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TheBRRR’s Thoughts

So the ETH ETF got approved by the SEC yesterday - a big win for crypto.

Markets priced a 20% chance of approval just a week ago, so the fact it went through is a pretty dramatic and unlikely catalyst for the crypto market.

It hasn’t fully played out in the price action as you might expect - while ETH is up 21% on the week it’s technically flat since the approval was announced last night.

The ETFs need to clear one additional approval before they start trading, but it’s viewed as a formality. Most expect the ETFs to begin trading within 4-6 weeks.

Risk assets continue to look good - NVDA delivered another blowout earnings report and the Nasdaq is putting the finishing touches on a 1.4% gain for the week - setting a new all-time weekly closing high.

Leaving you with a little bullish nugget before the long weekend -

In a new report, Goldman noted that the Fed might start to accept a higher inflation target of around 3%, shifting from its traditional 2% goal. This adjustment could signal a more flexible approach to rate cuts amid persistent inflation.

If Goldman’s right and the Fed changes its target to 3%, risk assets will fly as the money printer goes brrr.

ETH ETFs Approved By Politically-Pressured SEC

WHAT HAPPENED

The SEC has approved exchange applications from Nasdaq, CBOE, and NYSE to list ETFs tied to the price of ether (ETH) after a last-minute pivot due to political pressure. This marks a significant shift in the US regulatory environment.

WHY IT MATTERS

• Market Expansion: This approval could lead to a significant influx of institutional and retail investment in Ethereum, mirroring the effects seen with Bitcoin ETFs.

• Increased Legitimacy: The SEC's decision lends greater legitimacy to Ethereum and the broader crypto market, potentially paving the way for more crypto-based financial products.

• Price Volatility: ETH prices experienced wild swings amid the news, with a dramatic drop to $3,500 followed by a surge to nearly $3,900, settling around $3,700. This volatility triggered over $350 million in liquidations, highlighting the market's sensitivity to regulatory developments.

• Political Influence: The approval, despite previous skepticism, suggests potential political influence, especially considering recent SEC and White House dynamics.

• Regulatory Precedent: This move sets a precedent that might streamline the approval process for future crypto ETFs, pushing the market further into mainstream finance.

  Reuters, Zerohedge

NVDA Surges On Another Earnings Blowout

WHAT HAPPENED

Nvidia (NVDA) stock surged 9.3% on Thursday, closing above $1,000 for the first time and boosting its market cap to over $2.5 trillion. This rise follows the company's Q1 earnings report, which significantly exceeded expectations. Nvidia announced a 10-for-1 stock split and a dividend increase, further enhancing investor appeal.

WHY IT MATTERS

• Earnings Beat: Nvidia reported Q1 adjusted EPS of $6.12 on revenue of $26 billion, far surpassing analyst expectations of $5.65 EPS on $24.69 billion revenue. This marks a substantial year-over-year growth of 461% in EPS and 262% in revenue.

• Data Center Dominance: The company's data center revenue soared 427% year-over-year to $22.6 billion, making up 86% of total revenue. Strong demand for generative AI and Nvidia's Hopper platform is driving this growth.

• Stock Split and Dividend Hike: The 10-for-1 stock split and increased dividend align Nvidia with moves by other tech giants, enhancing its attractiveness to a broader range of investors. The split will be effective on June 7, with the new dividend paid on June 28 to shareholders of record as of June 11.

• Market Leadership: Analysts from JPMorgan highlighted Nvidia's technological edge, maintaining an "Overweight" rating and raising the price target to $1,150 from $850.

STRATEGIC IMPLICATIONS

• Investor Appeal: The stock split makes shares more accessible to retail investors, potentially increasing liquidity and demand. The dividend hike aligns Nvidia with other Big Tech firms, appealing to income-focused investors.

• Networking Revenue: Nvidia's networking revenue tripled year-over-year to $3.2 billion, driven by the need for advanced networking solutions to support AI data centers.

• Gaming and Other Segments: Gaming revenue increased by 18% to $2.65 billion, while automotive and professional visualization segments remain smaller but are growing.

• Buybacks and Dividends: Nvidia bought back $7.7 billion worth of shares and paid $98 million in dividends during the quarter, reflecting strong cash flow and shareholder returns.

• Meta's LLaMA 3 Model: Meta’s use of 24,000 H100 GPUs for its latest large language model, LLaMA 3, exemplifies the significant reliance on Nvidia's AI technology by leading tech firms.

DATA POINTS

• Q1 Earnings: Adjusted EPS of $6.12, revenue of $26 billion.

• Future Revenue: Expected Q2 revenue of $28 billion, surpassing analysts' $26.6 billion forecast.

• Data Center Revenue: $22.6 billion, up 427% year-over-year.

• Stock Split and Dividend: 10-for-1 split effective June 7, new dividend paid June 28 to shareholders of record on June 11.

Yahoo Finance

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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.ll