Form 13D/A ON24 INC. For: 2 April

This is a risk disclosure stating trading financial instruments and cryptocurrencies carries high risk, including potential loss of some or all invested capital and increased risk when trading on margin. Fusion Media warns cryptocurrency prices are extremely volatile, site data may not be real-time or accurate and is indicative only, and disclaims liability for trading losses while prohibiting unauthorized use of its data.

Analysis

Market-level risk disclosures and noisy/lagging data sources act as a tax on short-term liquidity: market-makers widen quotes and reduce inventory depths, which disproportionately hurts small-cap/low-volume crypto tokens and unregulated off-exchange venues. Regulated intermediaries that can offer clean custody, insured balance sheets, and transparent pricing (exchange-traded products, CME-cleared futures, large custodial banks) capture increased market share; smaller venues face higher funding costs and possible client outflows, amplifying concentration into a handful of infrastructure players over months.

Second-order plumbing effects matter: if banks and prime brokers tighten repo/credit lines to crypto-facing firms, trading counterparties will route flows through bilateral OTC or cross-border venues, pushing more volume into non-US liquidity pools and increasing cross-market basis (spot vs futures, ETF vs OTC). That creates persistent arbitrage opportunities that show up as wider but more predictable spreads and elevated repo/funding premiums that can persist for quarters if regulation remains ambiguous.

Tail risks cluster around three catalysts: a major data-provider/exchange outage (days–weeks) that spikes funding and forces deleveraging; a regulatory enforcement action or clarity (weeks–months) that reallocates flows toward regulated products; and a macro liquidity shock (days) that blows out volatility and punishes levered long bitcoin/alt positions. Reversals are most likely when institutional on-ramps (spot ETF inflows or bank custody rollouts) accelerate, normalizing spreads and compressing hedge returns.

The behavioral payoff: expect muted broad-market rallies but larger idiosyncratic moves—BTC/ETH and regulated wrappers rally on positive signals while altcoins suffer longer drawdowns. The persistent premium for custody and transparent pricing is a structural revenue tailwind for incumbents, but it also sets up opportunistic mean-reversion trades when funding frictions overshoot.

Key Decisions for Investors

• Long COIN (12-month): overweight Coinbase to capture market-share gains from flight-to-regulated-venues; hedge ~30% of position with 6–9 month $PUTs to protect vs a regulatory shock. Target 2:1 upside/downside if custody revenue traction continues.
• Pairs trade — Long CME (CME) futures liquidity play / Short high-beta Bitcoin proxy MSTR (6–9 months): expresses preference for fee/clearing revenue over corporate-treasury crypto exposure. Size so P&L neutral to a 20% BTC move; aim for capture of basis compression as flows re-center into cleared products.
• Arbitrage trade — Buy discounted GBTC shares or other retail trusts on >10% discount while shorting nearby CME BTC futures (3 months): harvest persistent ETF/trust discounts driven by retail redemptions and data-quality-driven flows. Use modest leverage; stop-loss at 5% adverse basis move.
• Event hedge — Buy 1–3 month puts on altcoin proxies or small-cap crypto ETFs (where available) sized at 1–3% NAV to protect against exchange/data outages or abrupt de-leveraging events. Cost acceptable as insurance given fat-tail event probability.