The State of the Crypto Markets ($1,200 Checks + Election Uncertainty, Public Companies buying BTC!)

Transcript

zapper is this new tool that i use to check out all of my assets in defy as you guys have known defy has absolutely exploded recently and so managing your assets is getting harder and harder because there's so many different places and so many different assets that it could be so i'm going to put my ethereum address in here and zapper is going to tell me where all of my assets are across ethereum right so uh here are all of the assets in this wallet uh there's there's a decent amount of them uh and it's also going to tell me where i've deposited assets into various d5 protocols right so there's some yield farming going on there's some liquidity pooling going on we can also look more granularly at the specific protocols that it's involved with in this explore

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can resolve to your human readable name so you can tell bitcoiners to send you bitcoin to trustlessdate.crypto or yournamehere.eth check them out at unstoppabledomain.com alright guys welcome back to state of the nation david we've got to talk about some things that are driving these are like drivers maybe maybe um somewhat macro themes that are driving particularly crypto prices right now and i want to bring up this market monday uh opening note that you put together on uh just just yes the bank and use that as a guide for talking about some

of this stuff because i think it's super insightful but you listed six different things that are driving crypto markets right now before we get into those why is it important that like we understand um crypto prices isn't it just like like a random walk through crypto right it's just whatever it's all noise doesn't matter in the short run it's all going to work itself out in in the long run uh why do we need to know about these these themes anyway yeah and and the your reference to the random walk is a good one for those that don't know the rant the random walk is this kind of theorized model for how crypto prices move and if you can think of a really drunk individual who's like stumbling down the

road they they stumble down the road but they still follow the road right like they go left and right across the road but they still follow the road and so understanding where this walk goes is really important because where it goes is relevant to our goals relevant to our ethos relevant to the bankless nation right and so understanding the things that are impacting the price of ether is something that impacts the bankless nation right fundamentally we all are here because of things that are valuable assets that are valuable right and so as the value changes it's important to integrate that into your understanding all right well let's talk about some of those things that we think are are affecting the random walk and maybe it's not so random after all and the first is this this has been a a theme of 2020

right you know um people in the crypto community have been talking about um you know like the the rampant inflation and money printing of the dollar ever since 2008 but like we are seeing it in overdrive in 2020 it's it's a part of our lives now like uh bills are being voted on it it's a it's a constant discussion are we going to get another airdrop check at least in the u.s other governments are similar can we talk about this first one which is the new covid relief package so for folks that have been outside of of u.s politics anyway what is that and why is it important to the story here yeah this is the second uh covert relief package with 1200 dollars in it for for

all americans uh and this is something that a lot of um people that if they were around now they would have been bitcoiners but you know 10 20 30 years ago were maybe they're gold bugs or libertarians people like ron paul said something like this was coming like forever ago we're like and and ron paul said like you know inflation is eating the middle class and you know what that has now with kovid is now we need inflation in order to survive right and so they are pumping dollars into the world in order to sustain uh you know the unemployment and the you know the the lockdowns that we are able to have so it's trying to balance out uh you know making sure that people don't have

to go out to go to work and so they can stay home and be safe away from kovid and also allow businesses to be afloat but then it's also doing this through inflation right more or less at the end of the day the the dog the value of the dollar is going to inflate when a bunch of dollars get injected into the world around us yeah so the big question is uh the you know the 1200 check is is coming it seems almost inevitable but the big question is where are people going to put that twelve hundred dollars i had a friend of mine uh who wasn't in crypto previous but he got his twelve hundred dollar check and he just went wild like he just like okay now it's my chance it's it's money you know it this is evidence of the money printer maybe some

of the crypto folks are right and you just started investing in bitcoin and ether and of course i'm in the space so that's the sort of thing like there's some selection bias here that's the sort of thing i'm going to hear about um however if you look at you know how crypto prices sort of responded uh post the first stimulus check it's been it's been pretty uh pretty insightful pretty pretty phenomenal uh way above the s p at least for ether and bitcoin way above the price of gold of course that could be other market cycles so you know this the trend line isn't long enough to yeah there's some noise here but i guess the question to ask yourself is like what are you gonna do with your 1200 check once it comes if you have enough

