How to play the ETH ETF approval

I am, quite frankly, at a loss for words.

Last week was the most substantive, most unexpected, most bullish week I've ever seen in almost a decade of crypto. The spot ETH ETF approval is the coup de grâce, but even more significant and long term bullish is the 180 degree pivot in US crypto policy.

We are in for a wild ride from here.

In this week's newsletter, I'll give you a brief summary of the events of the last week in case you missed it, and then we'll focus on opportunities that could outperform as the ETH ETF comes to market.

The most bullish week in crypto history

Let's set the stage. Crypto made a run in November and December of last year, led by Solana and meme coins. The Bitcoin ETF was approved and began trading in January. Inflows were extraordinary; the bitcoin ETFs became the most successful ETF launch in history. Bitcoin set a new all time high. The institutional money was (finally) here.

On 4/20 (can’t make this up) the bitcoin halving came and went for the 4th time, cutting production of new bitcoin by half. Historically, bitcoin has entered major bull markets about 6 months following every halving.

Solana was ripping. Bitcoin was ripping. There’s a dog with a hat, and the hat stays on! But ethereum? Ether was...meh. Stagnant. Chopping. Trapped between the Solana frackas and Bitcoin’s “digital gold.”

That brings us to last week, when the US House of Representatives called to order and chose violence.

First, the House passed a bill that would repeal the SEC's SAB 121, an accounting bulletin that would have made it prohibitively expensive for financial institutions to custody digital assets. 21 Democrats broke ranks to vote "Yea" for the bill, despite a veto threat from the White House and strong opposition from Liz Warren and her cadre of Luddites on the extreme left. Less than a week later and 12 Democrat Senators joined 48 Republicans to pass the bill in the Senate.

That alone is monumental. Unprecedented. Historic. But the House wasn't finished.

Next they took up a much broader bill, FIT 21, that would implement a new regulatory framework for digital assets to treat crypto as the new technology and unique capital formation mechanism that it is.

Put aside your politics for a second and let's be honest with ourselves -- the Securities Act of 1933 was not written for a globally decentralized and cryptographically-secured coordination and financialization platform built on the internet. Many of the authors of Securities Act could have ridden horses to work. Literal horses.

This clip is how I imagine FDR reacting to the internet while working on the New Deal in 1933.

71 Democrats voted to pass FIT 21, up from the 21 that voted for SAB 121 repeal just a few days prior.

And just like that the flood gates opened.

The SEC went into overdrive to approve the pending Ethereum spot ETFs, allegedly after a phone call from the White House ordering a stand down. The political winds had changed. The ETF's were approved, moments before the May 23rd deadline.

Significant again, the ETFs were approved with Form S-1, the paperwork required for commodities approvals. This confirms ETH's status not as a security, but as a commodity under the purview of the CFTC.

So, to recap, all in the last week:

• Crypto is now a bipartisan issue with a large bloc of Democrats in Congress voting pro crypto. The White House is already softening their stance, and Trump has gone all-in crypto.

• The SEC has been called to heel, potentially ending a multi-year campaign of intimidation, lies (and lies, and lies), and regulation by enforcement.

• ETH is a commodity, not a security.

• Spot Ether ETFs are approved and will begin trading this summer.

This is not just a story about an ETF unlocking new capital to pump our bags. This is about crypto acceptance, stability, and sensible regulation fit for purpose.

It removes what was the single greatest risk to the entire industry (and to our bags). Crypto is not a crime. And today, Congress agrees.

I say again: you're bullish, but are you bullish enough??

The time to own ETH is now

Great. We’ve got an ETH ETF coming. Now what?

I'll do a deep dive on Ethereum as a technology, platform, and ecosystem in a future newsletter. For today, I'm going to skip all that and just lay out some options to get exposure.

