CRYPTO REVIVAL?
01/11/26 Prospero.ai Investing - 283rd Edition (Weekend)
Today we’re talking about a subject we don’t often dive into at Prospero.ai and that’s Crypto. You know, Bitcoin, Ethereum, and hundreds like them. Even if cryptocurrency is not your thing – here’s what you need to know, it just picked up its most important tailwind in years; and it didn’t come from a chart, a halving model, or a viral prediction. It came through government regulation. Secretary of the Treasury Scott Bessent was recently quoted as saying: “We are removing all regulatory barriers for crypto.” That was followed up by the U.S. Securities and Exchange Commission dropping crypto as a standalone risk category and folded it into the broader universe of financial products and technologies in its latest report. That may not mean much to you, but it’s a BIG deal and the signal is unmistakable: digital assets are no longer being treated as a problem to contain. They’re being treated as part of the system.
That shift matters more than any Crypto strategist, six-figure Bitcoin call. When regulators stop asking “Why are you involved in crypto at all?” and start asking “Are you managing it responsibly?” the investors worry that the risk of a sudden policy shock will collapse the market disappears. The result? It makes it significantly easier for wealth managers, hedge funds and institutions to justify exposure to crypto without fearing a headline-driven reversal.
It’s against that backdrop that familiar voices are getting louder. Changpeng Zhao (Founder of Binance, the world’s largest crypto exchange) is openly talking about a super cycle that could kick off very soon. Tom Lee is once again floating aggressive Bitcoin targets ($180,000 in the next month) and Ethereum targets. On the surface, this sounds like classic crypto bravado. Underneath, it reflects something real: crypto now has the infrastructure it lacked in prior cycles. Regulated products. Institutional custody. Clearer compliance pathways. Distribution channels that let mainstream capital participate at scale. Pair that with a regulatory tone that no longer frames crypto as radioactive, and the idea of a structural repricing stops sounding like fantasy. It becomes a legitimate outcome. As a matter of fact, the SEC’s decision to stop flagging crypto as a unique exam risk, quietly reframes the entire debate. The question is no longer if crypto belongs in financial markets, but how it should be offered and supervised. The result? It gives traditional Wall Street firms a clearer green light to participate. And that’s a big deal.
Think about it this way: Crypto is entering the same category as options, leveraged ETFs, and private funds. They’re still complex, volatile, but institutionally understood. And that means more capital will come flowing in. One interesting example is that JP Morgan just announced that it will accept Bitcoin as collateral for certain institutional loans. That’s a real move from what used to be thought of as a ponzi scheme to legitimate bank grade collateral.
But that brings us to an important question – where will the capital flow? If a super cycle emerges, not all assets will benefit equally. Bitcoin obviously sits at the core. It’s the reserve asset, the institutional on-ramp, the collateral layer. It’s the engine that makes the trade investable. But beyond Bitcoin, there seems to be a much larger use case brewing under the surface. And that is using cryptocurrency to facilitate actual financial payments, and institutional workflows, not just across states, but around the world.
Beyond Bitcoin, here are a few (not all) that stand to benefit.
• Ethereum — The primary settlement layer for stablecoins, DeFi, tokenized assets, and on-chain derivatives, with the deepest developer and institutional footprint.
• Solana — A high-throughput network increasingly used for consumer applications, payments, and high-frequency on-chain trading, making it a high-beta complement to Ethereum.
• XRP — A payments-focused network optimized for cross-border settlement and liquidity management, with long-standing integration efforts among banks, payment providers, and financial institutions. Its value proposition is tied less to speculative DeFi activity and more to transaction throughput, settlement efficiency, and institutional adoption.
The common thread is simple: the story around crypto has quietly flipped. Not from bearish to bullish, but from “does this survive?” to “how big can this get?”; and that by its very nature is bullish.
