Why Bitcoin's Q4 rally died and the 2026 setup: Jamie Coutts

Transcript

dads as a as a um boost for the market or boost for the asset prices is pretty much over in my view. >> What's up everybody? It's LG Ducet here and welcome to the Milk Road Show, the daily crypto show that reads the market fine and print so you don't accidentally buy the footnotes. Today is December 10th, 2025. We are recording on December 9th, 2025, although it is December 10th for our guest today. We had a conversation earlier on the show this week about chain valuations and we didn't really get an answer in ter terms of what makes a chain actually valuable.

TVL just doesn't really cut it. But today's guest has a metric that he himself has coined and it might just be the closest thing we have to understanding which chains are over or undervalued. Jamie Coots, the chief crypto analyst at Realvision, is our guest today and we will discuss his re research piece on L1's and also kick off by discussing how he kind of foreshadowed the current price action on Bitcoin and what might be coming soon that may not be so good for Bitcoin and why he is a little bit worried. Today's episode is brought to you by Reserve ETFs. Get exposure to the entire crypto market in a single token. Chain link.

Break the interoperability barrier and power the future of tokenized finance and bridge. Power your business with instant stable coin payments. No friction, no banks, just global finance made simple. Here he is. Jamie, welcome back to Milk Road, man. How you doing? >> Yeah, I'm doing well. LJ, how are you? >> I'm good, man. It's great to finally chat with you. I have not interviewed you. You were you were on with Jay last time. Um, but I do have one pretty big question for you. Last time you were on the show, you said bitcoins and altcoins were set to explode in Q4. That obviously hasn't happened. It has surprised all of us. What has changed? What what in your opinion uh prevented us from from reaching I guess Valhalla by this point?

>> Yeah, it's certainly been a disappointing quarter. There was a report that I published back in September which was just after really the market made or Bitcoin made new highs. And in that report I was forecasting that Bitcoin was likely to decline by about 25 to 30% a very normal decline in a typical bull market for Bitcoin. And the reason for that was that you could see that momentum uh in global liquidity depending on which metric you're looking at was starting to roll over and that's a that's a huge driver of um asset prices.

But what's happened since has definitely surprised me because I was expecting that we would have inflected higher again by now and we potentially are. If you look at the the technicals on um Bitcoin and some of the digital assets that they've started to look like they've put in a bottom. There's some technical indicators like the mark that have shown exhaustion around these levels. So maybe that's happening. What has definitely surprised me though is that the um the pullback was deeper and the size of the liquidity withdrawal was larger than expected and it came from sort of different places than I than I thought. um namely the you know what the TGA did or the the Treasury General account did with the Fed in terms of you

know sucking up sucking up uh liquidity from the market and then going into a shutdown. So um those things were definitely unexpected. The things that I was worried about at the time which was causing the rollover in liquidity was more around the Fed's balance sheet and in the report I was forecasting that they are going to have to end QT and at that time no one was talking about that but it's actually they actually did surprise the market I believe and flag that last month. The question or the bigger issue for our favorite digital asset is that it doesn't seem even after today's announcement that there's a resumption to balance sheet expansion that it's going to be enough given the the state of reserves in the financial

system and I think that is really continuing the um really subdued price action that we're seeing. So the outlook for next year though, if that was going to be the next question, um is that we're going to see liquidity resume higher um as a function of the fact that QT has ended. The Fed is now I think it's around 40 billion. The announcement just came out before we we went on this call LG. So I'm not sure if that number's correct. I think it's around about 40 billion in um in asset purchases, which I think is the inverse of the QT program that they were running, which ended. So they've now flipped it. So it's almost like an 80 an 80 billion net positive to liquidity.

Then you've got the SLR changes which the administration is um trying to push through quite quite fast. So that will add to global M2 next year. The question is is the ascent or is the change in liquidity enough to fully support asset prices especially those assets which are seen to be the debasement trades or the debasement um anti-debasement trades i.e. gold and bitcoin. I think it's going to be very good for equities. Um there's definitely lots of tailwinds happening for equities. Corporate earnings are expanding. So, you know, the the the S&P should grow into sort of its P multiple um premium that it's that it's um given itself over the last year.

