Tag: bitcoin ETF

Collection of recent crypto learnings 3: “…one can argue that currencies themselves are intrinsically platforms, and that coexisting multiple currencies should be analyzed as platform competition.”

Past updates 1 and 2

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The ENS approach is even more vulnerable, where a group of multisig key holders, no matter how reputable, will control the governance and upgrade of the backbone infrastructure of the decentralized web.

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I believe, in reality, a significant portion of the cryptocurrency space operates on meme culture,” Zhu said during the AMA. “We all tend to invest in bitcoin because it represents something everyone believes in, transforming it from a meme into a tangible reality

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out of the three core layers of internet stack – naming (DNS), transportation (TCP/IP) and application (HTTP), naming is at the very start of the stack

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Good breakdown / categorization of AI+crypto projects


(But missing generative media like images, videos)

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the core definition of a blockchain is all the data used is generated within that blockchain and therefore verifiable by any participant in the blockchain. Towards that same end, smart contracts can only talk to smart contracts

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Furthering the idea that the US has much to gain from the adoption and co-option of Bitcoin is the tangible stash of coins distributed within its borders; MicroStrategy’s 189,150 bitcoin, the 215,000 bitcoin seized by the Department of Justice, Block.one’s 164,000, Grayscale’s 487,000 in GBTC, and now the new US spot ETF offerings hold a combined 170,174 bitcoin as of 1/31

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in a 2011 interview with Bloomberg, Fink went so far as to say “Markets don’t like uncertainty. Markets like, actually, totalitarian governments… Democracies are very messy.”

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Bitcoin is punk rock. You don’t get it? Fuck you we don’t care. We’re having a party — Peter McCormack

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CDixon (paraphrased): “Computer” is a collection of both nouns and verbs. A ledger is just a noun. So it undersells the power of verbs like earn, transfer, spend, save, stake, lend, etc

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From an app’s perspective, blockchains offer three key features: consensus, composability, and availability 🧵
1. consensus – solve contentious race conditions
2. composability – access other liquidity and apps
3. availability – data is readily accessible
// what about governance (consensus?), tokenomics (new biz model)

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The Ethereum blockchain core developers did briefly consider including an ALARM opcode to enable smart contracts to schedule operations in future blocks, but it was ultimately discarded as unworkable [https://vitalik.ca/general/2022/03/29/road.html]. The Cosmos SDK used for development of application specific blockchains [https://v1.cosmos.network/sdk] has some support to execute code – with significant limitations – at the beginning and end of each block.

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Blockchains invert the hardware-software power relationship, like the internet before them. With blockchains, the software governs a network of hardware devices. The software—in all its expressive glory—is in charge.

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one can argue that currencies themselves are intrinsically platforms, and that coexisting multiple currencies should be analyzed as platform competition.

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That said, when a token goes straight down, you can’t call this a screaming success. There is a good reason why IPOs generally go up. And there is a good reason for why BNB, ETH, and BTC are 3 of the most successful protocols today. When you price an asset low, and let early investors participate in the financial upside of your success, it tends to have long-lasting positive effects. Your users become power users and evangelists. But when something prices high and goes straight down, you alienate those who were true believers. And it’s hard to come back from that

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AI+blockchains point to a dystopia of impersonal and faceless interchangeable-parts humanity that’s more industrial than the industrial age.

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Why not put $500 into a memecoin that could 50x, knowing that you could likely lose most or all of it? It’s not like the $500 is enough to make any difference anyways. Neither is $1k or $5k. That mindset, which is becoming pervasive in America, is financial nihilism. This is the zeitgeist for young Americans, you’re naïve to think otherwise. And it’s a huge driver of shitcoining

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For Web 3 to succeed it needs to do two things:
Enable cool functionality unable through traditional Web 2,
and make the user largely unaware that they’re even on the blockchain

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Programmable, composable data structures (ie, tokens) are the “new computing primitive” that will usher in the next phase of the internet

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We need an alternative. Crypto is the perfect marriage for AI since the transparent global human coordination that underpins the movement is something that can harness AI for good at global scale. Crowdfunding (with cash or with your GPU) the creation and fine tuning of open source models which anyone can audit in real time for biases or issues is the safest path forward in the accelerating world of AI.

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The idea of Bitcoin, like the idea of Index funds is a clean “world view” that markets itself. It’s not the only crypto that does so. Once you do accept Bitcoin into your brain, part of your brain opens up to other cryptos: Eth, Solana, NFTs, Ordinals … maybe some combination of Crypto and AI like Tao.

