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At present on “Markets Each day,” host Jennifer Sanasie speaks with Bitwise Crypto Analysis Analyst Ryan Rasmussen on the vast scope of belongings Bitwise is watching throughout the crypto ecosystem, together with layer 2s, crypto equities and bitcoin mining.
This episode was hosted by Jennifer Sanasie. “Markets Each day” is govt produced by Jared Schwartz and produced and edited by Eleanor Pahl, alongside Senior Reserving Producer Melissa Montañez. All authentic music by Doc Blust and Colin Mealey.
Audio Transcript: This transcript has not been edited and will comprise errors.
JENNIFER SANASIE:
Alright, let’s speak about these crypto markets. What are you watching at present?
RYAN RASMUSSEN:
You recognize, I feel one factor you talked about that everybody’s watching is the outcomes of the FOMC assembly this week, that is going to have a big effect on which method markets transfer from a danger on perspective. In order that’s the principle factor that I am watching this week, after all, we’re keeping track of the flows out and in of those bitcoin ETFs. That is nonetheless entrance of our minds at Bitwise. So these are the 2 issues I am desirous about.
JENNIFER SANASIE:
What do you anticipate to see on the FOMC assembly?
RYAN RASMUSSEN:
I feel we’ll have flat this FOMC assembly. There are expectations that charges might minimize afterward this 12 months. However I feel proper now and the primary half of the 12 months, actually, I might anticipate us to only keep the present rate of interest ranges and could be shocked if we see a hike in rate of interest ranges at present.
JENNIFER SANASIE:
Unpack that a little bit bit extra for us. We talked about danger belongings, crypto falls into that class. If that occurs, how do you anticipate to see the crypto markets transfer?
RYAN RASMUSSEN:
Yeah, so crypto definitely falls into that danger belongings class. When rates of interest are going up, we are inclined to see the promoting off of danger belongings. These are issues like equities, like various belongings like crypto, particularly given how risky it’s, traditionally talking. So if we’re simply charges keep the present stage that assume that meets expectations, we see crypto sustaining its type of worth ranges at present, bitcoin within the $40k vary. If we see charges enhance, that is typically an indication that traders can get greater yield elsewhere within the markets. That is what traders are inclined to go danger off, that means that they go to much less dangerous investments like treasuries that may generate an honest yield. So if rates of interest keep their present ranges, we’d see possibly markets do the identical. If rates of interest go up, we might see a little bit little bit of a dump. After which after all, rates of interest come down, traders are searching for higher yield alternatives outdoors of treasuries. And that is once we begin to see traders look in direction of danger belongings like equities, like tech, like bitcoin, like crypto. And in order that’s actually what we predict we have to see for this subsequent leg up out there cycle is rates of interest being dropped a little bit bit from the place they stand at present.
JENNIFER SANASIE:
I wish to get into Bitwise’s This fall report in only a second, however we’re speaking about bitcoin now. And I do know again in December, you predicted that bitcoin might attain $80,000, hitting a brand new all time excessive after the approval of an ETF and the having the ETF approval has occurred. We’re anticipating the halving to occur afterward this 12 months. Do you continue to stand behind that prediction?
RYAN RASMUSSEN:
We do, we do. We did not assume that there was going to be this instant transfer to $80k or greater following spot bitcoin ETF launches, we did anticipate the spot ETFs have been going to need to launch this 12 months. And we anticipated that to occur most probably in January. So we’re completely satisfied about getting that prediction proper. However we did not assume that markets would transfer from $45 or $48k, as much as $80k in a single day. What we anticipate to occur is traders to come back into this area who’ve been sidelined from investing in bitcoin. These are conventional traders like institutional traders and monetary advisors who’ve actually been ready for that ETF format to be able to allocate to crypto, to be able to allocate to bitcoin, actually. And so now that now we have these gates open, we’re clearly seeing billions of {dollars} circulation into the area we have seen with the launch of those bitcoin ETFs and with over $5 billion and flows coming into the merchandise, and in order that’s one catalyst. In fact, the halving is one other catalyst that we’re actually enthusiastic about, we predict that focus will begin to shift in direction of the halving within the subsequent month or two after the bitcoin ETF hype wears down. After which after that, you understand, I feel we’ll have these two catalysts, we might have rates of interest come down, like we talked a couple of bit earlier. And people three issues mixed in our eyes units an awesome path forward for bitcoin hitting the $80k or greater worth stage.
