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A | Bankless nation. It's just about the end of 2023 and we are entering 2024. It's predictions time. We got to make our new year's predictions. We've got 15 of them today with Matt Siegel. He's the head of digital assets at Vaneck. Fantastic predictions that span whether we're going to have a recession. Talk about bitcoin... |
B | Some of them are extremely precise. Not only did we get a bitcoin all time high prediction, which is safe, but we got the day, the day of the bitcoin all time high breaking, which is extremely specific. Some predictions for out of left field, some deep in predictions, some predictions about accounting and how that's ac... |
A | I hope you are ready for some predictions for 2024. What will the next year bring? Well, we have the perfect person to tell us. Matt Siegel. He's the head of digital asset research at Van Eck. He's been there since 2021. Van Eck has been totally doubling down, I would say tripling down on crypto lately, particularly in... |
C | Thanks for having me back, guys. |
A | Okay, so let's talk about these predictions. You got 15 before we get into the first one. We're just going to go through the order and kind of grill you on each. What's the genesis for these predictions? Have you guys done this in previous year and how did you come up with these things? |
C | Yeah, we did it last year. I'd say our track record is mixed on how it all turned out. But it's really helpful for an investor to lay out a roadmap of how things may develop and then adjust your positioning as the facts change. So Jan asked for predictions, and here they are. But a little disclaimer is that we're reall... |
A | Wait, where's the arena? Is that on Twitter, where all good complaints go? Yeah. Get mad at bankless if you're upset at these. Okay, let's talk about the first one. This one was a little upsetting to me, I got to be honest. Matt, prediction one. The us recession will finally arrive, but so will the first spot, bitcoin ... |
C | Yeah, I mean, this may come off as kind of crying wolf as everyone's been calling for a recession for a year now. But when you look at the data, the economic momentum has been slowing for months, and that creates an economy that's more vulnerable to shocks. So leading indicators are now in recessionary territory. There... |
A | So, Matt, if we see that recession, are you predicting the first half or second half? Because we've got an election going on in the US next year, too, which makes there's definitely some political incentive to defer the recession as long as possible. |
C | I think the recession will be backdated to Q four. They tend to last one to two quarters. So we're out of it. And spending ad dollars on election ads in Q three and q four, that typically lines up with pretty positive markets. |
B | All right, going into the next prediction in the list, uneventful. Fourth, bitcoin having. Of course, the bitcoin having, not a prediction. We all know exactly where that's coming. But, Matt, tell us about the specific nature of this bitcoin having. What are the predictions you're making around this bitcoin having? |
C | So this is a pretty easy one. The prediction is that the halving will proceed without a major fork or missed blocks in April 2024. And as the new coin issuance gets cut in half, we will see unprofitable on miners disconnect. They will cede market share to those with low cost power. And then after a period of digestion,... |
A | Is that why you're saying significant gains for those low cost miners? Those are the miners you're talking about. Does the halving benefit them because it seems like their revenue is getting cut? Are you just saying the market for miners are healthier at this point? |
C | And you're expecting the overall market for miners is healthier with stronger balance sheets. They should be able to deal with the having better than in previous cycles. But I think the distinction that we're drawing here is that there's a couple of publicly traded miners, namely Cleanspark and riot, that have a cost b... |
B | The typical meme around the happening is that well, we have half as much bitcoin being issued and going to the market, therefore bullish. But that's not a very sophisticated take because there's one more variable in that which is, well, the miners actually decide when they're going to sell that bitcoin. And I think ove... |
C | The investors in the public markets don't want to see these miners take on debt because they all went bankrupt last cycle. So we have seen some large purchases of asics. We saw one today. Riot announced a big deal, but their net cash riot is. So it's not a debt problem. It's just that being net cash, having low cost po... |
A | Okay, prediction number three. Here we go. Bitcoin will make an all time high. I like those words in Q 420 24. |
B | Pretty narrow timeframe. |
