--- title: “That’s Our Two Satoshis” - Common Sense is Starting to Replace Skepticism description: Blackrock has changed investors’ perceptions of this industry, leading all investors to recognize how underexposed they are to digital assets. image: https://www.ar.ca/hubfs/TO2S%20375x175%20%286%29.png --- [![email-sig-logowhite](https://www.ar.ca/hs-fs/hubfs/email-sig-logowhite.png?width=102&height=96&name=email-sig-logowhite.png "email-sig-logowhite")](https://www.ar.ca/) [![Get in Touch](https://no-cache.hubspot.com/cta/default/4536350/28ac2c2f-186c-436f-9682-1169cf946ad3.png)](https://cta-redirect.hubspot.com/cta/redirect/4536350/28ac2c2f-186c-436f-9682-1169cf946ad3) ** ** ** [![Arca](https://www.ar.ca/hs-fs/hubfs/arca_square_576x576.png?width=60&height=30&name=arca_square_576x576.png "Arca")](https://www.ar.ca/) [![Get in Touch](https://no-cache.hubspot.com/cta/default/4536350/28ac2c2f-186c-436f-9682-1169cf946ad3.png)](https://cta-redirect.hubspot.com/cta/redirect/4536350/28ac2c2f-186c-436f-9682-1169cf946ad3) ** ** ** Search **Menu** ** ** [![Data Room](https://no-cache.hubspot.com/cta/default/4536350/72e2934a-0f70-4634-897e-b99fd4807a9b.png)](https://cta-redirect.hubspot.com/cta/redirect/4536350/72e2934a-0f70-4634-897e-b99fd4807a9b) [![Get in Touch](https://no-cache.hubspot.com/cta/default/4536350/28ac2c2f-186c-436f-9682-1169cf946ad3.png)](https://cta-redirect.hubspot.com/cta/redirect/4536350/28ac2c2f-186c-436f-9682-1169cf946ad3) ![](https://www.ar.ca/hubfs/Blog/Thats%20Our%202%20Satoshis/Branding/2-Sats-Header.png) [Market Recap](https://www.ar.ca/blog/tag/market-recap) | # “That’s Our Two Satoshis” - Common Sense is Starting to Replace Skepticism [![Jeff Dorman, CFA](https://www.ar.ca/hubfs/Jeff%20Dorman.png)](https://www.ar.ca/blog/author/jeff-dorman-cfa) Written by [Jeff Dorman, CFA](https://www.ar.ca/blog/author/jeff-dorman-cfa) Jul 3, 2023 ******![Thats Our 2 Satoshis Logo](https://www.ar.ca/hs-fs/hubfs/Thats%20Our%202%20Satoshis%20Logo.png?width=300&name=Thats%20Our%202%20Satoshis%20Logo.png)****** ### What happened this week in the Crypto markets? ### ![Screen Shot 2023-07-03 at 9.43.54 AM](https://www.ar.ca/hs-fs/hubfs/Screen%20Shot%202023-07-03%20at%209.43.54%20AM.png?width=700&height=390&name=Screen%20Shot%202023-07-03%20at%209.43.54%20AM.png) *Source: TradingView, CNBC, Bloomberg, Messari * **Another good month, quarter, and half for digital assets** The digital assets market ended June on good standing, rallying for the last two weeks on the heels of Blackrock’s Bitcoin ETF application, and a host of other TradFi firms announcing entrance into the digital assets arena.  Bitcoin itself continues to broadly outperform. Through June 30th, it isn’t easy to find a better-performing asset across all global markets: ** ** ![](https://lh5.googleusercontent.com/6EwbRoPklIZ8th5dlCQ8ej_w0lOBfvsWlbWQungA4Adk-2moUTIH44sUINaU9KUpPHxVOac83KTEEfGKlF3udtdan-KSXVlYSuk6gEpilGWKrD7H0VXDtc2VL9Rp2mkCws12sqG7Ej7AoIRQCPCz1rM) *Source: Arca Internal Data and Bloomberg* ** ** The majority of this year’s rally occurred long before the Blackrock news, meaning most of these gains happened despite little inflows or excitement.  That is [now changing](https://www.ar.ca/blog/idle-capital-is-returning-to-crypto), quickly. To appreciate how important this news was, you have to recognize that most conversations since November of 2022 (FTX implosion) have been centered around “*What happens to crypto when the SEC kills the industry?*”, and in just two short weeks, these conversations have changed to “*Will Blackrock and Citadel dominate the industry, and who else will make all of the money?*”. This was an incredibly fast change in sentiment.  ** ** And it makes sense.  Don’t forget, it was only three months ago when investors were roiled by the regional banking crisis.  Every investor in the world is overly exposed to traditional banking and finance even if they don’t have any direct investments in bank stocks. Their investment livelihoods are directly or indirectly tied to their fate. But very few (if any) investors are exposed to digital assets in a meaningful way.  Blackrock has single-handedly changed this calculus and will have ongoing impacts on capital flows as investors play catchup.  ** ** When narratives shift, previously biased views start to become more open-minded and then common sense begins to take over.  Which leads to funny conversations. For example, I loved this passage from the most recent Pantera investor letter.  A completely unbiased investor with zero preconceived notions would think that regional bank equity, at 13:1 leverage, is a fraud compared to dollar-for-dollar backed U.S. dollar stablecoins.  Banks are terribly designed stablecoins may sound funny, but it’s a very accurate description.  It will take time for the embedded comfort and workflow to change. ** **   ![](https://lh6.googleusercontent.com/1Rss3-DS6_MRqkitynPK8w6wDDqX3wpRmYXV678NkAImbYPbl0pq5cKyK9an8loyjm71d_kbibNOl2tnO8bijUMLM22ehin_1REIdwPNpgvHlZPhuiCiksdpkAbCykp4Kbv6_7Q1dyIrflMX2Z56GOM) *Source: Pantera June investor letter* ** ** Not only are TradFi market makers and asset managers putting their hats in the ring, but the accompanying research is also becoming more forward-looking as well.  Bank of America recently released a new 100-page report on the state of digital assets, and [it’s quite good](https://research1.ml.com/Archive/12573681R1.pdf?w=jeff%40ar.ca&q=Xya5jX!3O4dGxKxhH1W!Y6MFCy1ZbCrBq31eLr3OtAE&__gda__=1688048733_6969b2506ed92cd34908df62998263d0), with many common sense narratives replacing previous skepticism.   > *“We believe the lack of user-friendly front-end interfaces and a disproportionate focus on bitcoin, memecoins, regulatory headwinds and illicit activity are overshadowing the rapid development of real-world use cases that are in active production today.”