disposable income to meet your your needs are you gonna put it in stocks are you gonna put it in real estate all right like what's the store value are you gonna put it in crypto right that's that's why i think we're seeing this graph respond in that way and keeping on this graph maybe it kind of doesn't fit in the narrative that gold is underperforming versus the s p but you can even pull apart some of the companies in the s p typically the tech stocks from the rest of the s p and the reason why we would want to separate the tech stocks is hey they are absolutely dominating the s p and so they basically are the smp and the reason why tech stocks have done so well is they typically don't have any debt they actually have the opposite they have a

lot of cash on hand and what's really going on is companies that have liabilities aren't doing so hot and companies that have assets are doing hot and so you know i bet you if we were to separate the smp line into companies that don't have liabilities and companies that do gold would be doing better than the companies that do have liabilities and worse than companies that don't have liabilities it's all about having cash all about staying solvent in this market yeah tech companies too i think everyone is seeing this this move to digital i mean like i'm doing more and more on screens and less and less in the real world as a result of covid and i think some of those practices are going to be sticky so some of the telecommuting

software we use some of the remote software we use is going to continue in the future everything is becoming more digital hence tech stocks um interesting to observe but it looks like the check is going to land we're going to have money printer go burr we're going to have some um helicopter money dropped on us at some point soon so the second thing just to add on a small little tip onto the end of that because it's not something i knew at the time but china is also doing an airdrop in their central bank digital currency to their citizens so this is not the only game being played not to be outdone not to be outdone but but you know china wants to print some money too all right um election uncertainty so this is again a little

u.s centric but i think it has ramifications across the world um i'm sure a lot of folks know what's going on but like what's your what's your hot take on that and how that um how that leads to market uncertainty yeah there's two things here first off we don't know who's going to win the election and so there's uncertainty around that right uh and there's also uncertainty as to how one of these parties is posturing about how they are going to accept or not accept the election results and the mere possibility of of somebody not accepting the results of your election is also very makes the markets very uncertain right like that is a very uh uncharted waters for the whole entire country and so therefore it's going to be uncharted waters for the market to learn how to

deal with that right and in the backdrop of this we just have civil unrest from the polarization between these two parties which kind of just amplifies uncertainty right like you take uncertainty and then you add civil unrest on top of it you just get even worse uncertainty on the flip side of things however both parties seem to be posturing and wanting to like get into the party that is giving out relief right like both parties want to be known as the party that got checks into the hands of americans right and you know the the democrats famously the the more pro-worker uh uh party uh really just wants to give out more money than the the republicans and but interesting the republicans aren't the no party they aren't the no we're not giving any money party they are the party of we're just

gonna give a little bit less right and so both parties are being the parties of relief so kind of if you're if you believe the part number one where as money gets injected assets especially crypto assets go up both parties seem to be posturing for we're going to print more money so that's interesting yeah it does seem like both parties have a modern monetary theory agenda no matter who wins that's going to be the long-term trend but in the short run we've got this election uncertainty that we're dealing with that could cause markets to to dip so if we're looking like short medium turn right you've got money printer gober which is maybe pro crypto possibly but then you have election uncertainty which is like uncertainty everyone goes to

things like dollars right in that case cash money just want to make sure i have enough money to pay my rent that sort of thing all right let's talk about a third thing you list which is this bitmex uh incident we've talked about it with jake on state of the nation last week but despite bit max uh falling you know one of the the largest crypto derivative banks bitcoin bank primarily bitcoin is still alive it's like you know taking a hit but it's doing okay yeah so on the bitmex news the uh the btc and the rest of crypto price just plummeted right because that's bad a lot of a lot of volume and a lot of exchange activity happens on bitmex but i think over the long term this is going

to be extremely bullish because if we want more and more of the world's capital to have a reasonable chance of getting into crypto then we need to have legitimacy in this space right like the the legitimate the legitimacy of the cryptocurrency industry is much better to of an asset to have than bitmex the exchange and so i'm totally a fan of of you know you know throwing throwing bitmex overboard in in for favor of more legitimacy and what's also interesting is that the market you know it crap it didn't crash it dipped at the news of bit mix but then it just researched and rebounded even harder right and so in in bull markets you know we shed bad news and in good with good news uh we we

