Loading summary
Transcript28 lines
- [00:00]
Amazon Music Ad
Hey, prime members, have you heard? You can listen to your favorite podcasts ad free. Good news. With Amazon Music, you have access to the largest catalog of ad free top podcasts included with your prime membership. To start listening, download the Amazon Music app for free or go to Amazon.com adfreepodcast that's Amazon.com adfreepodcast to catch up on the latest episodes without the ads.
- [00:24]
B2B Marketer
My dad works in B2B marketing. He came by my school for career day and said he was a big roas man. Then he told everyone how much he loved calculating his return on ad spend. My friends still laugh at me to this day.
- [00:39]
LinkedIn Ad
Not everyone gets B2B, but with LinkedIn you'll be able to reach people who do. Get a $100 credit on your next ad campaign. Go to LinkedIn.com results to claim your credit. That's LinkedIn.com results. Terms and conditions apply. LinkedIn the place to be. To be.
- [01:02]
Jen Sanasi
It's November 12th and this is Markets Daily, hosted by me, Jen Sanasi. On this show, we navigate the current shaping the crypto markets, providing insights against the broader financial landscape. So whether you are actively trading or just fascinated by what's going on in the crypto markets, this show is your compass to understanding what's happened, where we are and where we're going. On today's show, we are joined by Coinbase Institutional head of research, David Du. David, welcome back.
- [01:27]
David Du
Thanks, Jen. It's great to be here.
- [01:29]
Jen Sanasi
It's been an absolutely crazy, I would say, last week. So my first question for you is, how are you holding up?
- [01:36]
David Du
Pretty well. You know, I have a lot of friends who are not in crypto, but they're paying attention. They're coming up and asking, you know, either asking me about what's going on or congratulating me. And I'm like, I don't know why you're congratulating me personally. I didn't do anything here. But yes, this is great news.
- [01:52]
Jen Sanasi
Well, you know, I've seen a lot of tweets that say, you know, non crypto folks are now reaching out, asking about Bitcoin. We are so back. Are we so back?
- [02:02]
David Du
I think we are. Certainly the potential for the regulatory overhang to be lifted, I think, of course, is behind a lot of what's happening. And there are discussions around the Bitcoin strategic reserve and whether that's a real possibility. And we can unpack that and talk about what the regulatory pressures on that might be. But for the most part, I mean, we're just all about the Fact that right now the risk environment is good, the environment for crypto is good, and I think it's probably going to continue for another one or two quarters.
- [02:34]
Jen Sanasi
Well, everyone is talking about that bitcoin strategic reserve, what that possibly could look like and what that means for bitcoin and the crypto markets. Do you want to talk to me a little bit about that?
- [02:44]
David Du
Yeah. So I think that it was a great signal when you saw Cynthia Lummis, Senator Cynthia Lummis, who has been pushing the Bitcoin strategic reserve, pushing this on Twitter, like the day after the elections, which gave me like two different signals. Number one, that means that on Capitol Hill, people are paying attention to this because I think one of the bigger concerns was that a lot of the crypto regulation could start to fade as we progress into the next administration. Because how much of this is rhetoric, how much of this is real? But it shows that people on Capitol Hill are paying attention to this and they're thinking about it. So that's great. But the second part of it is, yeah, it's not as easy. It's not necessarily a unilateral decision that you can just make. Right. There's a lot of factors involved, a lot of players involved. The Federal Reserve, for example, has a lot of restrictions in terms of what they hold on their balance sheet. And typically they're just Treasuries and mortgage backed securities. And once upon a time, they probably wouldn't have even put mortgage backed securities on that list. So, I mean, it takes time for them to adjust internationally. For example, the IMF is a big player in terms of us giving the IMF money to loan out to other countries, for example, and they have certain limitations on what the special drawing rights are and what are included as reserves for that. And I don't say that this kind of discounts the idea that crypto could eventually be included, but the idea that this could be, this could happen in the next hundred days, for example, I think is still very difficult.