My sense is that this new idea: Bitcoin, and this new demographic: Millenials are in for an epic bull run.
The BTC ETF will be the gateway drug for this. It will get the Boomers and GenXs so that they CAN participate in the transition. Most won’t. But enough will.
It’s an idea that will take over the next 20 years.

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USDT on the Ethereum network shows an average transfer size of $35,000, indicating its involvement in substantial financial activities within the DeFi ecosystem, likely influenced by Ethereum’s higher transaction fees. Conversely, USDT on the Tron network presents a distinct scenario. With Tron’s minimal transaction fees, the average transfer size for USDT is around $7,000, facilitating more frequent, lower-value transactions

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He defines crypto as a meeting of “generative tech” (the creation of new things, users and markets) and “participatory capital formation” (individuals pooling money in new ways to create new types of businesses).

Collection of recent crypto learnings 2: “Ethereum hit $10 billion in revenue faster than any other major software company besides Google”

Below are some thoughtful and entertaining crypto-related content since the last update

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Ethereum hit $10 billion in revenue faster than any other major software company besides Google

Ethereum Revenue

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Programmable, composable data structures (ie, tokens) are the “new computing primitive” that will usher in the next phase of the internet

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We need an alternative. Crypto is the perfect marriage for AI since the transparent global human coordination that underpins the movement is something that can harness AI for good at global scale. Crowdfunding (with cash or with your GPU) the creation and fine tuning of open source models which anyone can audit in real time for biases or issues is the safest path forward in the accelerating world of AI.

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Chris takes the same journey but he calls these phases Read, Write, and Own. The initial phase of the web, when the web browser arrived, was mostly a reading experience. Then in the early 2000s, the web became two-way and we could Read and Write. What Blockchain Networks have unlocked is the ability to own things on the web

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The “big, long macro trend” is what’s important, not the “technology” of “passive investing” or “indexing”. American Boomers of the last 30 years think they are “smart” to Index, but their real smartness was to jump on board a trend fueled by US money printing combined with quantitative easing and globalism

The idea of Bitcoin, like the idea of Index funds is a clean “world view” that markets itself. It’s not the only crypto that does so. Once you do accept Bitcoin into your brain, part of your brain opens up to other cryptos: Eth, Solana, NFTs, Ordinals … maybe some combination of Crypto and AI like Tao.

My sense is that this new idea: Bitcoin, and this new demographic: Millenials are in for an epic bull run.
The BTC ETF will be the gateway drug for this. It will get the Boomers and GenXs so that they CAN participate in the transition. Most won’t. But enough will.
It’s an idea that will take over the next 20 years.

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Friend.tech does ~$7M in annualized revenue from only ~500 DAUs. But you need to have an extremely high CLV for the economics to work.

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He defines crypto as a meeting of “generative tech” (the creation of new things, users and markets) and “participatory capital formation” (individuals pooling money in new ways to create new types of businesses).

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Cdixon on investing (he leads a16z’s Crypto Fund):

I used to think venture investing is 80% an intellectual test, 20% emotional test. Now I’d say it’s the reverse.
I’d say the same about my experiences as a startup founder. Probably true of many other long-term activities.

Giving up too early, being overly influenced by external sentiment, acting hastily, losing sight of fundamentals, getting too optimistic, getting too pessimistic, being overeager to do something when sometimes you just have to wait, other times waiting too long…. Etc etc :)

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Every bull market in crypto has been kicked off by a new method of token distribution. Examples include:
* PoW chain proliferation—2013/2014
* ICOs—2017
* IEOs—2019
* Liquidity mining—2020
* NFT minting—2021
*

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Some view this regression phenomenon as the foundational policy of the crypto space: “whatever is permitted by the protocol’s code and market structure is legitimate.” This viewpoint, while rarely expressed in such direct terms, is remarkably common among crypto users

Regression to the code erodes social norms, and this consequence accounts in large part for what repulses people from crypto. Even as protocols fulfill important social functions like affordable remittances and escape from inflationary regimes, “the space” appears to outsiders as greedy and riddled with scams. It is for this reason that crypto seems to stand apart from all prior human institutions

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Token buyers will be to investors what bloggers/tweeters are to journalists:
Tokens will break down the barrier between professional investors and token buyers in the same way that the internet brought down the barrier between professional journalists and tweeters and bloggers.

