The Crypto Summit: Our Gameplan

We also have Labour Market data tomorrow as well that we'll lightly touch on at the end of this report. We covered it in greater detail in Tuesday's Market Update, so expect some volatility tomorrow morning (US time) when that's released.

Many industry leaders have been invited to the Summit, some may speak and be able to give further clarity to certain ideas, that might help steer the market towards the more likely end result (of what a Reserve might look like).

In this Market Update:

• Aspects That Can Be Announced Tomorrow.
• Likelihood Of Certain Outcomes.
• What Do We Expect & How We're Playing It.
• What We're Also Tracking.
• Cryptonary's Take.

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

---

Aspects that can be announced at tomorrow's crypto summit

It feels like we have had a number of these events now, where we're set up for a major announcement that then turns out to be an 'announcement of an announcement' with not much substance, and the Crypto market is left disappointed.

It's likely that Crypto participants will be looking for something more material/concrete tomorrow. So, we can split this up into two parts; BTC, and then ALTS. Let's dive into what's in the realms of possibilities here.

For BTC:

• Will a Strategic Reserve be set up, and if so what's the timeline on this?
• Will the BTC held by the US be converted straight into the Reserve?
• Is there going to be outright buying of more BTC to add to a potential reserve? If so, what will be the total $ or number of BTC bought, and over what time period will this be done? This is perhaps the key thing we're looking out for tomorrow.

For ALTS:

• Will ALTS be added to a Reserve? Is a potential Reserve a BTC Reserve or is it a Crypto Reserve (inclusive of all coins, so not individual to SOL, ADA or XRP, but a reserve that includes them all)? If so, how is this potentially weighted?
• If so, what coins will be added? ETH, SOL, XRP, ADA, and anything else?
• Is there scope to add more coins/ALTS to a Reserve, and what parameters would these coins/projects need to meet to be added?
• Again, will there be outright buying of these coins? And if so, how much $ worth and over what time length?

There are quite a few questions here, and it's therefore important to estimate the likelihood of each outcome.

Likelihood of certain outcomes

Again we'll split this up into two sections; BTC, and ALTS. We feel it's important to do this following Howard Lutnick's comments 'So Bitcoin is one thing, and the other currencies will be treated differently, positively, but differently'.

For BTC:

We expect that the existing Bitcoin will be converted into a Reserve or a stockpile, and we believe the odds of this are high (80%). The main question to us is whether outright buying goes ahead and how big this buying is.

It's possible that Trump/Sacks announces a plan to add BTC to their current stockpile. We estimate this to be around a 30-40% chance though. In terms of them committing to a $ figure or a number of coins figure, we feel the odds of this are low, maybe just 10-15% chance.

The reason is that it just wouldn't make sense to do this. President Trump is expected to act in the best interest of the US, so it doesn't make a great deal of sense to announce to the world that they're (the US) committing to buying a certain amount of BTC over a certain period of time, and then to just let the rest of the world front-run them, and shoot the price up.

In our view, what makes the most sense is to announce a Bitcoin Reserve, but to be non-commital in the details, and then for them to quietly buy up BTC over the coming quarters. We think this is probably the more likely outcome on Friday, and it's very possible the market just won't know how to digest this. The lack of commitment to a $ figure of buying might spook the markets.

For ALTS:

This is much more difficult to estimate. After all, who'd have thought that XRP and ADA (yes, ADA) would be in the running to be added to a potential Crypto Reserve?

In terms of outright buying of ALTS, we expect the odds to be very low (maybe just 10%). It would be a surprise to us to see that US taxpayer dollars are being spent on buying XRP and ADA. Perhaps what's more likely is that the Ripple and Cardano Founders (Brad Garlinghouse and Charles Hoskinson) allocate a percentage of their personal coin supply to the Crypto Reserve.