And there's a ton of um capex to go through, but I think um it's the debasement assets like Bitcoin. And I wouldn't put the rest of crypto in the debasement trade uh because they're really technology plays. Um so, they tend to perform very very differently, but they are also caught up in the sort of the beta on Bitcoin. But my view is still we get a decent push higher next year. I think the market is just trying to digest what the Fed has actually said in this most recent announce or what Pal was saying in the press conference today. Always mixed you know there's always mixed signals from these guys. I mean, it's just it's actually infuriating to watch, you know, the Fed officials talk about monetary policy because it's clouded in so much

confusing language. Um, which I think is there intentionally, but essentially um, you know, what we've seen is a cut. We've seen balance sheet expansion, but the question is, is it sufficient to really drive assets um, higher? So, that's been the that's been the disappointing element to why I think um, digital assets have really underperformed this quarter. We can talk about the structural um the structural drivers for adoption, the Clarity Act and all those things that make the asset class extremely attractive over the medium term, but I think at the moment everyone is um squarely focused on what's happening on the liquidity front.

I'm going to pause there for a second. If you're listening to this and thinking, okay, but what is the move I should actually be making? Then going pro is for you. Every week, our research team drops a full deep dive on the biggest themes everyone else misses. Plus, you get access to our full Milkroad Pro portfolio that has real-time buy and sell signals and access to our Discord where our analysts will answer any question you have. If you want to level up, honestly, that's where you got to do it. Hit the link below. Is is the crypto market like structurally dependent on liquidity intervention? like because it feels like obviously it needs liquidity to thrive and to function, but it feels like we keep hedging our bets on like well the

the TGA is going to unleash all that money or we're going to change rates and this is going to happen. You know, I feel like it's so dependent on having some kind of infusion of money in in this interventing kind of way. >> Yes and no. I mean there's two the the thesis that I've always maintained for why you want exposure to digital assets and why it deserves a place in anyone's portfolio like a global portfolio a multi-asset portfolio is that there are two secular themes of our time which are unshakable and that is the fiat monetary order is a creditbased system and we're at a point where every new dollar or new currency unit of credit that's created

produces less and less economic output or value and that the size of the outstanding debt is so large that really all we're doing right now is issuing more credit to service the existing debts and that is a system that is you know extremely impaired and is irreversible mainly. So therefore, the debasement aspect, which is what they do to try and keep the system afloat, lends itself to debasement, anti-debasement assets, gold, and also Bitcoin, the newer form of that. And Bitcoin's got, you know, different utility um and different properties than gold that make it quite unique, but they're essentially in the same basket. The other major

secular trend is technological adoption. If technology improves people's lives, it will be adopted. It never regresses. So that aspect of blockchains and what they provide to a already, you know, a archaic financial system and a world in which trust is being, you know, destroyed by our institutions. Decentralized or trustless or more neutral platforms for doing commerce make a lot of sense. So they I I see liquidity as being a structural driver but more of an amplification of the techn technological adoption trend which is driving blockchain, driving robotics,

driving AI, genomics, all these other exponential trends at the moment. So we live and you know we live and breathe you know to large in large part based on what the central planners are doing at the at the monetary and fiscal level but you know I've my phrase is you know the spice must flow nothing stops this train from Lyn Alden is you know a more well-known thing like it is it liquidity is the you know the circulatory um necessity of the entire uh system. So over the medium to long term, it doesn't really matter. It's going up and the technology and the adoption of the

technology to solve other issues other than just a store of value, right? The other issues are how do we move value? How do we how do we amplify monetary velocity that is you know has been cooked for years for decades really because all the system does is print new credit to buy assets. I mean up until recently in this new capex cycle you know most credit was was being issued to institutions to invest in financial assets and so the economy has been sort of languishing for decades under that sort of regime. Um blockchains, smart contract platforms are the new infrastructure which allow monetary

velocity to reinvigorate, reignite. And let's face it, I mean, you know, there is a desire for half the world's population to get access to financial assets, to credit, to be included in the financial system that the existing system, as much as it might try or not try, will never be able to service because the rails are broken. >> Good answer. I want to ask you Jamie about um uh DATs and kind of their role. You had mentioned in that report back in September um that their bid might be in decline or might be slowing. Do you think we're kind of ending getting close to the end of the era of DATs and them adding and Bitcoin being added to the

corporate balance sheet or will we see will that be a big part of this 2026 potential run? So, we're at we're definitely at a a point where DATs as a as a um boost for the market or boost for the asset prices is pretty much over in my view um because they can't you know most of these DATs are not able to tap the equity markets anymore because they don't have enough premium in their price. Now, they will continue to do so until such time as the market prices them back at MNAV of one or even less.

