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How BTC's Rally Could Kickstart Crypto's Flywheel | Bell Curve

Fri Jun 23 2023

BlackRock ETF Filing

00:00 - 06:52

  • BlackRock, the largest asset manager in the world, announced that they were filing for an ETF.
  • Other ETF issuers like Bitwise, Invesco, and Wisdom Tree have also filed.
  • Prices of Bitcoin and other cryptocurrencies have responded positively to this news.
  • The approval of a Bitcoin ETF could lead to ETH being considered next.
  • Over six million people tweeted about Bitcoin ETF last week, which could help solve the cold start problem and get people talking about it more.
  • The positive sentiment from large asset managers de-risks cryptocurrencies from a regulatory, reputational, and business perspective.

Massive Asset Managers Supporting GG Put

06:33 - 13:18

  • Massive asset managers are supporting the GG put, which may have been de-risked from a regulatory and reputational perspective.
  • Positive sentiment is expected in March 2024 with the happening of Bitcoin and potential approval of ETFs.
  • The market structure bill or draft bill will determine the future of crypto regulation.
  • A vote on July 19 out of committee for a regulatory bill that's pro-crypto is a huge step forward.
  • BlackRock filing a spot Bitcoin ETF using Coinbase custody on the back end raises questions about their motives.
  • The simplest explanation for BlackRock's move is good business strategy to get their piece of crypto while it's beaten down but not going anywhere.
  • Crypto is still important as an alternative store value despite being beaten down.
  • There may be no imminent approval coming, but if there are wins on the legal/litigation side, trad Fi could start.

Bitcoin Dominance and Institutional Interest

13:02 - 20:00

  • Bitcoin leads every cycle in crypto.
  • BTC dominance tends to bottom at the absolute peak of euphoria and is the first thing to catch a bit on the other side.
  • The secular trend of Bitcoin dominance is down, but cyclically it tends to rise at the beginning of a new cycle.
  • This might be the start of institutional interest back in crypto after a year and a half.
  • An ETF would give legitimacy to Bitcoin and drive demand.
  • The SEC may roll over on Bitcoin while still trying to attack other protocols and crypto assets.
  • Crypto is a global game, so government sanctions won't necessarily affect it like they would with stocks.
  • Maxis believe that Bitcoin is directly against the interests of the US government.

BlackRock Approval and Regulatory Fold

19:31 - 26:45

  • Bitcoin is the most directly against the interests of the United States government among all cryptocurrencies.
  • The SEC has already said that Bitcoin is not a security.
  • Approval of BlackRock and being brought into regulatory fold drives flows, but it won't turn on floodgates.
  • Coinbase has been onboarding biggest hedge funds and asset managers in the world.
  • GBTC and Bido require you to be an accredited investor, which excludes baby boomers who are the largest asset holders in the US as a population right now.
  • ETF approval and denial dates are major catalysts for market movement.
  • EDX markets have only four tokens trading on it - Litecoin, Bitcoin Cash, Ethereum Classic, and Zcash. Citadel is its main player for crypto.

EDX and Institutional Adoption

26:16 - 33:11

  • EDX is Citadel's main play for crypto and is expected to take a lot of share away from Coinbase and Binance.
  • The CME volumes are becoming a center of flow where historically has not been.
  • The traditional model of separating custody, settlement, and exchange will be applied to crypto trading with EDX.
  • EDX uses the same technology stack as SIDSEC, Citadel Securities, which makes it easier for them to onboard.
  • It is hard for institutions to step outside the bounds and try something new due to strong controls associated with RIA's and financial advisors.
  • Litecoin and Bitcoin Cash are included in EDX. These are the same poor assets that Gary Gensler said are not securities except for Bitcoin.
  • ETH is in the process of being blessed by the tradfi community. Having it on these places is extremely bullish.
  • Regulatory stuff plays out over the next couple of years.

USDC and Cross-Border Payments

32:42 - 39:45

  • SAP is testing cross-border payments for all of their customers using USDC.
  • Payments could be a viable option, but it comes down to cost and availability.
  • Cross-border payments are the most viable right now.
  • Point of sale transactions will probably be the hardest to support USDC.
  • The reliability of receiving money in cross-border FX is still extremely small.
  • There's still that three-hop conversion of currency to USDC to X.

NFT Market and L2 Solutions

39:27 - 46:12

  • The NFT market has been inactive since 2019-2020, but may become a good investment category again.
  • Punks have no utility or fees, but are leveraged ETH plays.
  • Fund managers are considering buying punks at current prices.
  • There is concern about liquidity and winners/losers in the NFT market.
  • OP stack gaining traction for launching NFT marketplaces.
  • Building an L2 on a centralized L1 with permission validator set does not make sense.

Launch of Tokens and Collaboration

52:40 - 55:10

  • Building an L2 on a centralized L1 with a permission validator set doesn't make sense.
  • There is a new opportunity to launch a token.
  • The lowest effort thing that has the highest market cap return will get launched until there are so many of them that they're all worth nothing.
  • RFP for L2s on finance and all that stuff for B&B.
  • CZ and Brian should bury the hatchet and come together as the two last men standing in this bear market.
  • It would be good to see them get on the same page, especially with Coinbase's business being carved up by trad fi.
  • Respect the pump as Ivan on tech once said. We got to be there for other folks.
  • No submarines for anybody to shoot in place. Terrible way to go for people trapped in the bottom of the ocean.