May has been a wild month for the crypto market and the portfolio (which did +12.9%), particularly for Ethereum. The buzz in the market was that the Ethereum Spot-ETF had slim chances of getting the green light from the SEC. This sentiment was reflected in the ETH-BTC performance. But then, a courtroom drama unfolded. A judicial dispute suggested that if the Ethereum ETF shared the same characteristics as the Bitcoin ETF, it should get approved. Riding on this precedent, all Ethereum ETF applicants revamped their applications to mirror a Bitcoin ETF, aiming to push the SEC into a corner and force approval.
This situation showcases how the judicial system can keep the executive branch in check. If an institution isn’t consistent with its policies, the judiciary can step in to enforce consistency or prompt policy changes (often nudged by the legislative powers). This kind of checks and balances system, familiar in both the US and the EU, is crucial for a thriving market. Crypto markets need consistency and regulatory predictability, which the SEC was initially hesitant to provide. Thankfully, the judicial powers stepped in to push for clarity.
On a related note, presidential candidate Donald Trump has done a 180 and is now advocating for pro-crypto initiatives. This is bullish news, as it brings crypto into the limelight and onto the presidential campaign agenda.
But enough politics, let’s talk about the portfolio.
The team behind the crypto project CHZ had planned an upgrade to enhance their network adoption and prepare for long-term growth. The planned changes were expected to yield substantial returns on staked CHZ, with the upgrade scheduled for May 21. The projected initial returns were over 100%—a significant prospect for a top 100 cryptocurrency. I took a position in CHZ at €0.108, anticipating that a successful upgrade would lead to an increase in price as investors sought high returns.
However, the upgrade did not go as planned. The team provided no details and vaguely promised a solution the following week. When the week arrived, there was no solution or update. Strangely, the price of CHZ increased to €0.152—a staggering 41% rise in just five days!
Why the sudden spike? Here are some possible explanations:
- Investors might still be banking on the upgrade and its potential returns. But if so, why didn’t they buy before the scheduled upgrade?
- Investors could be looking ahead to the UEFA EURO 2024 football competition, starting on June 14, historically a bullish period for CHZ.
This situation has been confusing. The CEO’s silence was especially noticeable, and the usual staking returns (1-3% without the upgrade) disappeared without explanation. This trade remains uncertain, with clear potential but uncertain realization.
In response, I took some profits but decided to maintain the trade through June, given the positive sentiment and potential for attractive staking returns.
The above trade has provided the portfolio with an extra 6.4% in profits this month.
Stay tuned for further developments in this crypto journey!