moon right and so that's kind of what i see happening i like that use that word legitimacy because obviously the government's way to get legitimacy in the market and trust in the market is through regulation right so i i do think trust in our institutions in general is at all time lows but the cftc solution for that is basically hey we need to regulate we need to be watchdogs on the industry um but legitimacy is a neutral word and so is trust the other way we can gain that trust in the um derivatives market is actually through transparent defy right so if you're using a uh transparent smart contract driven derivatives platform maybe something more along the lines of dydx or even in the future synthetics uh everything's on chain

everything is audible you don't have to trust arthur hayes with your funds right that like that's another level of legitimacy i think and i do think all of this is uh bullish for for d5 so does robert leshner hold on to your butts he says well hold on here i think that's a bart simpson uh quote actually i'm not sure nice all right so the fourth thing is public companies loving bitcoin super interesting stuff somebody asked me on twitter um you know is this bullish for ethereum so i uh or ether i guess there's maybe two two questions there so tell us about public companies loving

bitcoin and um it seems obviously bullish for for bitcoin is it also bullish for ether yeah sure so this is the second public company to add bitcoin to its balance sheets in this very short time frame like maybe six weeks right and the first one was micro strategy which you know at the end of the day microstrategy is really just this one guy who seems a little bit impulsive and seemed to just market buy a bunch of bitcoin and put it on his company's balance sheet the second is square led by jack dorsey who is you could you might even call him a bitcoin maximalist definitely pro bitcoin doesn't believe in other tokens doesn't necessarily believe in ethereum uh and so we have two companies that with bitcoin on the balance sheet and this is a big signal to other companies that the bitcoin scarcity game is being played right like

you guys i hope you guys all read the article that we put out on bank list called bitcoin scarcity game it talks about how like the uh choice to not buy bitcoin is a choice right and so you know if companies aren't thinking about putting bitcoin on their balance sheet they're going to lose out to companies that are thinking about it right so very fundamental to the value proposition of bitcoin and we see this uh scarcity game playing out on larger and larger scales like first off it is played off by individuals who you know spin up their cpu on their laptop to mine bitcoin in 2009 2010 and they and then they you know mine it more because they want more bitcoins right and then you know it starts to people start to buy it and then you know companies start to build around it and

then it just scales and scales and scales up and now we're at the point of public companies is public companies turn to play uh the music the game of mutual chairs with bitcoin right and that's what that's what i see currently being played and that's just tailwinds for the narrative of bitcoin is this bullish for ether and ethereum you know i see a lot of bitcoiners tease me saying like you know nowhere did michael say or of michael strategy or jack dorsey put ether on their balance sheets and so like no this is super bearish for ether like they don't even understand what ether is but i would remind them that every time that bitcoin moves upwards ether tends to move upwards even more right just because of the nature of the market caps like bitcoin i don't know what the market cap of bitcoin is like 300

billion right now versus ethers like 40 billion uh if bitcoin doubles ethers historically more than doubles right and so it's it tends to be a leveraged play along bitcoin so you know bitcoin success is ethereum success because you know if people see put bitcoin on their balance sheets they're also going to think like okay what else can we put on our balance sheets especially after it it moons right they're gonna ride that train yeah i totally agree i i do think probably eighty percent maybe more of the people who are into the space myself included probably you included like we learned about digital scarcity through bitcoin and bitcoin scarcity game like that was the gateway uh for for me anyway to ethereum and through to defy and to open finance in general so it um

you know bitcoin is 10 years old ethereum is five years old i think bitcoin will uh continue to be the gateway to other interesting crypto projects like like ethereum so probably good for both i agree the bankless state in the nations are brought to you by wiring wiring is defy's first self-building community run project which i just get really really excited about wiring is a system that seeks out yield in defy and it does that in a number of different ways a very aggressive way is with the vaults where you can deposit your preferred asset of choice and different defy experts will come in and generate a strategy for what to do with your deposited token right and so it'll go find ways to get yield in that deposited token in d5 for those