* With TradFi’s entrance to trading (EDX), asset management (Blackrock, Fidelity, etc) and research (BofA), it’s only a matter of time before every investor recognizes how underexposed they really are to this asset class. ** ** **Prometheum, Paradigm, and the SEC** Recently, a broker-dealer, Prometheum, was granted a special purpose license from the SEC to handle crypto asset securities and argued during the House Financial Services Committee meeting that no additional legislation or regulatory authority was required. This Prometheum *story is *[*VERY strang*e](https://twitter.com/collins_belton/status/1669081113191391236). This past week, Laura Shin invited Prometheum’s co-CEO [on her podcast](https://twitter.com/laurashin/status/1674065907390332931) to debate regulation with Paradigm’s special counsel.   ** ** The conversation on this podcast was centered around the fact that no tokens that ***exist today*** can currently be listed on Prometheum’s ATS. While true, it's not really relevant.  We first need to ask the most important question:    ***“How many potential FUTURE token issuers will register, and how fast can Prometheum grow the security token market and create the same type of liquidity that we’re getting on current exchanges?”  *** ** ** Arguing that Prometheum's licenses can't list current tokens is irrelevant since there are only like 5-10 current tokens that will even matter in 5 years.  The majority will die off, as they always have, and will be replaced by new ones.  We need to anticipate the future and figure out how something like Bitcoin and Ethereum (which will survive), stablecoins, STOs and the inevitable new tokens from protocols, companies, municipalities, and universities can all trade in the same venue. ** ** No one should care if they’re holding a tokenized security or a non-security digital asset other than the exchanges who trade them and the token issuers themselves - and that’s only because these parties have more restrictions and reporting rules placed on them if an asset is deemed a security. Tokenholders themselves should not (and do not) care. There’s nothing illegal about holding securities. Whichever venue figures out how to trade & provide the liquidity for all will win. [We dedicated a blog to this topic recently](https://www.ar.ca/blog/the-implications-of-secs-actions-on-crypto). ** ** The only question that matters is how simply and easily can tokens get issued, and listed, and who can provide the liquidity. Once determined, there will be millions of new tokens issued from individuals, companies, municipalities, universities, and protocols. I applaud the debate, but it centered on the wrong question.    ***And That’s Our Two Satoshis! ****Thanks for reading everyone! Questions or comments, just let us know.*   **The Arca Portfolio Management Team** *Jeff Dorman, CFA - Chief Investment Officer* *Michael Dershewitz - Chief Operating Officer* *Katie Talati - Director of Research* *Sasha Fleyshman - Portfolio Manager* *David Nage - Portfolio Manager* *Wes Hansen - Director of Trading and Operations* *Michal Benedykcinski - Senior Vice President, Research* *Nick Hotz, CFA - Vice President, Research* *Kyle Doane - Vice President, Trading* *Robert Valdes-Rodriguez, CFA- Vice President, Research* *Alex Woodard - Associate, Research* *Christopher Macpherson - Research Analyst* *Andrew Masotti - Associate, Trading and Operations*       **To learn more or talk to us about investing in digital assets and cryptocurrency** **call us now at [(424) 289-8068](tel:+14242898068).** ### Subscribe For the Latest Blockchain News & Analysis     Disclaimer: This commentary is provided as general information only and is in no way intended as investment advice, investment research, legal advice, tax advice, a research report, or a recommendation. Any decision to invest or take any other action with respect to any investments discussed in this commentary may involve risks not discussed, and therefore, such decisions should not be based solely on the information contained in this document. Please consult your own financial/legal/tax professional. Statements in this communication may include forward-looking information and/or may be based on various assumptions. The forward-looking statements and other views or opinions expressed are those of the author, and are made as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated and there is no guarantee that any particular outcome will come to pass. The statements made herein are subject to change at any time. Arca disclaims any obligation to update or revise any statements or views expressed herein. Past performance is not a guarantee of future results and there can be no assurance that any future results will be realized. Some or all of the information provided herein may be or be based on statements of opinion. In addition, certain information provided herein may be based on third-party sources, which is believed to be accurate, but has not been independently verified. Arca and/or certain of its affiliates and/or clients may now, or in the future, hold a financial interest in investments that are the same as or substantially similar to the investments discussed in this commentary. No claims are made as to the profitability of such financial interests, now, in the past or in the future and Arca and/or its clients may sell such financial interests at any time. The information provided herein is not intended to be, nor should it be construed as an offer to sell or a solicitation of any offer to buy any securities, or a solicitation to provide investment advisory services. 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