A | Yeah. Potentially spurred by political events and regulatory shifts following a us presidential election. So we know we're getting a us presidential election at least. I sincerely hope that's the case. Potentially spurred by political events and regulatory shifts. So all time high for bitcoin by Q four of 2024. And thi... |
C | Yeah, so I think we'll get to the more details around the ETF at the end here, and that should keep the price somewhat supported in Q one. So even if we get a recession, I'm not calling for a dump, but the main call is that in the second half, bitcoin will climb this presidential side wall of worry. The percentage of t... |
B | Right. |
A | So, Matt, not only did you call a date, you also called bitcoin high, and you also called Trump presidential winner, and then you called the magazine cover of Time. That's like, that's at least three there, my friend. |
C | Wish list predictions, they start to blend a little bit when you're fully invested in this asset class. |
B | All right, all right, let's keep this going. Ethereum's market position behind bitcoin. You are predicting that Ethereum will not flip bitcoin in 2024. Flipping is not on the menu next year, but still will outperform tech stocks. Unpack this one for us. |
C | Sure. I remember being on a stage with you, David, a couple of years ago, and we were in New York, right? Yeah, that's right. And will eth flip bitcoin? Everyone on the stage raised their hand and I said, no, I'm going to stick with it. So that was a flexibility. |
B | No, it won't ever, or no, it won't soon? |
C | Not next year. Not next year, not next year. |
B | Oh, sure, I can get behind that. |
A | Sadly, Matt, David is not wrong yet. Okay. He's not wrong yet. |
C | My call is that there's more money in tradfi looking to get involved in crypto than there is in crypto that can be recycled. And in the current regulatory regime, bitcoin, its regulatory status is unique and its energy intensity is also unique. And it's the energy intensity that is attracting this interest from quasi s... |
B | Okay, hold on. This is but not the same sounds that I've heard other people predict make predictions around the bitcoin ETF and Ethereum ETF. Ethereum ESG friendly ESG approved compared to bitcoin because of bitcoin's energy consumption. Also, external like trad investors enjoy Ethereum more because of its similarity t... |
C | I'll push back on that. I'll push back on that. First is that I don't believe in ESG. I think the ESG narrative is fading. The courts in Canada have dismantled Trudeau's green agenda. The UK prime minister has backed away from their green agenda. South Korea has just re instituted plastic straws, baby. So that story is... |
A | Bullish carbon use. |
C | The other wrinkle here is that especially for these ETF's in the US, it doesn't appear like there will be staking involved in those ETF's because of the regulatory uncertainty. So I'm not sure that the product will have quite the same appeal as the buy and Hodl bitcoin ETF, at least in the early days. |
A | Matt, do you think that Ethereum will get an ETF in 2024? What's your over under on that prediction? It's not one of your 15, I don't think. But I'm curious about that. |
C | I do, I do. I think the deadlines for the SEC to rule on the spot applications that are pending, which include ours, is may. So there is some time. |
A | So that'll be good for Ethereum. And you're saying that in this prediction, not good enough to flip in bitcoin and not good enough to preserve its market share in the face of what you call growing competition from other smart contract platforms. That's the prediction for 2024? |
C | Precisely. |
B | Okay, so that kind of seems to fit under the general sentiment that Ethereum is just squeezed. You got the bigger brother capturing a lot of attention on the trad side of things. And then you have Solana, which is like the shiny new fast toy on the crypto side of things. Are you saying that you're in line with this kin... |
C | Yeah, I mean, I think that ETH is going to outperform BTC for next year. I just think that most of that outperformance will come in the second half of the year and we can get into with the next one why that's the case, but there's a lot that has to do with ETH roadmap. |
A | So prediction number five, post. And this is what I love about this new Vanac that I'm seeing. Maybe you guys were always doing this, but I didn't realize you were going this deep on crypto. It's great to see. Post EIP 4844 implementation, ethereum layer twos will capture the majority of EVM compatible TVL and trading ... |
C | Well, as you guys have covered so well, Ethereum will have a fork next year. This fork will reduce transaction fees dramatically and improve scalability for layer two chains like polygon, arbitrum, optimism, and others. So one of the challenges of managing assets in this space as the l two s have come to market is that... |
B | This is predicting that one of Ethereum's layer twos will actually be a stronger settlement layer than Ethereum itself, at least. |
A | In terms of on chain dex activity. I wouldn't say that settlement, because it still settles back to Ethereum. |
B | Sure. |
