As BlackRock files for daily bitcoin product, here’s how another SEC debate may shape ethereum

These include a CBOE VIX index
VIX,
-5.17%
around 15 that supposedly signals complacency, and the relative strength indices for SPX and COMP of 76 and 79, respectively, showing the barometers are deep in so-called overbought territory.

There’s also bulls’ seemingly heretical — some may argue ultimately suicidal — dismissal of the market law ‘Thou Shall Not Fight The Fed’ as they challenge the central bank’s interest rate projections.

Still, at least this risk-on bonanza has not reignited other parts of the 2021 asset frenzy, like crypto. Well, not yet.

BlackRock, the world’s biggest asset manager, has reportedly chosen now to file an application for a spot bitcoin exchange-traded fund. Mike Novogratz, chief executive at crypto investment manager Galaxy Digital, is, perhaps unsurprisingly, keen:

Others, not so much. “I would not recommend that anyone touch this product with a ten foot pole,” said Marty Bent, of Tales from the Crypt, a crypto-focused blog. “If GBTC
GBTC,
+3.43%
[Grayscale Bitcoin Trust] has taught us anything it’s that this particular trust structure is terrible for the investor.

“You throw cash into this product and pay fees to underperform bitcoin in the long-run. The only difference with BlackRock’s trust seems to be that you can take the bitcoin in-kind if you wish,” he said.

So far the impact on the price of bitcoin
BTCUSD,
+0.90%
appears minimal. The same came be said for crypto’s other most popular unit, ethereum
ETHUSD,
+0.61%.

Yet new developments in an SEC legal case may give ethereum a boost, implies JPMorgan.

The regulator has been battling Ripple Labs over whether the XRP token that runs on Ripple’s network is a security or not. Simply put, if a token is considered a security then the SEC clamps down and that is seen at the very least reducing the unit’s attractiveness.

As part of the debate in defining a security in this context, an internal SEC discussion called the ‘Hinman documents’ was released this week, in which former SEC Director William Hinman stated that cryptocurrencies can transition from securities to commodities once they become decentralised enough, JPMorgan notes.

This viewpoint is important because as JPMorgan writes in its note: “[W]e believe that the ‘Hinman documents’ would likely intensify the race among major cryptocurrencies and their respective blockchains to become more decentralised and look even more like ethereum in order to avoid being designated as securities.”

“It is not clear when the Ripple vs SEC case will come to a conclusion…[but] the revelations from the “Hinman documents “ boost the ethereum case to avoid being designated as [a] security,” JPMorgan concludes.

Then, perhaps, BlackRock may consider an ethereum ETF too.

Markets

U.S. stock-index futures
ES00,
+0.07%

YM00,
+0.01%

NQ00,
-0.02%
are up, while benchmark Treasury yields
TMUBMUSD10Y,
3.775%
firm. The dollar
DXY,
+0.26%
is little changed after Thursday’s sharp fall, while oil prices
CL.1,
+0.59%
dip and gold
GC00,
-0.13%
is a touch higher.

Try your hand at the Barron’s crossword puzzle and sudoku games, now running daily along with a weekly digital jigsaw based on the week’s cover story. To see all puzzles, click here.

The buzz

Federal Reserve Bank of Atlanta President Raphael Bostic disclosed Thursday he made multiple trades before a Fed meeting last year, despite being prohibited from doing so.

Traders take note, U.S. stock markets will be shut Monday for the Juneteenth Day holiday.

The Japanese yen
USDJPY,
+1.09%
and 10-year government bond yields
TMBMKJP-10Y,
0.404%
are softer after the Bank of Japan surprised no one by again keeping monetary policy ultra loose after its Friday meeting.

Virgin Galactic Holdings
SPCE,
+14.92%
shares are rocketing 40% higher in premarket action after the space-travel company said it would begin offering commercial space flights this month.

Shares of Adobe Inc.
ADBE,
+2.39%
are up 3% , topping $500, after the desktop publishing pioneer late Thursday reported record quarterly revenue of $4.82 billion and forecast solid sales for its current quarter.

Cabot Corp.’s
CBT,
-9.53%
stock is dropping 7% after the specialty chemicals maker said its sales have slowed, as China’s recovery hasn’t materialized in the way that the company expected and global demand remains “soft.”

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The chart

Tesla’s record breaking daily winning streak that ended this week saw the shares
TSLA,
+1.59%
at one point display their most overbought condition in nearly two years. Exuberance among retail traders is often cited as the significant driver behind such a surge, as they look to juice gains through short-term call options, which give the right to buy a stock for a set price up to a particular date.

But as the chart below from Vanda Research shows, institutional investors have been an increasingly big player in Tesla options. It also shows their interest spike can be fleeting.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

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