Research Summary
The report discusses the current dynamics in the crypto market, the misconception surrounding the FTX estate sale, and the SEC’s recent action against the Stoner Cats project. It highlights the growth of private companies in the crypto space, the underperformance of certain tokens, and the challenges faced by investors. The report also provides an in-depth analysis of the FTX estate sale process and its potential impact on the market. Lastly, it criticizes the SEC’s decision to shut down the Stoner Cats project, comparing it to Star Wars collectibles sold in the 1970s.
Key Takeaways
Current Crypto Market Dynamics
- Private Companies’ Growth: Many private companies in the crypto space are growing, but this growth is not translating into benefits for publicly traded companies or their investors.
- Underperformance of Certain Tokens: Despite the success of certain projects, related tokens such as ARB, OP, GNO, ATOM, and SOL are underperforming in the market.
- Investor Challenges: Investors are facing difficulties in monetizing their investments due to the limited playbook available and the absence of meaningful apps to invest in.
FTX Estate Sale Misconception
- Gradual and Opportunistic Selling: Galaxy Asset Management, which won the bid to manage the FTX estate, will sell the assets gradually and opportunistically, not in a fire sale as the market expected.
- Long-term Process: The selling process will take many months or even years, and most of the assets will likely be sold via OTC sales, not through exchanges.
- No Front-running: Galaxy cannot front-run the sales and profit internally, as it is illegal and their asset management business is completely walled off from their prop desks.
SEC’s Action Against Stoner Cats
- Unregistered Offering of Securities: The SEC ruled that selling the NFTs of the Stoner Cats project was an unregistered offering of securities, leading to a fine and the requirement to return the funds raised.
- Regulatory Fear: The action against Stoner Cats has increased regulatory fear in the NFT space, limiting the creativity of NFT project founders.
- Comparison with Star Wars Collectibles: The report compares the Stoner Cats NFTs to Star Wars collectibles sold in the 1970s, arguing that the SEC’s action was over-reaching.
Actionable Insights
- Investigate the Potential of Private Companies: Despite the current market dynamics, there may be potential in the growth of private companies in the crypto space.
- Monitor the FTX Estate Sale: Investors should closely monitor the FTX estate sale process and its potential impact on the market.
- Consider the Impact of Regulatory Actions: The recent action against Stoner Cats highlights the need for investors to consider the potential impact of regulatory actions on their investments.