C | Exactly. |
A | But it does predict you are predicting more of power law winners in the layer two space rather than just we have thousands of chains and all of these layer twos and the tvls distributed across these hundreds or thousands of chains. |
C | Yes, by volume, now by users. The long tail may not. By users, there may be still plenty in the long tail, but by assets, we think it'll consolidate. |
B | So, Matthew, I can tell you about like ten different layer twos that are very, very different from the optimistic rollups like arbitrum and optimism that we know, or even the ZK roll ups like polygon that are coming onto the scene. There's fhe based layer twos. There is Solana virtual machine based layer twos. There's ... |
C | Yeah, I mean, all that liquidity, fragmentation is suboptimal, and eventually there's no choice but to accelerate the dominance of the winning l two s. And that's already occurred in Dexs, right, where uniswap pancake curve. The three of those are 80% of Dex volumes in 2023. So we're going to make the call that that sa... |
A | I can't wait to ask you about power law, winners of ETF's, by the way, Matt. But again, that's a tease toward the end. We'll get there. Sorry, David. Go ahead, number six. |
B | Number six. NFT activity peaks to new heights. Nfts are coming back. Matthew, I know we've seen a few nfts pick up in steam, but nfts across the board, the entire sector is coming back to life. What's this one? |
C | Yeah, Vanak intern laughed at us about this one, but we are sticking to it. NFT activity will rebound to an all time high. We think the activity will gravitate towards the top collections on ETH, better crypto games, and importantly, new bitcoin based offerings. So if I were to tell you that since inception, the issuan... |
B | 2021 in terms of quantity or value. Value of the nfts. |
C | Yep. At the mint. So we're going to make a call that for 2024, that ratio will be three to one ETH to BTC, which is still enormous progress for bitcoin. What the heck? |
A | So bitcoin, the NFT platform. That's what you're saying? |
B | Hang on, I'm calling some flubby weird numbers here. Bitcoin, NFT, minting is just like a super weird metric to measure. How do we actually measure the value of these things? Because we're talking about ordinals, right? Right. |
C | Among others, ordinals, inscriptions. We're using the good folks at cryptoslam for their data on that number. |
A | I don't think that's a weird, like, you can definitely measure the value minted along with existing value. Both are not comprehensive measurements, but both are definitely measurements. |
C | So in November, that number was 319 million for Ethereum, 363 million for bitcoin coin. So there's a flipping. |
A | When you say ethereum, are you talking. Are you including the l two s? And as well, in kind of the Ethereum number, are you just talking about, like main net Ethereum, when you're incorporates. |
C | L two s, we might have to check that for you. |
A | That's a big. That's a big bull prediction on bitcoin. Okay, so prediction number seven. Let's talk about this. Binance will lose its number one position for spot trading with competitors like OKX, Bybit, Coinbase and Bitget contending for leadership. Coinbase's future market makes exceed 1 billion daily volume. As red... |
C | This is an easy one. Nobody likes the colonoscopy. And Binance is about to have a three year colonoscopy with the DOJ up their ass checking all of the data. And we don't think investors are going to be too keen on putting their largest trades on that platform, so we think they'll lose share. The point of that predictio... |
B | So part of this prediction, I think, is bullish Coin, the coin based stock on the public market and the story of Coin has, over the last six weeks or so, is up 76%. Is this a one to one transfer of value from Binance to Coinbase, would you say? |
A | Are you trying to get a bonus prediction here, David, on the price of. |
B | Coinbase, what's the impact on Coinbase's valuation? |
C | It's bullish for Coinbase. They should be a market. They've been gaining market share all year. They should gain more market share next year. Profitable cash on the balance sheet. They can pay back that debt. They've got the custody business. They're doing the custody for the vast majority of the ETF sponsors. I think ... |
A | What I heard from that was all time high Coinbase stock by Q four. What do you think, David? Is that what you heard? |
B | Is that in the predictions, Matthew, not in there. |
A | Okay. I hold them to it, though. |
B | All right, coming up next, stablecoin market cap hits record high with USDC market share recovery. Usually the sentiment around USDC hasn't been great as USDC has kind of just bled into, flows into tether. Like every dollar that USD seems to lose, tether seems to pick up up. You're calling for a reversal of this unpack... |