- [04:13]
Jen Sanasi
Yeah, I think you bring up a good point there. We had 10X founder Marcus Thielen on the show recently, and he said what he thinks could happen is maybe, maybe the government takes the bitcoin that they already have. I think they have 200,000 bitcoin that's been seized from various different criminal trials, and they put that into a side pocket and that becomes this bitcoin reserve for now, rather than executing on the full plan that Senator Cynthia Lummis announced at the bitcoin conference. Does that sound like something that could happen as a first step towards this plan.
- [04:45]
David Du
I mean, the idea that there will be intermediate steps in this, I think that for sure is very likely. Now whether that will be like the actual step that's going to be taken, I'll be honest with you, I have no clue. I really have. No one who has told me one way or the other about this. But the fact that this is happening on the government level, the fact that this is happening on the corporate level, you know, you're seeing a lot of corporate treasuries also talking about including bitcoin on their balance sheets. I think this is for me, what's really, really bullish here. And we got to remember that, you know, this is not just the United States we're talking about. I mean, yes, it is, because this is our discussion of the bitcoin strategic reserve. But a lot of other countries are looking at what we're doing right now and having a crypto friendly government coming into office. I think you're seeing a lot of other countries kind of paying attention and saying, well, hold on, like the next administration coming to the US has a plan on how to deal with crypto. We need to have one too. And so even regimes that may have been historically maybe not anti, but definitely like less friendly to crypto, for example, may now need to kind of change their tactics.
- [05:56]
Jen Sanasi
Okay, we talked about bitcoin's reaction to the news. Talk to me about what else you're watching.
- [06:04]
David Du
Yeah, so what I was kind of saying about that, I think, you know, that's probably what represents one of the tail scenarios that I think is going to be massively positive, probably either in the first quarter of 2025 and possibly even sooner. Because, for example, we just saw the NPC meeting in China, for example, the standing committee meeting. And you know, we don't know what exactly we talked about. Obviously the big headline there was, oh, they're pointing out around 10 trillion renminbi worth of stimulus from the fiscal side which rounds like US$1.4 trillion. But I do believe that they're talking right now about what they need to do in terms of how to improve their economy and whether needing to open themselves up to crypto, for example. So I can't say for sure whether this has been a topic that will definitely break into the mainstream. But we saw that their former vice minister of finance, for example, has talked about bitcoin and crypto very recently. I do think that this is now becoming a topic of conversation over there. So I do see these as potential positive Tail scenarios for crypto that could definitely take us a lot higher than where we are today.
- [07:16]
Jen Sanasi
I want to talk about Meme Coins. They have been this driving narrative of this bull cycle we're in. You know, memes always pop up or alts always pop up at some point in the cycle, but they've really been this driving narrative, especially when bitcoin and eth were kind stuck in almost a holding pattern. Talk to me about your observations with memes and how you expect to see them perform as we head into 2025.
- [07:47]
David Du
Yeah, I mean meme tokens have been a very big part of this bull cycle and the core narrative around it. The idea of that is that they don't aspire to anything more than what they are, which is their basic attention grabbers and that's what you're trading. And they've been the best performing crypto sector by a wide margin this year. A lot of that activity has been centered on Salana and we. A big part of that has to do with fact that pump fund has been adopted pretty widely. They're the dominant Meme coin launcher today. I think there are around like 3 million tokens that have been launched on pump function. And you know, like, I think over the last day alone it was like 20,000 for example. So the dominance of this I think is very visible. And if you take it just by the pure network fees, for example, the value of Solana's token issuance trading processes around Meme Coins makes it the third most profitable on chain sector behind stable coins and layer ones. So I think that that shows you right there, like this stuff is massive and a lot of the top crypto applications by, you know, protocol revenue, they tend to be things that are in the way of, of trading this stuff. Telegram trading bots, for example, salon trading tools, like I think these are the things that have really been well supported in the cycle because of all the activity that's happening on Mean Coin. So even though I think it's been easy to dismiss from some people to say, like, oh well, mean coins have no intrinsic value or like what do they really do for you? Well, yeah, but there's an entire ecosystem that's been built and dedicated to it.
