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“Markets Day by day” kicks off a brand new format with a minute of market updates, adopted by an interview with a rotating forged of market analysts throughout the crypto house. As we speak, host Jennifer Sanasie speaks with Sean Farrell about an funding pivot to ether and layer 2s, plus the most recent bitcoin ETF updates.
This episode was hosted by Jennifer Sanasie. “Markets Day by day” is government produced by Jared Schwartz and produced and edited by Eleanor Pahl, alongside Senior Reserving Producer Melissa Montanez. All authentic music by Doc Blust and Colin Mealey.
Audio Transcript: This transcript has not been edited and should include errors.
JENNIFER SANASIE:
In response to CoinDesk Indices, at 8 a.m. Jap Time bitcoin was buying and selling up 2.2% over the previous 24 hours at $45,112 whereas ether rose 1.2% over the identical time interval, at $2,266. As we speak’s ‘Mover’ is Powerledger ticker POWR, down 29% on the day. In conventional markets, each the NASDAQ and the S&P 500 had been up round 1% on Friday. Inventory futures are combined this morning. And in commodities, the Brent crude benchmark was buying and selling at $76.88 a barrel. In the meantime, gold was buying and selling at $2,030 an oz.. For extra available on the market motion this morning, let’s herald Sean Farrell, head of digital asset technique at Fundstrat. Good morning.
SEAN FARRELL:
Hey, thanks for having me.
JENNIFER SANASIE:
Thanks for being right here, Sean. Now, we have to speak about what everyone seems to be speaking about: the spot bitcoin ETF purposes. What do you suppose occurs as we speak?
SEAN FARRELL:
Nicely, on Friday, backing up actual fast, we noticed all the issuers file their 19b-4, which is one leg of approval. Then as we speak, both as we speak or tomorrow, we’ll most likely see the place it comes out about an SEC vote on the 19b-4 approval. After which unbeknownst to many, there’s one other leg of this journey, which is the S1. We’re seeing the S1s roll on this morning. , we’re gonna have to attend on approval of these S1s to truly get this stuff dwell and being traded.
JENNIFER SANASIE:
Now, what do you suppose occurs to the worth of bitcoin if the approval comes via? These S1 filings in fact this morning introduced the charges for numerous totally different asset managers, the worth of bitcoin jumped on the announcement of these charges. What do you suppose occurs to the worth of bitcoin? Does it bounce even additional? Does it decline?
SEAN FARRELL:
Yeah, I believe the prevailing narrative, particularly amongst crypto circles, has been that it is a consensus “promote the information” occasion. Many are basing that on prior precedent of the CME futures launch again in 2017, which marked the highest of that cycle. And in addition to the launch of ProShares futures bitcoin ETF again in late October 2021, which just about aligned with the highest of that cycle. However you realize, what that fails to acknowledge are the totally different macro contexts. With every product launch, each of these product launches had been on the tail finish of very lengthy, enduring injections of liquidity. And we’re simply on the precipice of a brand new tightening cycle. And the macro setup right here is simply utterly totally different. , in fact, there’s additionally utterly totally different gamers. And I would be stunned if Larry Fink and BlackRock and all of those blue chip asset managers, if they arrive out the gate flat, you realize, I’d be very stunned. So I believe it is proper to anticipate some value appreciation right here, particularly submit launch. And so we’re not within the “promote the information camp.” Definitely, you realize, there is a life to that rally. And after some time, we’ll simply return to specializing in macro tendencies and can be topic to the identical elements that we had been earlier than. However when it comes to the ETF launch itself, we’re within the “purchase the information” camp.
JENNIFER SANASIE:
All proper. So that you’re within the “purchase the information” camp, what do you suppose occurred to the worth of bitcoin instantly after the approval?
SEAN FARRELL:
Instantly after? That is powerful. , I believe we’ll actually see some volatility. I am certain everybody that paid consideration to the market observed the beautiful substantial drawdown throughout your entire crypto house final week. We noticed some fairly vital liquidations, and we form of cleared the board from a leverage perspective. So that could be a good factor. Funding charges are nonetheless fairly impartial throughout most majors and large alts. So you realize, I believe we most likely have some room to run larger, would not be stunned if we get north of fifty. After all, on any tremendous sturdy transfer larger, there’s sure to be some volatility concerned bi directionally. However I actually would not be stunned to appropriate to that fifty stage.
JENNIFER SANASIE:
So north of fifty on the approval. I gotta ask, final yr Fundstrat Managing Accomplice Tom Lee referred to as for $180,000 if the ETF was accredited, that was in August final yr. So rather a lot has occurred since then. Do you suppose that we may hit that this yr?
