified as a commodity and not considered a security.
Why this matters: Investors will have easier access to Ethereum and may feel much more confident investing in not only $ETH, but the thousands of other legitimate projects built on the Ethereum Layer 1.
UPDATE: we are moving up our over/under date for the launch of spot Ether ETF to July 2nd, hearing the Staff sent issuers comments on S-1s today, and they're pretty light, nothing major, asking for them back in a week. Decent chance they work to declare them effective the next… x.com/i/web/status/1…
— Eric Balchunas (@EricBalchunas)
9:15 PM • Jun 14, 2024
ETHEREUM SURVIVES THE SEC.
Today we’re happy to announce a major win for Ethereum developers, technology providers, and industry participants: the Enforcement Division of the SEC has notified us that it is closing its investigation into Ethereum 2.0.
This means that the SEC… x.com/i/web/status/1…
— Consensys (@Consensys)
12:57 AM • Jun 19, 2024
Tether’s New Gold-Backed Stablecoin 🔱
What Happened: Tether, the leading stablecoin issuer, launched Alloy, a gold-backed stablecoin designed to track the US dollar.
Why It Matters: For stablecoins to continue gaining adoption, they need to be backed by assets that holders are comfortable with. Alloy combines the stability of the dollar with the enduring value of gold, providing a reliable new option for crypto investors. As Tether is the most important stablecoin by market cap, this new product could see widespread use and acceptance.
Airdrops: Free Money
The Fund Received $10k in Premarket Value of ZKsync Airdrop
What Happened: ZkSync a company which just launched their token, gave early adopters 17.5% of their token distribution. Our fund benefitted from this thanks to strategic investments over the last few months.
Why It Matters: All airdrop rewards go directly to our fund investors.
Stay tuned for more updates, and feel free to reach out with any questions!
Best regards,
Mike Klein
Digital Wealth Insider
PS:
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