- [09:27]
Jen Sanasi
Yeah, that's really interesting that you bring that up. I mean, for investors who are sitting, listening to this, trying to make, watching this video, trying to make sense of the Meme coin narrative, what can we take away from what you've just pointed out?
- [09:43]
David Du
Well, I would say that first of all there are, there's real Activity that's behind this and it's sitting on like the individual protocols themselves. So how do you try to monetize this stuff, for example? Well, like, could I, should I be looking in, if I'm looking at the Solana ecosystem, should I be buying Soul when it's undervalued? Or should I buy like a decentralized exchange like Radium, for example, which is doing somewhere around like eight and a half billion dollars worth of volumes, which is still a little bit less than, you know, like things like Uniswap, which is the Ethereum, well, the key Ethereum decentralized exchange, for example. But I'd say like great. More and more people are kind of thinking, well, how do I kind of play this base? How do I think about the volume sitting on decentralized exchanges versus centralized exchanges and where is the value capture best had? So I think if you're going to be looking at the space, that's how you need to start thinking now. Because we're moving away from this narrative driven kind of market. And it's not to say that narratives still aren't very important. They still drive a lot of strategies that we see both from retail as well as institutional clients. But now more and more fundamentals are playing a picture, playing a part into this picture. And that's because the space is maturing and that's because now people are focused on what is revenue capture actually look like in the space. And I think that particularly with a regular regulatory environment potentially clearing up, that's only going to grow over the next year.
- [11:09]
Jen Sanasi
You mentioned layer ones, meme coins, of course, stable coins. What sector I guess do you think is going to drive the narrative or do you think is really going to stand out next year?
- [11:21]
David Du
Yeah, I mean, I counted about five different narratives that I think are going to be really important right now. Stablecoins as payments are probably the best because they have clear product market fit. And we are seeing that everyone is trying to get a piece of that right now. And a lot of the traditional players, for example, are already trying to incorporate those rails in some way, shape or form. Like Visa has, you know, integration now with, with, with crypto rails and stablecoins. Stripe made that purchase of the bridge, for example. So I think that things like this are definitely clearly showing that even from the point of view of like Fed Governor Chris Waller coming in and saying, actually, you know what, like Defi could be complementary to what's going on inside of traditional finance and removing those intermediaries from the processes of kind of Moving remittances for example. I think like that's why it's going to be huge. So I would say stablecoins probably that also means DEFI is going to see a resurgence here because greater now in terms of more people trying to use these rails figure out how to incorporate it. Related to that is tokenization because more real world assets are being brought on chain and we've been seeing this kind of play out as a theme over the last two years, but I think now we're seeing the growth of this beyond just moneymark funds and Treasuries into things like private credit insurance, other assets, which I think are going to be very meaningful to what we're going to see in the next cycles, particularly as institutions really kind of step into this space. But then there are more crypto specific kind of themes are also playing out. AI and the integration between AI and blockchain I think has been kind of toyed with in different ways in terms of decentralized compute, for example. But I think that we're seeing AI kind of manifest itself into other parts of the crypto ecosystem in terms of the user experience, for example, or having AI bots creating meme coins. So I think that the idea of AI bots is definitely becoming a much more prevalent theme. And lastly, I think Deepin and you know, we've, we've kind of talked about this before, but decentralized physical infrastructure networks, for example, have been a long standing kind of thing that we've had since maybe probably in 2017. But you know, they've kind of waned and then they came back and now I think that we're kind of still about two years out before mass adoption of a lot of these tools. But we're seeing that these, you know, the way Deepen kind of works could be really useful and integrated into how people live their day to day lives.