C | Yeah, so we see total value of stablecoins on chain reaching an all time high above $200 billion. It's currently $128 billion. We see a number of regulated stablecoins that will launch in Europe in line with Europe's new Meca regulation. We're seeing a proliferation of yield bearing stablecoins and the first quarter ov... |
A | Wait, so you think that not only this, because this isn't in the at least the Twitter version of these predictions, Matt, you're also saying that USDC will flip tether. |
B | That's a hot prediction. That's even hot take. |
A | That's even more bold. |
C | Well, there's a catalyst for that, and it involves a three letter acronym called DOJ. |
B | That's another prediction. There's another one. |
C | There's another acronym, K Y C. And you might have heard of that one. So you know, the lawmakers are asking for a the USDOJ to take action against Justin sun and Tron. You know that. |
A | We were just talking about this earlier this week. |
B | Justin sun is the last big dubious character in crypto that seems to be unscathed. |
A | But treasury is actually talking about tether specifically at this point. Point like, specifically. So this is a prediction of kind of some action, I would guess. You also say in this prediction that emerging layer twos will be a catalyst for USDC. And you certainly see that. Like, you can imagine that is part of the r... |
C | Nobody's figured out how to pass along the yield on treasuries to us based stablecoin holders. |
B | And Gary? |
C | Yeah, that's unlikely to change until he's gone, but circle will be the closest to enabling that. And these kind of quasi KYC l two s that are beginning to emerge are likely to use USDC rather than tether would be my guess. But it's not one of our predictions that it's a circle USDC yield product which catalyzes this m... |
A | Prediction number nine. Dexs will hit all time highs in spot trading, market share driven by fast blockchains like Solana and wallets, enabling automated transactions promoting on chain trading and self custody. So this bull market is the bull market of the DeX is what you're saying. All time highs here. And part of th... |
C | Well, you can see following the Jito airdrop that Solana just flipped. Avalanche in defi TVL optimism and polygon. Look next after that, arbitrum. So I think you guys have probably been on the Solana chain, and the experience is very pleasant compared to what many people first experienced with eternity three years ago.... |
B | Oh, I will say. So. The first time you touched the Solana chain was in April of this year when I bought a madlad. And then also I touched it for the first time since then yesterday. And everyone's like, oh, the Solana ux. It's so good. It's so refreshing. It so, like, feels. It feels like web two. And I'll say just lik... |
C | But, David, I don't have to bridge, I don't have to, to, like, go through all this. |
A | David, these are your predictions. These are Matt's predictions. Stop. All right, but this is a general prediction about dexs. But you're saying specifically dexs on Solana as well. You're not just saying Dex volume is all time highs, you're saying Solana specifically is a big driver towards those Dex volumes. |
C | Correct. Putting the entire order book on chain is not possible on EtH Mainnet. It is possible on Solana. So the marginal crypto user whose first experience is with Solana is more likely to make an on chain transaction. |
B | All right, so these are all predictions one through nine. We still have ten through 15 left to go, which includes more Solana predictions, which I'm just super stoked for. So we're going to get to all of these and more, but first, a moment to talk about some of these fantastic sponsors, producers that make the show pos... |
C | Yeah. Bitcoin yield will be a thing again in 2024. Remittances will emerge as a killer blockchain use case. They always have been. But easier. Off ramping and spending of stablecoins will make it easier for the recipients to monetize their remittances. And given the use of bitcoin and layer two lightning network in som... |
B | Where does the yield come from in staking? |
C | It comes from channel fees, which are low. Staking to lightning nodes happens today, but it is risky and has low return because your bitcoin is used for payment settlements on the lightning network. But there are new protocols that abstract some of the technical nuances of managing these lightning nodes. There are also... |
B | You are making a prediction on the bitcoin app layer? |
A | No, I mean, that's not, that second one is not that second one is basically like, Babylon is like an Eigen layer sort of play for bitcoin and you're actually using the monetary value of bitcoin to secure an entire chain. Doesn't, doesn't necessarily mean kind of the. |
B | App layer, but, but app layer expansively is how I would say that. |
C | Yeah, yeah. |
A | But what I, what I did here is, uh, the year of lightning for 2024. And I have heard that in so many predictions for a very long time. Matt, is it finally going to happen? Like, like why, why hasn't lightning taken off in the past ten years? |
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