Good afternoon! We hope everyone’s enjoying their Wednesday, but we know bitcoin holders especially have a little extra pep in their step. Congrats on the new all-time high. 

Casey’s not trying to burst anyone’s bubble, but she has some concerns about how long BTC’s status as a “safe-haven” asset may last. More on that below. 

For those interested in a different kind of crypto exposure, our resident ETF expert Ben has details on the products launching soon (and those that likely won’t). Here goes: 

Bond market’s loss is bitcoin’s gain

It’s been an eventful day so far. 

Bitcoin hit a new record high of $109,888 this afternoon right as a weak US 20-year Treasury auction sent stocks plummeting.

Yield on 20-year notes hit 5.1% after today’s sale showed weaker-than-expected demand. The 30-year also rose 11 basis points to surpass 5% yield. The yield on the 10-year moved higher to 4.6%. 

The auction results come days after Moody’s downgraded the US from a triple-A rating to Aa1 last week. Given the relatively quiet economic calendar this week, it’s not surprising that US equities moved so much on today’s auction. 

The S&P 500 slid 1.2% around 1 pm ET on the auction results while the Nasdaq Composite shed 1.4%, erasing gains from earlier in the session. 

Bitcoin pulled back slightly after it approached $110,000, but was still up about 1% over 24 hours at 2 pm ET. 

What is surprising, though, is to see bitcoin — consistently trading like a risk asset this year — on the rise despite increasing bond yields. A sell-off in Treasury notes typically coincides with a risk-off sentiment. And today, BTC traded like a safe haven. 

Before you get too excited, Noelle Acheson, author of “Crypto is Macro Now,” cautions against calling this a “decoupling.” I’d have to agree. 

“More likely, we’re seeing building concern about a bond market ‘event’ triggered by Japan,” she wrote today. “The yield on its 30- and 40-year government debt has shot up over the past few days, and is now at record highs.” 

Yields on Japanese 30-year bonds hit a new high of 3.2% during Asian trading on Wednesday, according to London Stock Exchange data. Japan’s 20-year auction on Tuesday showed the weakest demand for the offering in more than a decade.  

The bond moves imply the Japanese yen is gaining strength against the dollar, 10T Holdings founder Dan Tapiero said. That could explain bitcoin’s rally. 

It’s hard to say, though, for just how long this trend will last. 

Like I said, there isn’t much macro data to trade this week, but risk assets still face headwinds. The ongoing trade war has analysts pulling back on S&P 500 earnings expectations for the rest of the year. Plus, tariffs could still deliver a blow to the labor market and second quarter GDP — and so far, the Fed isn’t budging on interest rates. 

On the point about earnings projections, I’ll concede that estimates do typically decline later in the year; but the slashes this time around are pretty significant. Since the beginning of Q2, analysts have reduced their projected earnings growth rate for the S&P 500 from 8.9% to 4.8%, FactSet data shows. 

Tomorrow’s initial jobless claims will give us our next labor market update. First-time filers for the week ended May 17 are expected to come in at 230,000, a slight increase from the week prior. 

Of course, if BTC isn’t trading like a risk asset, HODLers don’t have to worry about these potential headwinds ;)

— Casey Wagner

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Bitcoin’s price increase over the past month. This takes into account BTC’s retreat from its high earlier today, as the asset was trading around $106,900 at 2:30 pm ET.

Check out Casey and Ben’s piece on BTC’s latest peak. 

US spot bitcoin ETFs notched combined net inflows of nearly $1 billion on Monday and Tuesday. 

As for the next crypto ETFs hitting the market, some launches are imminent. As in this week. Others will take a while longer.

Volatility Shares is set to introduce two XRP futures ETFs on Thursday — a standard one and a version that offers 2x daily exposure.

The impending launches will follow Teucrium’s XRP futures ETF launch in April. That fund has ~$120 million in assets under management. Then, CME Group this week made XRP futures available for trading — with more than $19 million in notional volume traded the first day.

But as for spot products, the SEC said in a Tuesday filing that it wants more time to consider Grayscale’s proposed XRP ETF. This comes after the SEC last week delayed its decision on the firm’s planned solana ETF.

The SEC noted in a separate filing Tuesday that it “finds it appropriate to designate a longer period” to consider allowing Bitwise’s ether ETF to stake its ETH.

Industry watchers have expected these delays on additional spot crypto funds, as we’ve seen the SEC historically take the full 240 days it’s allotted to rule on a 19b-4 of this type.

As for changes to existing ETFs (i.e. permitting staking), SEC Commissioner Hester Peirce said in February “the commission may have to make progress on custody and other issues” first.  

So while the SEC could theoretically allow various proposed crypto ETFs to start trading at any time, investors might want to watch dates in July and October most closely.

Final SEC deadlines for spot products holding litecoin, SOL, XRP, dogecoin and cardano come in October, according to a Bloomberg Intelligence chart. The SEC’s 240-day windows for polkadot, HBAR and Avalanche proposals close in November and December. 

Before that, segment observers expect the SEC to decide in July whether crypto index ETFs can expand the assets they hold beyond BTC and ETH.  

If you recall, Hashdex CIO Samir Kerbage told me the diversification that would unlock is where the “biggest opportunity” lies.

— Ben Strack