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monolith actually already here to monolith is now you can buy die and get it sent to your wallet directly right so it's also being an on-ramp so you don't have to go through your centralized exchange like coinbase or gemini or wherever you can just go straight from your bank account right into your monolith checking account smart contract wallet so check them out at monolith.xyz um all right this thing is unsettling david um bitcoin and eth have this correlation with the s p 500 that it can't seem to like it can't seem to shake right so i guess this is part of the first theme that we were talking about where money printer goes burr and then stock prices

go up right as long as people are like they they do an initial flight to safety so they'll go to us dollars for a bit and then they're like okay the world's not collapsing and the fed will continue to print money so they don't want their money in dollars they want their money in store value assets like stocks um but uh and and crypto but ether and bitcoin have both exhibited this strong correlation with the s p it almost feels like we're playing in crypto with a leveraged stock game like in leverage s p game what's your take on that yeah this is like i said this in the article this is my least favorite thing about crypto at this present moment like i signed up for the uncorrelated industry right i signed up for a nation that doesn't exist in the real world like but

all of a sudden like we're correlated to the s p stock market right which which you know means that we are therefore correlated to a covid third wave right we are correlated to another round of shutdowns we are you know correlated to civil unrest right we are correlated anything bad that happens in the world is going gonna happen also to crypto and this has been more or less been true since you know uh the early march dump uh black tuesday or whatever uh so we've been correlated uh for a while and i i think part of you know why there's so many different market factors right now is kind of creating that um you know we're not correlated to the s p we're all just kind of correlated to the same level of general uncertainty right and so we're also kind of all correlated to

the money printer which is also a good thing right because if like a third wave happens you know all the bad stuff in in the world happens well then they're just going to turn on the money printer and that's going to be bullish for ether and bitcoin again right and so it i don't like it because i don't like being correlated to legacy i do like it though because then we have upside exposure to the money printer and like what is a better value proposition than being able to have upside exposure to something that prints money it does seem like it's an artifact of time horizon too right we are in this like you know 9 to 12 month maybe 18 month theme where we're correlated temporarily to the smp but like fundamentals suggests that that should not remain so in the future right so if you if you annualize

analyze why buy crypto why buy ether why buy bitcoin um you buy those assets for different reasons than you buy stock right so i do expect that like that's just the kind of the the medium term short to medium term cycle that we're in but i don't think it'll remain so um if if we're right about digital nations and if we're right about crypto as an asset class uh things should not stay correlated for the long run but let's get to the fifth thing and this could be a catalyst for that breaking of correlation david and that's eth 2.0 so um is it actually going to ship this time because i heard heath 2 is never going to ship

dude the funniest thing about the last bull market that we all went through is like it was the over the tone of the bull market was like yeah this bull market is going to lead right into ethereum 2.0 and we're all going to be speaking and 2017 17. like the not this bull market the last time and that seems to be kind of the narrative that's playing out right now in in this uh appreciation cycle uh however it seems to be a lot closer i don't know maybe that's what i said last time but i i'm i do think that it is indeed right around the corner and like you said this is exactly the catalyst we would need to break that that correlation right and also first and foremost it is possible to be upwardly correlated with something and so while we are correlated we are still

correlated in an up and to the right trajectory and i think that's what's going on with crypto and i think things like ethereum 2.0 where a lot of the value pillars of ether one which we just talked about with timbieko with eip1559 but then also with staking actually gets priced into ether right and i i said in this article i actually don't think that the fact that you can stake ether uh and receive rewards is going to be a great catalyst for ether price appreciation because i think the people that are going to stake ether are the gonna be the people that don't really trade or sell ether that much have had ether for a long time and also are not participating in d5 and so i really think the ether that's going to

become staking first is going to be dormant ether like this is we're talking about like vitalik's ether or uh the ef's ether ether that has been slated for proof of stake since like 2015 how about your ether i'll get there eventually right but but not not necessarily off the bat am not going to be the first door no sir somebody else i will be following somebody else through the door first yes you don't want to lose your teeth on something like that um all right so if somebody were to ask me in 2017 when is eth2 coming i probably would have said something like 2019 and that would have been totally faith based would have been like like based on my feeling like we didn't have test nets or i didn't see

a project plan that sort of thing i feel like uh we as a community have gotten a little smarter but even if you asked me late 2019 when eth2 would happen i probably would have said late summer 2020. and now here we are we're past summer 2020. and now what are we saying david we're saying like it looks like q4 or q1 mostly q44 q1 all right so so if you're if you're saying q4 um why are you right this time because that's what danny said it does feel like we've got test nets we've got implementation plans we've got um you know actual developers who

have the thing running um it does seem like q4 q1 is a much better bet than some of our previous predictions but there's a lot more evidence to back up the claim that we will begin staking very shortly exactly and there is a huge eth2 will never ship crowd right that says basically the longer it delays yeah to this day the longer delays the less likely it is to actually happen and i think they are in for quite a surprise right when that day does come and when eth2 does chip that is the thing that i think will impact the ether price not that there is actually going to be demand for ether for staking but just the the change in the narrative right like the change in