The most obvious, most direct options:

1. Buy ETH on a centralized crypto exchange like Coinbase or Binance, or a decentralized exchange like Uniswap.

2. Buy Staked ETH (or stake the ETH you already bought). You can stake your ETH on Coinbase (easiest) or stake it on chain with your wallet at Lido (more advanced, but better principled IMO). The benefit of staking is that you are able to earn a yield on your ether.

3. If you want to buy in your brokerage account, you can just wait for the ETH ETFs to begin trading later this summer (don't wait too long), or you can see if you are able to buy and hold ETH directly thru the digital assets division of your brokerage (ie. Robinhood, Venmo, or even Fidelity depending on where you live).

I’ll talk about ETHE a bit later, but that trade has closed. I would not buy your ETH thru ETHE at this point.

Second order effects worth a look

You own some ETH. Good for you. But you're not here for plain vanilla. You want more.

First option, you can buy stocks that stand to benefit from a crypto bull run. The companies who make money when vol rips and prices levitate.

Coinbase (COIN)

Coinbase is the obvious choice here, both as a crypto exchange that makes money on transaction fees and as the de facto custodian for institutional crypto assets.

Coinbase is the custodian for basically all the BTC ETFs today, meaning they take a fee to hold the crypto for Blackrock, VanEck, and all the rest. The more crypto in the ETFs, the more money Coinbase makes.

Coinbase's stock is already priced fairly high, but that doesn't mean it can't go higher. This bull cycle is just getting started.

Robinhood (HOOD)

Likewise, Robinhood is another good choice. They have a decent crypto business, they're the preferred venue for all of the Wall Street Bets shenanigans, and they'll benefit from a crypto mania with loads of new accounts and transaction revenue.

PayPal (PYPL)

PayPal is a sleeper pick. They offer crypto on-ramps, swaps, and transfers thru Venmo. They allow merchants to accept crypto as payment too. That’s all great, but the real signal is pyUSD, PayPal’s own stablecoin built on ethereum.

PayPal’s stock doesn't have the volatility of a crypto token or Coinbase or GameStop. However, on a risk adjusted basis, buying and holding PayPal can give you a taste of crypto upside with the comfort of a global, diversified financial services company (and if you did want to buy deep out of the money PYPL calls, no one here is stopping you).

More degeneracy plz

I know I know. You didn't come here for PayPal. Stocks are for boomers. Let's keep moving down the risk curve.

The truth is this ETF is bullish for everything crypto, and there’s positive momentum everywhere we look. This is not a reason to change the plan, this is a sign to double down. There are green charts across the board, including solid gains in existing favorites like Solana and WIF.

For something more directly aligned with ETH , it would be hard to bet against PEPE, the hottest meme coin on the ethereum chain so far this cycle. FLOKI and SHIBA INU are two other options, but for my money I'd lean towards PEPE (FWIW I don't own any of these coins today). Pepe went straight up on the ETF news, so maybe wait for a pullback or consolidation before aping in.

Another angle is to bet that the SEC will drop, dismiss, or lose it's open cases against the industry. Given the change in political winds, I wouldn't be surprised if those cases all ended up going away, one way or another.

Ripple (XRP) and Uniswap (UNI) are two high profile cases with tokens that stand to gain if the suits are dropped/dismissed.

Most importantly though, the past week has given the entire industry a path to compliance in the U.S. This could turn into a bonanza. Don't overthink it. Just be in the game.

Portfolio Update

No trades this week. Instead, I’ll highlight some ETH centric positions.

ETHE led the portfolio last week, up about 70%; I love this example because it highlights the power of focusing on opportunities with positive skew.

I added ETHE to the portfolio and wrote about it on May 3rd. ETHE was trading at a discount to the ETH held in the trust, giving us the opportunity to buy ETH at a ~25% discount to market prices. Today, the NAV discount has disappeared AND the underlying ETH is up ~25% too! Same thesis, double the upside.

Lucky timing? For sure. But the portfolio was allocated in the right place to outperform whether the ETF came this month or next year.

Here's the rest of my exposure to the ETH ecosystem, with a couple words about each.

Market Vibes

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