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Multi-chain developers have 10x-ed since 2015 and accelerated after 2018.
30% of devs have been working on 2+ chains for 3 years.
Most chains share deployers with Ethereum. Ethereum, @0xPolygonLabs, & @BNBChain cross-polinate the most frequently.
Large ecosystems have emerged for @0xPolygonLabs, @Optimism, @Solana, @NEARprotocol, @Cosmos, @Arbitrum, @BNBChain, and @avax

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Treasuries are just staked US dollars (!)

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In these cycles, bitcoin consistently outperformed altcoins in phase 1 of the upswing. In phase 2, altcoins substantially outperformed bitcoin. What’s interesting is that the magnitude of outperformance is so large that altcoins have outperformed bitcoin across the full length of both cycles

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If attention is the core pricing factor, then what crypto enables is an infinite canvas to issue and trade assets that track attention. The broader pattern of “financializing attention” requires two of crypto’s most important properties to reach its natural end state: permissionlessness and composability.

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The reason is that the transition from a gold-backed to fiat-backed system was comparable to a soft communist revolution, as the *visible* seizure of gold laid the groundwork for the *invisible* seizure of wealth via money printing.
And the classically trained judges at that time fully understood this. Justice McReynolds’ then-famous dissent denounced the ruling in the harshest terms, noting that the “Constitution is gone” and the “dollar…may be 30c tomorrow, 10c the next day, and 1c the day following”.

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The most important takehome is that tokens are not equity, but are more similar to paid API keys. Nevertheless, they may represent a >1000X improvement in the time-to-liquidity and a >100X improvement in the size of the buyer base relative to traditional means for US technology financing — like a Kickstarter on steroids

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Crypto is the modern version of the long emerging markets trade. As an industry, it will see the most relative capital inflows, budding innovation and has an innately global footprint. It provides a fiat currency debasement hedge (Bitcoin), new application networks akin to the internet (smart contract blockchains like Ethereum and Solana) and the fastest growing population. You can compare it to any individual sovereign, country or financial market and nothing beats it.

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Our thesis at Variant is that the next generation of internet networks will turn users into owners—specifically asset owners. The internet enabled everyone to become a publisher, and similarly, crypto enables everyone to become an asset owner, and therefore, an investor. You don’t need capital to invest, you can invest your time or work by producing art, running machines, or doing physical work.

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Ethereum is just a super useful thing – Ippolito

The crypto bull is back: What are the unexpected catalysts waiting for us?

Most people who follow crypto would probably agree that we are either entering or already in the early innings of the next crypto bull cycle. Just as prior cycles took prices to all time highs over the span of 1-2 years — though with plenty of volatility — I expect much the same behavior this cycle, too.

Like prior cycles, this one seems to sync with Bitcoin’s 4-year halving. Like prior cycles, it also comes after a prolonged and painful bear market full of implosions, bankruptcies, scammers, government regs, and plenty of Twitter fights.

If you’re on Twitter, the dominant explanation for why the worm has turned is the anticipated approval of America’s first Bitcoin spot ETF, specifically Blackrock’s application.

There are other catalysts too such as:

-the anticipated Bitcoin halving cutting new bitcoin issuance from 6.25 per block to 3.125 per block in April next year

-A pause and potential reversal of the Fed’s rate hiking cycle (and stealth QE or as Michael Howell puts it, “quantitative support” 🙄)

-The conclusion of SBF’s (first) criminal trial and the steady forgetting of the FTX debacle (and the Luna debacle and the Celsius debacle and on)

-High and sustained global inflation causing fiat currency holders around the world to look for alternative stores of value

-The crash of US Treasury prices and the prospect of “higher for longer” interest rates causing fixed income investors to seek alternatives

I consider the above as “immediate” catalysts in the sense that if any of them were to occur in a sustained and significant way, it would probably lead to a significant and broad pump in crypto prices. Some of the above are already “priced in” to varying degrees. But not completely, and not to the degree that I anticipate they will materialize in 2024 and 2025.

In addition to the imminent catalysts, I find it interesting to speculate about potential knock on effects, the “unexpected catalysts” per the title, the second order effects that follow on from the first wave.

Just as the rise of Uber (initial catalyst) led to the downstream effects of (a) the decline of the regulated yellow cab industry, (b) the crash in NYC taxi medallion prices, and (c) the rise of on-demand apps for everything from scooters to house cleaners.

These unexpected catalyst and downstream effects are far less likely to happen, but when they do, they can generate enormous volatility in outcomes because they are almost by definition SURPRISES and thus NOT PRICED IN.