JENNIFER SANASIE:
Okay, we’re gonna come to bitcoin a little bit bit later on this interview, however we acquired to get to that This fall report. I do know one of many charts that stood out to me this morning whereas I used to be studying it was the efficiency of the Bitwise 10 and enormous cap crypto index and its constituents. You recognize, the chart takes a have a look at Solana, Avalanche, Chainlink, amongst others. For those who’re taking a look at layer 1 outdoors of Solana, another huge performers that you simply’re keeping track of?
RYAN RASMUSSEN:
Effectively, that is a extremely good query. I feel there’s two that I am actually enthusiastic about. Ethereum, after all, maintains entrance of thoughts for us. There’s such such thrilling developments on layer 2 ecosystems, now we have EIP 4844, which is an improve to the Ethereum ecosystem that we anticipate to see later this 12 months. And I feel that creates a extremely nice setup for layer 2 options for the functions that we constructed on high of layer 2 options, as a result of it will scale back the associated fee that layer 2s are paying to choose the Ethereum mainnet. And so actually excited concerning the developments that we anticipate to see throughout the Ethereum ecosystem this 12 months. After which I might say Cosmos is one other one which we’re keeping track of, we’re seeing lots of fascinating issues pop up on the app chain entrance finish. Injective is one asset that has been seeing lots of pleasure not too long ago, it is had nice worth appreciation, for instance, it is a DeFi targeted app chain utilizing the Cosmos tech stack. So these are two areas of the L1 area apart from Solana that I am keeping track of this 12 months.
JENNIFER SANASIE:
You recognize, we speak about these ecosystems. So typically we watch the costs go up and the costs go down, have been looking at the place the customers are going, the place are customers actually considering working? Does one ecosystem stand out above the others to you?
RYAN RASMUSSEN:
Sure, definitely does. I imply Ethereum continues to dominate from a layer 1 community perspective in most metrics, whether or not that is customers or builders, or transactions or something of that sort. So Ethereum continues to be the chief. By far they’ve a ton of each day lively customers in comparison with you understand, Cardano, for instance, and even an Avalanche, for instance. And so Ethereum, you understand, it has such a lead on the opposite l ones having been round for a lot longer. And having now had so many builders and customers and functions actually dive into the Ethereum area. In order that one continues to steer the pack, I would not anticipate them to lose that benefit, no matter how nicely these different L1s do. They actually have the robust community results of being the primary mover within the area.
JENNIFER SANASIE:
And we talked about Ethereum. I gotta speak about these layer 2s, any standout layer 2s for you in relation to customers or worth motion?
RYAN RASMUSSEN:
Yeah, definitely, I imply, Polygon continues to be the main layer 2 when it comes from customers perspective or variety of transactions, for instance, they have been across the longest, definitely in comparison with Arbitrum or Optimism or Base. And so I feel Polygon stands out from that perspective, they really have, in addition they have a extremely robust advertising and marketing ecosystem and a ton of nice partnerships. So they’re doing an awesome job constructing a model for his or her layer 2, however we have actually seen some new entrants are available in sizzling. And so I feel Base is a type of that individuals are actually enthusiastic about. That is clearly Coinbase’s layer 2 scaling resolution, and Coinbase has so many customers that it is a straightforward transition to go from the Coinbase app to the Coinbase pockets to Base layer 2. That is constructed utilizing the OP stack, which is the Optimism stack. And so we’re actually excited round different scaling options type of constructing off of that and utilizing that expertise, after which zkSync type of popped up not too long ago as a type of ones that is seeing lots of traction as nicely. So it is a actually thrilling area to observe so much unfolding.
JENNIFER SANASIE:
Ryan I am completely satisfied you introduced up Coinbase as base as a result of again in December, you tweeted a prediction that Coinbase income would double beating Wall Avenue expectations by at the least 10%. Do you continue to stand by that prediction? And why do you assume that is going to occur as we transfer into 2024?
RYAN RASMUSSEN:
Yeah, Jen, we do nonetheless stand by that prediction. There’s a few the reason why I imply, firstly, and possibly most easily, Wall Avenue simply does not perceive Coinbase’s enterprise mannequin. Once we put this prediction out, we type of have been trying throughout the ecosystem to see what are individuals getting improper. And one factor that we seen once we pulled the Coinbase forecast from Wall Avenue analysts for 2024 was that analysts have been predicting basically a flat 12 months from 2023 to 24. I feel the consensus income estimates have been round eight to 10% greater than 2023. And we simply thought that was merely improper. There’s so many bullish catalysts for Coinbase as a enterprise. Base, it is simply a type of the layer 2 scaling resolution we have been simply speaking about. They’re additionally anticipated if we’re in a bull market, which we imagine we’re, to see a spike in buying and selling quantity. They’re the custodian for 9 of the 11 spot bitcoin ETFs that simply launched earlier this month. Meaning they get income for each asset that flows into that space and into these merchandise. They usually have their hand in a bunch of different areas of the ecosystem that is stablecoins with USDC, perpetual futures and derivatives with these exchanges. They’ve launched their worldwide enterprise and, and actually, they simply present so many companies throughout the crypto ecosystem that to us, it appears like a no brainer that their income goes to spike in 2024 coming off an awesome 12 months in 2023. However nonetheless, you understand, rising from the bear market of 2022, that is a multi 12 months course of for an organization as huge as Coinbase.