SEAN FARRELL:
Hey, something is feasible. We’ll be popping out with our outlook subsequent week, the place we’ll have our value goal ranges for bitcoin and ether, and maybe some all, however you realize, that was a long run goal. I believe that’ll take a while to manifest. However you realize, that is actually inside our sights.
JENNIFER SANASIE:
I am completely happy you introduced up eth and alts. As a result of I need to discuss that, I do know the headlines are being overrun by the spot bitcoin ETF, however there’s nonetheless rather a lot occurring. A number of our previous friends have stated that after this approval, we ought to be trying to ether. What’s your perspective there?
SEAN FARRELL:
Yeah effectively, the implications of a spot bitcoin ETF approval with the spot ETF purposes ready within the wings. The implications, clearly, are that the likelihood of approval for an ETF sooner or later this yr, these possibilities transfer fairly larger, fairly quickly. And so it is doubtless that we most likely do see an enormous spike in dominance. However that may truly put in a long run backside for eth, BTC. As you realize, a number of merchants begin to eye up entrance working any potential approval, or hypothesis of that approval of an ether ETF someday in Q2.
JENNIFER SANASIE:
On the subject of ether, are you watching the Ethereum ecosystem? In case you had been to make a portfolio allocation as we speak, what would you be ?
SEAN FARRELL:
Yeah, we provide these kind of technique and insights to our purchasers. And you realize, we have been fairly constructive on main layer 2 tokens. So that you take a look at arbitrage and optimism, they’ve rallied fairly considerably, they’re each at or approaching all time highs and more likely to enter what many fondly known as ‘value discovery’ territory, you realize, they’ve far above probably the most traction within the L2 house. So these are nice locations to be in our view. However then you realize, there is a longer tail of eth-adjacent names, like you may have LIDO and Maker and another names which were exhibiting some life just lately. So I believe, you realize, we’re gonna take note of which names are the strongest, as soon as we do see that long run backside or substantial backside ETH, BTC. And that’ll give us extra info as to tips on how to place going ahead.
JENNIFER SANASIE:
You talked about Arbitrum and Optimism, any predictions on layer 2s or layer 2 tokens which might be going to steal the headlines steal the highlight this yr?
SEAN FARRELL:
Nicely, you realize, I believe we lastly have readability over that. The Dencun improve, which, you realize, for these unfamiliar, primarily lowers the fee to transact on layer 2 networks, as a result of it decreases the charges that the alts should pay to the layer one to submit information. And, and so you realize, naturally I believe, I believe lots of people are skeptical, however I believe the the charges and the prices of working L2 and transacting on an L2 are going to impress lots of people, we’ll see exercise spike, maybe 10x from there, and we’re more likely to see a really sturdy narrative round layer 2 and layer 2 ecosystems.
JENNIFER SANASIE:
All proper, and I gotta get your ideas on Stacks. I do know that was famous in Fundstrat newest be aware right here, Fundstrat rising allocation for Stacks. Discuss to us about why.
SEAN FARRELL:
Yeah, so we have been fairly constructive on the bitcoin financial system, form of grew out of early in 2023, when ordinals began popping off, there was a transparent urge for food for constructing on bitcoin that was rising, that form of rolled into, you realize, broader use circumstances and broader scaling mechanisms for bitcoin. Spending a while round stacks and different builders engaged on initiatives that are supposed to scale bitcoin in a equally modular style as a number of these L2s on ethereum are constructing. Now, it grew to become evident that this urge for food for constructing on this bitcoin financial system is just not going away. After which, you realize, we turned constructive on Stacks, you realize, a number of months in the past, with their, you realize, the progress that they are making on updating their community, they get the improve coming in Q1 referred to as the Nakamoto improve. Proper now Stacks may be very clunky. To be frank, it is unusable at this level. I imply, I’ve tried utilizing it. However you realize, this improve ought to get blocked time down to a few to 5 seconds. And it is doubtless we see an entire rewriting of Stacks, which is the one L2 on bitcoin that has a token and has a nonzero quantity of TVL and exercise on it. So it actually has carried out fairly effectively the previous couple of months, however I believe it actually has extra, extra juice from right here.
JENNIFER SANASIE:
Okay, it seems like in 2024 we ought to be watching layer 2s throughout the Ethereum and Bitcoin ecosystems. Simply earlier than we go, a yr from now, what’s the value of bitcoin?
SEAN FARRELL:
Ah, you referred to as me at a foul time. Our outlook is subsequent week. It’ll be larger. That is what I may give you proper now.
JENNIFER SANASIE:
All proper, Sean, we’ll should have you ever again on after the outlook comes out so that you may give us somewhat value prediction there. Thanks a lot for becoming a member of the present this morning. That was Fundstrat Head of Digital Asset Technique Sean Farrell. That is it for as we speak’s present.