Why would they do this? It'd give their token more legitimacy (potentially, although I think us Crypto natives can see right through it) and that then increases the value (in retail's eyes) of XRP and ADA. This is potentially more likely, but we still expect the odds for this are low, maybe just 20%.

But, on the other hand, if they do announce outright buying of ALTS and the $ figure is relatively sizeable, then this will likely lead to full blown risk-on. Especially if we see that they lay out parameters for other ALTS to potentially be added/included at later dates.

This may however though take away slightly from the BTC narrative. This might result in BTC Dominance coming down, that would be an interesting result. Again though, we put the odds of this at extremely low, maybe 5-10%.

What Do We Expect & How We're Playing It

We're expecting real positivity around Bitcoin. We feel a Bitcoin Reserve, or plans to set up a Reserve, will be announced. The key will be whether or not they commit to outright buying of BTC. What makes most sense to us is that they don't commit to this, and therefore the market might be disappointed in this.

For ALTS, a Crypto Reserve, with outright buying is the best outcome. But, we see the odds of this as extremely low. Working out the in between outcomes is tricky, and we'd be surprised if they're committal to anything.

Potential market result

It's possible that the market outcome for Bitcoin is positive (prices), especially if they announce outright buying and commit to a number that's big. Although we don't expect this.

For ALTS, it's hard to know how the market is positioned here. It seems unless they announce a Crypto Reserve with coins being added and outright buying of these coins, it's likely that these coins will selloff.

Overall, the talk has been extremely positive, but we've been here a number of times before, and we've been let down, and the market has responded accordingly. Even if a Reserve is announced, the market will likely want to hear outright buying is happening in order for it to send higher. But, we put the odds of this as low. We expect this to be a 'sell the news' event.

How We're Playing It

Going into the event, it's probably unwise to have huge positions. Of course, it all depends on what's said, and if there's outright buying, bid Bitcoin. If there's outright buying on the ALTS, bid the ones that are included, and the ones that can potentially meet future parameters to be included in a Reserve. But, as we've said, we don't see outright buying as being the likely outcome.

Most Likely Outcome

It's possible for BTC, we see a small bid higher into the Summit and during the event. Although we think it'll be a 'sell the news' event and therefore, if BTC moves into the $94k to $97k area during the Summit, and there isn't a commitment to outright buy coins, then this sets up a nice BTC Short opportunity.

For ALTS, especially XRP and ADA, if we're right, we'd look to Short them into their range highs (assuming the price gets there). The reason is that we believe the event for ALTS (and XRP and ADA) will be underwhelming, and therefore they can set up for good Short opportunities also.

What We're Also Tracking

Aside from the Crypto Summit, we continue to keep a close eye on a few macro events over the coming days/week.

• Is there a closer movement towards ending the war in Ukraine?
• European Bond Yields soaring higher on dramatically increasing future fiscal spending to make up for the US's pullback in support for Ukraine and Europe. How might this affect risk assets (and mostly US risk assets) in the coming weeks/months?
• Tomorrow's economic data; jobs and unemployment data. We do think there can be a downside surprise in this data print. We will do a Light Update following the release of the data.
• The ECB has cut rates by 25bps as expected today. This doesn't have much immediate impact on BTC, but we'll continue to track it.

Cryptonary's take

The markets have been really difficult at the moment, especially in Crypto as there are two conflicting narratives. We have a macro environment that still points to risk-off, although we do expect this to change in the coming quarter or two.

But, running alongside this is a Trump administration that seems (so far) extremely favourable towards Crypto. The market feels as if it's on tenterhooks and it tends to want to sell down before a positive Crypto policy is announced, and its prices re-rate back higher. We've seen extremely volatile price action as a result off the back of this.

Tomorrow's Summit is a key event. The market will really want to see some commitment from the Trump admin, and it seems the bar to beat for the market to go up, is quite high. We're expecting positivity around Bitcoin, but for ALTS to be hit. Overall, we believe this will be a 'sell the news' event.