🩺 (Almost) EOY check-up

Welcome to the Forward Guidance newsletter, brought to you today exclusively by Ben Strack. Here’s what you’ll find in today’s edition:

• A crypto price check-in as the year closes, and expectations for 2025.

• ETF filers focused on the segment have been hard at work this holiday season.

There was no shortage of crypto price predictions this year, particularly (it seemed) in November and December after the election. Some had been eyeing the $125,000 level for BTC at the end of 2024, while others did warn of a pullback.

Where we stood at 2:10 pm ET Monday: BTC at ~$94,300 and ETH at ~$3,400.

Bitcoin has dropped roughly 12% since rising above $108,000 on Dec. 17. Ether was trading higher than the $4,000 mark that day, but has fallen 15% since.

21Shares research strategist Matt Mena attributed this in part to the more hawkish vibes from the Fed heading into 2025. The forecast of two rate cuts next year (instead of three) “dampened market sentiment and is a key factor behind the recent downturn in prices for BTC, ETH and other risk assets,” he argued.  

Mena also noted that the six-month high in the 10-year Treasury yield further diminishes the appeal of crypto assets, as investors shift toward safer and more predictable returns.

Then there’re those who are locking in gains realized over the year, Mena said. At the same time, others are employing tax-loss harvesting strategies — selling assets that have declined in value to offset capital gains and reduce taxable income.

He and other analysts have called this a “healthy” correction, typical for bitcoin after a significant run-up. If BTC can stay above $85,000, the 21Shares exec told me he thinks it will sustain the uptrend seen in recent months. Otherwise, we could see accelerated selling and further price declines. 

“The next major psychological price level to watch is $110,000,” Mena added. “Once bitcoin breaks through this resistance, we could see a swift surge to $120,000, with the potential to target $150,000 by the summer as momentum builds.”

Sergei Gorev, head of risk at YouHodler, predicts the corrective sentiment in the crypto market to persist into 2025. He cited the historical correlation between BTC and the declining M2 money supply as a key factor.

But Galaxy’s Alex Thorn wrote in a Friday research note that he expects BTC to ultimately reach 20% of gold’s market capitalization in 2025 (it’s currently slightly more than 10%).

Thorn thinks BTC will cross $150,000 in the year’s first half — as well as a “test or best” of $185,000 in Q4.

“A combination of institutional, corporate and nation state adoption will propel bitcoin to new heights in 2025,” the Galaxy research head wrote. “Throughout its existence, bitcoin has appreciated faster than all other asset classes, particularly the S&P 500 and gold, and that trend will continue in 2025.”

— Ben Strack

Fund issuers continue to dream up crypto ETFs they hope to launch in 2025. 

We recently highlighted Bitwise’s filing for a Bitcoin Standard Corporations ETF to invest in those with at least 1,000 BTC. 

Related, Strive Asset Management filed last Thursday for a Bitcoin Bond ETF that would seek exposure to convertible securities issued by MicroStrategy and others expected to use a big portion of proceeds to buy BTC. 

REX Advisers then shared plans to launch a Bitcoin Corporate Treasury Convertible Bond ETF that (you guessed it) would invest in convertible bonds issued by companies holding the largest crypto asset.

ProShares also plotted three bitcoin-related funds. A so-called S&P 500 Bitcoin ETF would take a long position in S&P 500 stocks and a short US dollar/long bitcoin position. The latter piece is done via bitcoin futures as a way “to currency hedge the US dollar exposure of the S&P 500 stocks position,” a company filing notes.

Two other planned products similarly aim to replicate the performance of bitcoin-denominated investments in Nasdaq 100 stocks and gold.

Perhaps more interestingly, Volatility Shares filed for an ETF that would invest in solana futures contracts “that trade only on an exchange registered with the Commodity Futures Trading Commission.” These do not yet exist.  

The company did not immediately return my request for comment. 

Volatility Shares, which offers leveraged BTC and ETH futures ETFs, is also the firm that revived the effort to launch ether futures funds in mid-2023. Though it ditched those plans when many others followed suit by re-filing for similar products, some credited the firm as being crucial to achieving approval of those (and ultimately spot ETH) products.  

Several firms — VanEck, 21Shares, Canary Capital, Bitwise and Grayscale — have active filings for spot solana ETFs. 

It remains uncertain whether the SEC will deviate from its precedent of requiring a regulated futures market — such as those available for BTC and ETH but not for solana — before approving other spot crypto funds.

One thing’s for sure (as stated on X by Bloomberg Intelligence’s Eric Balchunas): “Damn. ETF issuers don’t sleep (or take the week [between] xmas and new years off).”

It’s probably a sign there’s plenty more filings to come in the new year.

— Ben Strack