Form 13G Sol-Gel Technologies Ltd. For: 31 March

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Analysis

Regulatory and litigation pressure is concentrating economic activity onto on‑shore, regulated infrastructure (exchanges, custody, derivatives venues). That shift increases recurring fee capture and reduces bid/ask spreads for incumbents; a 10–30% exit of smaller venues/market‑makers would plausibly lift on‑chain liquidity concentration and raise regulated-exchange revenues by mid‑teens percent within 6–12 months. Expect increased demand for institutional custody and cleared derivatives, which benefits players that already have bank lines, insurance and CME/DTCC connectivity.

Derivatives and volatility markets will see a bifurcation: short-dated implied vol will spike during enforcement headlines while term vol should compress as market concentration increases. This creates a carry opportunity to sell short-dated volatility delta‑hedged, but it also creates tail‑risk for rapid deleveraging and liquidation cascades that can generate 20–40% moves in spot in days. The mechanics: enforcement → margin calls at lending desks → liquidations on centralized and decentralized venues → transient basis widening between spot and futures and large options gamma events.

Legal actions raise a second‑order financing risk for miners and lending platforms; increased compliance and legal costs will force smaller players to sell inventory or collateral, pressuring altcoins and names financing equipment or treasury holdings. That suggests a 3–9 month window where equity dispersion rises: regulated exchange equities and derivatives clearers outperform, while balance‑sheet‑levered service providers and miners underperform. Over 1–3 years the structural winner is concentrated, regulated infrastructure with custody and clearing capabilities; near‑term the path will be noisy and headline driven.

Key Decisions for Investors

• Long COIN (Coinbase) — buy Jan 2027 LEAPS call spread (e.g., buy 1.0x LEAP, sell nearer strike to fund) sized 2% NAV. Rationale: capture higher recurring fee capture and custody flows as smaller venues exit; target 2.5–3x return over 12–24 months, hard stop 20% drawdown.
• Long CME Group (CME) — buy shares or 6–12 month call spread sized 2% NAV to capture rising cleared derivatives volumes and higher open interest. Target 25–40% upside in 6–12 months if OI and ADV increase; hedge by reducing size if daily cleared volumes fail to grow over two consecutive quarters.
• Volatility pair: short 30‑day BTC ATM straddles delta‑hedged (size 1% NAV) funded by buying 6‑12 month 10–15% OTM BTC puts (size 0.3% NAV) as tail protection. Time horizon days→months: collect short‑dated carry while limiting left‑tail exposure; reduce short vol if realized 30‑day vol exceeds 1.5x implied.
• Relative value pair: short miners (MARA + RIOT weighted) and long COIN (net neutral market beta, total size 3% NAV). Rationale: miners are levered to asset‑price shocks and financing risk; COIN benefits from concentration. Target 30–50% asymmetry over 3–9 months; use a daily mark‑to‑market stop of 10% on the pair to cap blowups.