- [13:56]
Jen Sanasi
I agree with you on all the sectors you just outlined there. And I want to talk to you about ETFs. That was one of the biggest narratives this year, right? Of course we got the Bitcoin and the ETH ETF approved in the United States. Solana has seen an uptake and part of the thesis there is that we could see a sole ETF in 2025 with more regulatory clarity in the US talk to me about what you're watching when it comes to the ETF narrative.
- [14:27]
David Du
Yeah, I, I go back and forth about this because we saw the success of the spot Bitcoin ETFs for example, and despite, you know, Some of the concerns people had around the spot eth ETFs now they're starting to catch a lot more inflows very recently. And of course that has a lot to do with what we just had in terms of the political landscape kind of shifting. But you know, we are kind of over indexed, no pun intended, on this idea of oh, ETFs need to be single name ETFs and that's why we're looking at XRP, that's why we're looking at SOL and other names, for example. But historically speaking, that's not generally how a lot of ETFs or indices are built. I mean generally they're built to kind of capture a wide swath of assets. Because what you're trying to do is trying to capture a well diversified portfolio. Like you look at The S&P 500, for example, over the last 10 years, like the S&P 500 has had 30% of its names dropped and picked up. Like just this year alone we saw like some other companies drop from the top 500 and Nvidia was picked up, for example. So I mean, this is typically what an ETF is designed to do, right? It's trying to give us the best capture because we can't always know who the winners are in any given space. And crypto is included in that because we, we are changing rapidly. So I tend to think that if we see an etf, it'll go more that direction because we have a lot of, you know, still newbies out there, maybe people who want exposure to crypto but just don't know what to do. You know, like they, they, they probably heard of Bitcoin, maybe they've heard of eth, but they don't know a lot of the other ones. And they need an option to give them exposure without trying to just rely solely on, you know, word of mouth.
- [16:20]
Jen Sanasi
Well, what a segue into talking about your news today. Coinbase has some News, the Coinbase 50 index. And I just have got to say, most people who, who say Coindesk, say Coinbase, like Coindesk and Coinbase get so confused. And Now Coinbase has a 50 index and CoinDesk has the 20 index. And I just feel like people are going to get them confused. But talk to me about this. What was the significance of launching this index so close to that win for Donald Trump? Was there any correlation there?
- [16:54]
David Du
No. So this has been in the works for a while. This wasn't like we, we saw this happen in the, in the elections. We decided. But that said, the timing probably couldn't have been better. And I do think that what we're seeing right now is, you know, like, I, like, I tend to be kind of an old school guy when I look at, you know, this market and there are a whole new wave of people who have access to this diversified product which, you know, for anyone who has struggled to buy whatever token is out there now, they're capable of kind of saying, well, I can just buy this index. And you know, we are like the coin 50 is targeting, trying to be like the broadest index possible and give us exposure to not just historically, let's say like layer one tokens, which, you know, there are existing benchmarks out there, but they're for the most part kind of like, like majority kind of referencing these smart contract platforms. Well, this, this particular coin 50 index actually gives exposure to like meme coins to some extent, to deepen to some extent. Yes. Like everything is still probably going to revolve around what's happening with Bitcoin, but we do cap the top side of any one token to 50%. So you know where bitcoin's dominance right now is somewhere around 57, 58%. Like on our index, it's actually going to be capped at 50%, giving you greater exposure to a diversified set of tokens.
- [18:23]
Jen Sanasi
David, we got to leave it there. Thanks so much for joining the show today. As always, it was a pleasure.
- [18:28]
David Du
Jan, this was great. Thank you.
- [18:30]
Jen Sanasi
And thank you to our listeners. Thanks for coming on this journey with me to better understand the crypto markets. If you enjoy watching or listening to the show, subscribe to the CoinDesk podcast network that is on all podcast platforms. We are on YouTube, you can subscribe there. Give us a thumbs up. Thanks for watching and we'll see you tomorrow.