Category: Cryptoes

Some recent Ethereum learnings (and I’m still very bullish)

I’ve written before about my interest in Ethereum, and though it’s largely underperforming in the early stage of this current bull market, I believe the Ethereum token, network, and ecosystem will have its day / year / time in the attention sun. For me, part of the spirit and purpose of investing is to channel what capital and energy you have towards the world you WISH to see, and not just purely to maximize return. And Ethereum’s focus on decentralization, openness, pluralism, and a sort of positive idealism (reflected in Vitalik, largely) is something I aspire to. But investing is hard, crypto is always humbling, this is not investing advice, blah blah.

Below are just a few recent tweets / writings / learnings about Ethereum that I wanted to share:

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Ethereum has a yield in excess of its inflation rate. This is the definition of “real yield”, and is unique to Ethereum in the crypto world.
Institutions love yield. Especially real yield. It’s not hard to imagine a world where a bit of crypto risk-appetite in general comes back, and some institutional money managers realize that Ethereum can be viewed as both a tech-growth risk-on play, AND a real-yield play

But Ethereum has durable and unreplicable advantages right now. It is simultaneously
-The most Lindy smart contract chain
–The only smart contract chain that crossed the regulatory chasm
-The only chain with which Coinbase is aligned
-The only chain that has a “yield”

One enormous medium term advantage Ethereum has in the institutional world is that the CME lists an ETH futures contract. BTC is the only other cryptoasset that’s listed on CME. Now with almost 3 years of history, this contract has given regulators, notably the SEC, some level of comfort with trading around ETH that just doesn’t exist for SOL.

Source: https://medium.com/alliancedao/ethereum-is-the-only-institution-friendly-smart-contract-chain-b6a0ac199b6f

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One thing I ♥️ about Ethereum is the ability to easily verify the contract and look at the source code, whereas on Solana, one would need to compile the source code and generate a bytecode file before comparing against what is deployed on the blockchain

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And of course Vitalik’s recent essay on cypherpunk values including:

  • Open global participation
  • Decentralization
  • Censorship resistance
  • Auditability
  • Credible neutrality
  • Building tools, not empires
  • Cooperative mindset

Source: https://vitalik.eth.limo/general/2023/12/28/cypherpunk.html

Chamath from 2013 talking about bitcoin — are you tired of it yet?? :P

To me this was the most interesting part:

Suffice it to say that the geopolitical ramifications of a robust Bitcoin economy are mind-boggling, beginning with a completely peer-to-peer banking system that works by and between people and ending with a world that no longer relies on the U.S. dollar as the reserve currency of all assets

Link: https://www.bloomberg.com/view/articles/2013-05-30/bitcoin-the-perfect-schmuck-insurance

Their All-In podcast is a weekly must listen, not because I agree with everything or everyone on it, but where else do you get to listen to 4 guys worth 9-figures plus who are good friends shoot the shit?

Diversify into what?

David wrote this essay in early 2021, at the height of Bitcoin’s last bull market, and I think the insights are even more valuable now as we enter the early innings of Bitcoin’s current bull market:

The second unfortunate realization I have come to is that Bitcoin is (or soon will be) just about the only investable asset on the planet for the foreseeable future. This may sound like a preposterous statement, but it isn’t. Believe me, I have looked high and low for viable alternatives in order to diversify my portfolio and there simply aren’t any at the moment

And he shares this chart:

Screenshot 2023 12 04 At 09.22.24

Fiat currencies — pretty clear that global inflation will continue to be a problem for the next 5-10 years (and I can’t help you if you believe the mind-virus that is “2% inflation is good for the economy”)

Of the above, other than Bitcoin, I tend to think stocks will do ok, and probably real estate because civilization would collapse if peoples’ home values fell in half. People start marching and burning things when that happens. So that, and bank collapses, are what governments will do anything to prevent (witness China now, and US after 2008).

Bitcoin will see 2 mini bull runs, and BTC > $100K may become the new normal

My starting assumption as we enter this bitcoin bull market is that we’ll see 2 mini bull runs.

The first one started a few months ago, driven by the improving global liquidity conditions and the optimism over a US Bitcoin spot ETF. This run-up will probably grind steadily upward until the ETF is approved (likely by January 2024). It’s possible that the approval itself won’t be “sell the news” and, as up to $1B of newly injected buying pressure enters, will send Bitcoin even higher. Temporarily. This run-up alone could see Bitcoin pass its $69K previous all-time high (made in November 2021).

Then there will be a sell-off, a pressure release valve, driven in part by underwhelming ETF demand (which will come, only more steadily and incrementally than people think), and by excess leverage justified by the unsustainable excitement. Bitcoin will fall below the $69K mark, say to $50K or so.

By mid-2024, as the ETF inflows steadily build, as macro liquidity conditions steadily improve, as halving supply shock starts to actually affect the market by May, June, and beyond — that’s when the second and “real” bull-run happens, and BTC soars past $100K and could touch $200K or more. This is where the real institutional and maybe even nation-state fomo begins to kick in.

Cycles are inevitable and at some point, the bear will be back. But I think BTC > $100K could become the new normal.

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I could be very wrong about the above. Bitcoin could see 1 massive quick bull run followed by a multi-year slow grind down. What Bob Loukas calls a left translated cycle. But I think there’s too many positive shoes to drop for this to be the more likely outcome. Whereas most of the negative shoes have dropped (driven in part by political and institutional pressure to clear the bad actors out of the system before the big tradfi money men step in, they don’t wanna get their shoes dirty after all).

A few notes from 2023 Chainalysis crypto geography report

It’s an emerging markets story aka “lower middle income countries”. For example defi:

Chainalysis Defi

India on par with UK! And Turkey dominates the Middle East

Chainalysis India Turkey

America is: More institutional capital; Stablecoins usage declining; Even in bear market, stables still lead, but alts beat ETH & BTC!

UK dominates in Western / Northern Europe

In Eastern Europe, it’s Russia, Ukraine, and Poland

Mainland China lags — but Hong Kong is promising

Chainalysis East Asia

“The promotion of Hong Kong as a potential crypto hub is not necessarily indicative of the Chinese government’s stance on crypto,” he told us. “However, we are seeing a number of Chinese state-backed entities indirectly supporting Hong Kong’s web3 ventures, and this could be viewed as an exploratory approach to understanding digital assets without loosening mainland policies.

India and SEA is all about centralized exchanges (CEX) — and look at gaming/gambling in Philippines and Vietnam

Chainalysis Asia

Saudi Arabia, Vietnam, Nigeria growing despite the bear market:

Chainalysis Growth

Here’s the The 2023 Geography of Cryptocurrency Report.