GM and BRRR.

Do you smell that?

I love the smell of roasted bears in the morning.

A weaker-than-expected jobs report set the tone yesterday - as it spurred panic buying of risk assets across the board, as the Nasdaq surged by nearly 2%.

During the frenzy, an appeals court announced its decision the Grayscale Vs SEC case. The court ruled in favor of Grayscale, and in the process dismantled the hypocrisy of the SEC’s persistent rejection of bitcoin ETFs.

The crux of Grayscale’s case, which the court agreed with, was that the bitcoin spot and futures prices are 99.9% correlated, so a spot bitcoin ETF would behave no differently than the futures-based ETFs that the SEC has already approved.

Bitcoin's price reaction was swift, with a 6% surge, while Grayscale’s Bitcoin Trust surged 18%, narrowing its discount to NAV to ~23%.

One final callout in today’s intro - our portfolio’s largest holding, NVDA, is back to all-time highs today.

On the back of its impressive earnings report last week, the company’s shares surged 4.2% yesterday, driven by the announcement of a strategic partnership with Google.

The partnership pairs Google’s latest supercomputer (A3) with Nvidia’s most powerful GPU (H100).

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Market News

Grayscale Grabs Victory While SEC Sulks

The U.S. District of Columbia Court of Appeals ruled in favor of Grayscale Investments, stating that the SEC was incorrect in rejecting the firm's application to list a spot Bitcoin ETF.

The landmark decision could have far-reaching implications for the cryptocurrency and asset management industries, which have long sought SEC approval for such financial products.

The court victory against the SEC has ignited a trading frenzy in Grayscale’s Bitcoin Trust (GBTC) shares, which broke volume records yesterday. The court ruling makes it more likely that GBTC could be converted into an ETF, appealing to a broader range of investors and potentially closing the Trust’s 25% discount to its underlying BTC holdings.

• The SEC's Double Standard: The SEC had previously approved Bitcoin futures ETFs but rejected spot Bitcoin ETFs, including Grayscale's. Grayscale argued that the market manipulation safeguards for futures should also apply to spot ETFs. The court agreed, stating that the SEC was "arbitrary and capricious" in its rejection.

• Court Ruling Impact: The court ruled that the SEC must review its previous rejection of Grayscale's attempt to convert its Bitcoin-focused fund into an ETF. This fund currently manages over $17 billion worth of BTC. The conversion would allow for redemptions and potentially close the gap between GBTC's share price and the net asset value of its Bitcoin holdings.

• Trading Volume and Price Surge: Nearly 20 million GBTC shares were traded, marking the busiest trading session in 14 months. While the spot BTC price rose 7% to $27,500, the share price of GBTC surged by 18% to almost $21, the highest level since Bitcoin was at $31,000 in mid-July.

  Read more and here

Macro News

Stocks Jump for Joy After Dismal Jobs Data

U.S. stocks and bonds rallied on Tuesday, largely driven by dovish JOLTS data and a weak consumer confidence print, which together reduced the likelihood of another Fed rate hike in November.

The risk-on move pushed the dollar index down 0.7% against major currencies as yields fell. Oil prices climbed back above $100 per barrel and gold topped $1,960 as the weaker dollar boosted commodities.

Spurring further upside, China is poised to cut mortgage rates on existing loans for the first time since the financial crisis to stimulate its slowing economy.

• Dovish Data Drives Markets: The U.S. JOLTS Job Openings for July came in at 8.827 million, lower than the expected 9.465 million. Consumer confidence also dipped to 106.1 in August, against an expected 116.0. These figures led to a surge in the S&P 500 by 1.45% and the Nasdaq by 2.15%, while reducing the implied probability of a Fed rate hike in November from 60% to around 50%.

• Currency and Fixed Income Reactions: The Dollar Index (DXY) started its descent, hitting lows of 103.36, improving risk sentiment and supporting a bull steepening in Treasuries. This suggests that the market believes the Fed may already be at its terminal rate, especially as eyes turn to upcoming PCE and NFP data.

• China’s Economic Stimulus: In a move to boost its economy, China is planning to cut rates on existing mortgages and is considering additional deposit rate cuts. Major lenders could lower rates across key tenors by 5-20 basis points, a plan reportedly signed off by regulators.

  Read more and here

Today’s Reader Poll

In our last poll, we asked Is Powell's cough indicative of a lie about his inflation target intentions?

People voted that JPow’s cough was actually indicative of him lying about his thoughts on inflation targeting. 😬

And for today’s question, let’s see if readers are bullish/bearish headed into the Fall:

AI Art of The Day

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The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.