For Prospero.ai investors, the edge isn’t chasing headlines or price targets. It’s recognizing a regime shift that’s happening and building exposure that lets upside change your net worth without ever putting it at existential risk. Some of the ways that I (Matt) have personally gained exposure to cryptocurrency is through the equity markets. You can gain access to crypto by buying $IBIT (Bitcoin ETF), $ETH (Ethereum etf) etc. But for those that want to get exposure to Blockchain / Cryptocurrency in a more stable and diversified way, way we recommend the $BLOK ETF. In the past for individual stock names we have favored $COIN and $MSTR but right now COIN is looking weak in our key signals. And even though MSTR at 100 Net Options Sentiment is an interesting signal that Bitcoin might be ready to run up again we do not like MSTRs 43 Upside. As we do think there is some short term upside in this area we currently have $HUT in our portfolio but we also have our eye on $BITF as a ticker with more room to rebound to its highs. Now a word from our CEO!
A WORD FROM OUR CEO
A few housekeeping items:
We will be getting in touch with our crowdfund investors about the perks shortly! Thanks for your patience.
While this article is about Crypto, we have complicated feelings on the ethics here. For more check out my Fast Company article: We Finance Our Disadvantages and Call It Progress
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CRYPTO REVIVAL?
Market/Macro Update w/ Cap/ Value Analysis
QQQ and SPY Net Options Sentiment
Sector Analysis
How we view the Sector performance and momentum
Portfolio Strategy
Putting it all together to make a portfolio that first controls for risks but also has upside
Longs
Adds —> Keeps —> Drops
Shorts
Adds —> Keeps —> Drops
Portfolio Summary
CAP / VALUE ANALYSIS
The Small Cap bull run continues! Both Growth and Value keep posting great numbers as the market rally finally broadens out. Large Cap Growth still posting poor numbers, whereas Large Cap Value seems like a decent play right now. Mid Cap is still a no go zone at the moment.
Still no clear signal for QQQ NOS, but definitely not bearish, still showing that there’s enough energy in this rally heading into earnings season.
SPY NOS continues to hover around flat levels, leaving open the question of whether this indicates broader market bearishness or an increase in hedging intensity rather than directional conviction.
SECTOR ANALYSIS
Materials extended its strong run this week, supported by improving macro sentiment and continued momentum in commodities, making it increasingly difficult to stay underweight. Consumer Discretionary also moved higher as risk appetite improved alongside resilient consumer spending data and easing rate concerns, driving a rotation into cyclicals. Industrials held up well as well, name-dependent, but the sustained relative performance continues to reinforce the broader cyclical recovery narrative.
PORTFOLIO STRATEGY
SPY NOS remains in the same spot as last week and QQQ NOS is still mildly bullish, so we’ll be net long heading into this week, really concentrating positions on sectors and market cap/ style spaces that are hot right now with the signals to match. We will also stay well hedged with our shorts targeting both Sector and Market Cap matches to our higher risk longs. 6 longs, 5 shorts.
Long / Bull Moves – COST add / META, ZETA, AVAV, HUT and LEU holds / SE drop
Adds
COST was an easy add as it came in at the top of our screener this week with great Net Options.
Holds
META was again kept for great Net Options and Upside Breakout. ZETA was kept for being a smaller cap name with great Tech Flow. AVAV and LEU were also holds for great Upside and Net Options. HUT was kept for its smaller market cap and great Net Options.
Drops
SE was dropped as it performed poorly in our screener.
Short / Bear Moves – FWONA, DDOG, CHEF and NTCT adds / DELL hold / HPE, CMCSA, ONB, and PNR drops
Adds
FWONA was a good add with favorable Net Options. DDOG and NTCT were both added for Technology exposure in both large and small caps. CHEF was added to play the prolonged underperformance in Consumer Defensive.
Holds
DELL was kept for large cap Tech exposure with favorable Net Options and Momentum.
Drops
HPE was dropped as we liked DDOG more. CMCSA, ONB, and PNR were all dropped as they placed low on our screener this week.
Portfolio Summary
Long / Bull Moves – COST add / META, ZETA, HUT, AVAV and LEU holds / SE drops
Short / Bear Moves – FWONA, DDOG, CHEF and NTCT adds / DELL hold / HPE, CMCSA, ONB and PNR drops
6 Longs: COST, META, ZETA, AVAV, HUT and LEU
5 Shorts: FWONA, DDOG, CHEF, NTCT and DELL
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