JENNIFER SANASIE:
Another crypto equities you are watching?
RYAN RASMUSSEN:
You recognize, miners are actually thrilling. One factor that miners present is type of as turbo beta to bitcoin. Typically talking, when bitcoin does nicely, bitcoin miners do extraordinarily nicely. And naturally, the inverse is true. So we’re being attentive to miners, the halving will definitely have an effect on the enterprise of miners, the rewards that they are mining, each single block will probably be minimize in half. And so they should enhance their effectivity with increasing their operations. There’s solely a lot that you are able to do from enhancing a expertise perspective and so actually need to give attention to ramping up manufacturing and growing effectivity. After which as extra individuals use the bitcoin community for issues like ordinals, and different use circumstances, which we’re definitely seeing pop up in 2023 and have traction going into 2024. That might additionally enhance the miners’ income. So I say bitcoin miners, Coinbase definitely, are a number of the high crypto equities that we’re being attentive to.
JENNIFER SANASIE:
I do know mining equities have been down not too long ago. Is there a sure one thing you are in search of while you’re taking a look at mining equities? Perhaps it might be diversification as we head into the halving, what makes a mining firm stand out as we head into the halving and rewards are going to be lowered?
RYAN RASMUSSEN:
A few issues stand out to me. I imply, the price of mine is so necessary, proper? You’ll want to be worthwhile at a comparatively affordable bitcoin worth. So lots of these miners, you understand, their profitability stage is within the teenagers. So for each bitcoin they mined, it value them 10 to $20,000, most likely near that $20,000 mark. And so with the value of bitcoin sitting round $40k, or $50k, that is a extremely worthwhile enterprise. However what we noticed within the final bear market with the value of bitcoin falling all the way down to the $20k and decrease stage, was that lots of miners simply merely weren’t worthwhile mining bitcoin, at that worth level. So what we search for is low value of mining relative to the value of bitcoin and the place we predict the value of bitcoin goes to be sooner or later.
JENNIFER SANASIE:
Okay Ryan, simply earlier than we wrap, I’ve to ask you about this prediction that you simply tweeted about in December that Taylor Swift goes to launch an NFT. We all know Travis Kelce, her boyfriend is heading to the Tremendous Bowl, do you continue to assume Taylor goes to launch an NFT this 12 months? And if that’s the case, is that going to drive renewed curiosity within the NFT market?
RYAN RASMUSSEN:
Effectively, what higher format to launch NFT than the largest sporting occasion on the earth. However although I feel it is unlikely that she does that on the Superbowl, nevertheless it’s very thrilling. I imply, one factor that we have been being attentive to not too long ago is the use circumstances that NFT has purchased, whether or not that is ticketing or whether or not that is music, NFTs, or actual property, NFT, or quite a lot of different use circumstances, they’ve such a robust energy to to construct manufacturers to assist develop manufacturers and enhance effectivity through which artists and different corporations are connecting with their prospects and fan base. And so we do assume that we’ll see increasingly more mainstream artists get into NFTs this cycle, it will be nice to see somebody like Taylor Swift who has a historical past of partaking with their followers from a in a singular method and I do not assume it is too far of a stretch to see her partaking with followers in relation to NFTs. That may very well be a token gated playlist on Spotify, which Spotify has been experimenting with and she or he’s the biggest streamer on Spotify in 2023. It may very well be distinctive entry to presales. NFT is only a good software to wrap that each one into to present the followers a greater expertise and to assist them join with artists like Taylor Swift.
JENNIFER SANASIE:
That is one NFT mission I’ll purchase into.
RYAN RASMUSSEN:
Identical right here. Identical right here. We’re huge Swifties over right here at Bitwise.
JENNIFER SANASIE:
Ryan, thanks a lot for becoming a member of “Markets Each day” this morning. That was crypto analyst at Bitwise Ryan Rasmussen. That is it for at present’s present.