what in what is true like all of the eth2 will never ship crew and you know that proof of work is here to stay crew like all the and and mainly the execution risk of ethereum 2.0 right because if we get to phase zero well then phase one and phase two aren't that far off right like phase two super far off if we never got to phase zero but with phase zero behind us we can start having that compounding progress right and again like one of the reasons why ethereum quote unquote 2.0 has taken so long is we started building phase zero one and two in parallel with each other right and so with phase one here like it's not like okay now we can begin on phase when phase zero is here it's not like that's when we start work on phase one when phase zero is here we can start to

implement phase one right and then once phase one is implemented we can implement phase two like a lot of this work has already happened and so the eth2 crew the the anti e2 crew i think is in for a a big short squeeze if you will you know because i'm like more confident that eth2 is actually like coming right i'm i'm i'm very confident that that that it's coming swell and sway it's only a matter of time probably probably months um maybe weeks uh when we get vitalik on the podcast next week i think we can broaden the discussion because whenever you get vitalik on a podcast it's kind of like um you want to ask the question of like yeah but so when is it coming like wendy two vitality right like uh and this time i feel like in our

podcast we can go a bit deeper on not like when eth2 but like why eth2 right right because this has been a long vision coming like what are the uh the principles behind the design of eth2 and what's important right yeah a crypto is absolutely political that's why like you know brian armstrong you know his peace just like you know he was and i get i get the sentiment he put a blog post out that was like hey um you know we're here for a different like a business mission right uh open finance kind of mission and we're not here to talk politics but at the same time right i get it's not left versus right politics right but um crypto is absolutely political right it is like

absolutely an anti-authoritarian like movement and that in itself is political what if you get into a government um a state that says like hey it's illegal to to own crypto right well then the act of owning crypto though is is very political in those cases so i don't think also escape that and also therefore some of the design decisions around eth 2.0 become extremely relevant especially a top down decision where like crypto's illegal well whether we are staking like 32 eth or 3200 eth is an important design implementation that impacts how the network can function under an adversarial environment such as that and so that's kind of why we're getting vitalik on to go through some some of the decisions which are there for

political decisions i don't know if italic would agree with that framing but i think we'll ask them or whether we can stake it on like a consumer laptop with a cell phone connection or whether we have to stake it in a big data center that's certainly another political consideration that feeds into the design all right david uh this has been state of the nation man but we've got one more thing to talk about and that's um our new episode our new sort of mini show that we're coming out with on friday uh the roll ups round out so so what is that what's going to be the format for that yeah so rollups around is going to be where we go through the news go through the events and kind of go through some of the things that ryan and i have on our mind

so it's going to be a very well packaged very quick um you know 30 30 minutes but with lots of topics uh roll ups of all the things that are relevant and so we have you know the price action market commentary kind of distilled what we just talked about as well as product releases from the defy world you know funding rounds uh you know who's going to be hiring any legal action that has been taken milestones who's hiring and then we're going to go through a series of you know what's on the news what's in your mind what are you looking forward to right so uh we were we are always taking suggestions this is kind of where the bankless nation can ping me and ryan saying hey will you include this in the next roll-ups round that's what the roll-ups round is for uh so this

thursday we're going to be talking a lot about uh the q3 token report which is coming out tomorrow on bankless we're also going to be talking about the department of justice 83-page crypto framework and what that means for you i hope jake put together a tweet summary for that yeah he did actually he did okay we're also going to talk about the blue kirby exit which i think is a fun little sitcom episode of crypto and defy uh and then we're also going to be talking about tornado cash because the tornado cash is picking up speed all right awesome man that's gonna be great so what you need to do is hit subscribe to the youtube channel to make sure you catch that that'll be friday mornings we will also be pushing that out on the podcast so if you're on the

run and prefer the audio version of that that will be there for you too so this has been episode 18 of state of the nation we're 18 years old now david we can vote um so thanks for joining us risks and disclaimers of course defy eath is risky so is crypto you could lose what you put in eip 1559 looks like it's coming it may not come who knows this is not financial advice but we are headed west this is the frontier it's not for everyone but we're glad you're with us on the bankless journey thanks a lot