I believe the immediate catalysts — and more that I missed — will by themselves propel Bitcoin past its former all time high ($69K USD). You can expect the rest of crypto to catch up as well (just not your shitcoin).

But it’s those unexpected catalysts / un-priced-in effects that could push cryptocurrencies to significant new highs in 2024 and 2025. Though I don’t put much stock in price predictions, my starting assumption for price peak in this fast approaching cycle is $150K Bitcoin and $10K Ethereum, with Ethereum flippening Bitcoin (as I wrote about before) briefly, and that itself also being a second order effect.

So below are some very speculative potentially surprising ideas that could catalyze the late and crazy parts of the bull market:

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Microstrategy causes corporations and corporate titans to fomo in
As Microstrategy’s Bitcoin bags explode in value (even at $36K Bitcoin, MSTR is already $1B in profit), leading to record corporate profits, a soaring stock price, and new levels of media notoriety for Michael Saylor, other small and medium tier companies — particularly those in adjacent industries from energy to tech to finance — will adopt a crypto reserve strategy. You could see billionaire tech titans like Masayoshi Son fomo in. Bitcoin will benefit most. Ethereum may surprise too

El Salvador causes nation states to fomo in
The same effect could happen to El Salvador, which becomes celebrated as a new beacon of financial sovereignty and emerging market wealth. President Bukele is feted by innovative politicians (I hope this is not an oxymoron) and small sovereign states, particularly in the Global South, and a race begins for nation states and central banks to buy Bitcoin and other blue chip cryptos. Investing heavily in bitcoin mining is also an indirect approach (eg, Oman, UAE, Bhutan). It’s possible G7 / developed states could also FOMO in, but I think this more likely in the next cycle (circa 2027-2028)

Bitcoin ETF’s success leads to a laundry list of other token ETFs
The Bitcoin spot ETF, after a slow launch, will steadily become Wall Street’s new darling, causing financial advisors and institutions to fomo in, leading to a slew of applications for other crypto ETFs starting with Ethereum. Though most applications could be rejected or at least delayed, this solidifies crypto’s position within tradfi, and tradfi is coming with their big accounts and clever financialization.

Ethereum becomes known as the deflationary currency and the Internet bond
As crypto usage rises (always correlated with bull markets), Ethereum becomes significantly deflationary (it already is, just more so), and along with its anticipated spot ETF approval, this is the cycle where Ethereum will birth its new reputation as (1) the “Internet bond” (first bearer digital asset with meaningful yield) and (2) the first deflationary asset to go alongside Bitcoin’s positioning as the first fixed-supply asset

Bitcoin beating gold becomes the next Schelling point
As Bitcoin easily passes $100K, everyone will turn their attention to what’s next, and what’s next is beating gold. Depending on the estimate you use, that easily puts Bitcoin around $400-500K, which I don’t expect to happen in this cycle… but it could. And it’s what people will talk about in the late bull. People need rallying points and gold has always been a big bullseye

Ethereum will flippen Bitcoin — just briefly
Just as Bitcoin’s main competitor is gold, Ethereum’s main competitor is Bitcoin. I support both and believe a rising tide lifts all boats. In the last bull, Ethereum peaked around 50% of Bitcoin’s value (market cap), and I expect that 50% will be far surpassed this cycle. As this happens, everyone will begin talking about Ethereum “flippening” Bitcoin, and the possibility is not priced in. Though I expect any market cap flippening to be short lived this cycle, but possibly a permanent fixture by the next. I wrote more about that prospect here.

Memecoin mania will return with a vengeance, and MSM will go crazy
I expect memecoin mania to return, despite less global liquidity and a high rates environment. And it will be larger and more degenerate, and no one will expect it. The first $100B memecoin. Maybe even a memecoin billionaire. The mainstream media’s shock and disgust will ironically pour fuel on flame. Elon’s never one to miss a press party, and he will finally launch his own token, somehow justifying the move by claiming synergy with Twitter/X and Grok AI.

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That’s it for now. It’s a very incomplete list, but if even a couple of the above surprises were to happen, we could be in for a wild(er) ride. I’ll add more as I think of them or you can yell at me on Twitter.

You could argue there will be plenty of negative surprises and unforeseen headwinds, too, but that’s the thing about bull markets — no one really cares, and everyone just wants to greed while greeding is good. The bad news and the corruption and the new wave of scams will accumulate and build and then push us into the next bear in 2025-2026 :)