Form 144 Rush Street Interactive For: 6 April

Risk disclosure: trading financial instruments and cryptocurrencies involves high risk, including loss of some or all invested capital; margin trading increases risk and crypto prices are described as extremely volatile and sensitive to financial, regulatory, or political events. Fusion Media warns site data and prices are not necessarily real-time or accurate, may be indicative and inappropriate for trading, disclaims liability, and prohibits use or distribution of its data without prior written permission.

Analysis

Regulatory and data-quality uncertainty in crypto markets is amplifying preference for regulated, custody-and-clearing-led trading venues. Expect widening spot–futures basis (contango) and higher implied vol on short notice (days–weeks) as risk-averse capital rotates from unregulated on‑chain liquidity into CME-style cleared futures and insured custody products, which capture recurring fee revenue even if spot volumes compress.

Second-order winners will be incumbents that combine custody, insurance and clearing — they win a larger slice of a smaller but stickier revenue pool while market‑making spreads widen and OTC desk margins expand. Losers are low‑barrier DeFi primitives, small offshore venues, and highly levered altcoin liquidity providers that face rising compliance costs, higher insurance premiums, and capital flight; expect market share consolidation over 6–24 months.

Immediate catalysts that can move prices within days are enforcement actions, large exchange hacks, or a stablecoin regulatory ruling; medium-term catalysts (3–12 months) are guidance/rulemaking and derivatives product approvals that can compress risk premia. Tail risks include a materially successful systemic exploit or stablecoin depeg causing forced deleveraging across futures and lending books — a 30–60% crash in correlated crypto risk assets within days is plausible and would blow out realized and implied vol simultaneously. A credible federal backstop, insurance pool, or ETF approvals would reverse the premium and favor long-duration custody/security plays.

Key Decisions for Investors

• Long CME Group (CME) calls, 9–15 month expiries: Buy 1x Jan-2027 call with ~2:1 leverage exposure. Thesis: cleared-derivatives and fee growth as flows move onshore; target +40–60% if regulatory clarity drives institutional flows within 6–12 months. Size small relative to equity book; downside ~30–40% if volumes remain muted and rates compress trading margins.
• Volatility hedge via out-of-the-money BTC puts (30–60 day expiries) bought in tranches: Purchase staggered 5–10% OTM puts to protect spot exposure or leveraged alt positions. Rationale: short‑notice enforcement/hack catalysts materialize in days; small option spend provides asymmetric protection (expected payoff >4:1 vs premium when a shock occurs).
• Long cybersecurity leaders (e.g., CRWD, PANW) 6–12 month call spreads: Buy calls and sell higher strike to finance cost. Rationale: rising compliance and insurance demand across institutions servicing crypto increases ARR and multiples; target +25–35% upside, downside capped to option premium if tech spending slows.
• Relative-value pair: Long regulated custody/exchange (COIN) 6–12 month calls financed by short small-cap exchange/DeFi token exposure (size-limited): Expect COIN to re-rate as share of institutional flows increases while small players lose market share. Target asymmetric 3:1 reward:risk over 6–18 months; watch regulatory headlines—tighten or hedge if enforcement escalates.