The ones that will continue on are the ones that have successfully tapped fixed income markets um and are able to continue to uh inspire trust and that really comes down to size and also you know the quality of the management and there's only a few companies in each of the digital asset assets uh that actually can sorry digital asset companies or treasury companies you know that can actually pull that off and so you're going to see consolidation. I I was never really a huge fan of this whole um strategy from micro strategy being broadened out because it would always it was always going to inspire lesser or lower quality companies from pursuing it and the market would always

um consolidate around the best quality ones. The thing that surprised me uh is that how quickly the market turned and the sentiment changed. Like I was expecting that to happen really next year, but it's already starting to get priced in, which makes the MCI index proposal so fascinating. But just to sort of um go back to your question about is it the end of Bitcoin on the balance sheet. I think it's the end of the sort of uh the digital asset strategy um being the sole strategy. I think it's going to not end the notion that if you've got a business and you've got excess cash flows that you invest in the best quality asset or store of value

and that would be Bitcoin but not make your whole business around Bitcoin the asset that you continue on as an operating company that's just solidifying your your balance sheet but just these you know singular focus sort of um uh digital asset companies um I think for now it's just a it's a really a consolidation game and concentration game and the ones that are left will continue on to be um you know I think you know fantastic companies in the future. >> ETFs provide investors with a structured disciplined and diversified approach to crypto which is cool but the world is moving on chain. We need a crypto native equivalent. That's exactly what Reserve's decentralized token folios bring to the table. Reserve ETFs are rulebased baskets of crypto assets

packaged into a single token like Coin Market CMC 20 crypto's version of the S&P 500. Go to milkroad.com/reserve to find out what's on offer. Sure, tokenized financial products are the future, but there is a big sticking point. They all need to speak to each other. This is a tough problem to solve, but Chain Link does exactly that. It's the universal language for financial markets, linking Wall Street to web 3, banks to blockchain, and so much more. See how Chainlink is linking the world by going to milkroad.com/chainlink. So, so hold on, let me recap that. So, so are you saying that despite a lot of the Ethereum DATs being kind of just copying Micro Strategy that some of them you're hopeful for some of them that

they can they can continue and continue to evolve as businesses? Is that what you're saying? >> Yeah, I know. I definitely think so. I just think that the tale got too long, right? I mean, there was just too many copycats. So, there's only so much the market can absorb. So you're already seeing you saw pretty quickly like a lot of these um a lot of these Johnny come lately uh or even the lower quality asset dats you know immediately started trading below MNAV. I mean the market was the market is the arbiter of truth or the best sort of signal and the market was repricing these um assets pretty quickly. So I think you know for those that have scale have good management I think they're fine. index inclusion decisions aside, you know, these are productive assets. um what

Micro Strategy has done by building up a US dollar reserve to pay the um the dividends on all its preferred instruments and flag that it's going to really start issuing credit or start potentially using Bitcoin as you know collateral for lending is a is the the thing that I thought would always happen but I think has been accelerated by the pressure that Micro Strategy has been under to start utilizing the asset but these are productive assets ass that will generate yield in the in the case of other digital assets such as Ethereum or Salana. Um there is you know some of these dads uh will obviously deploy the asset into DeFi pools and collateral and

they'll be able to earn yield from that and that will inspire confidence in the in the ecosystems. But some of them are already actually flagging that they're going to invest directly into other protocols and into other businesses that build inside their ecosystem. So, you know, these are operating businesses just very different to what the Msei would seems like they would prefer. Um, which is arbitrary, I think, uh, you know, to put it lightly. But, yeah, no, I'm I'm I'm confident in that. I just don't think that the ability for them to trade significantly above MNAV is going to persist. And the ones that will do rather well will be the ones that have built up a a significant reserve, a significant store um, position in their

in their assets. deployed that started earning yields and are also able to tap fixed income markets and that's really only going to be a select few. >> You mentioned MCI and we we've discussed that a few times because that's been a hot topic around Micro Strategy, but I'd love to hear from you Jamie. What exactly is happening with Msei and how is that a danger to Micro Strategy? >> Well, I mean the Msei has uh put out a consultation paper to exclude um digital asset companies if they hold more than 50% of a digital asset on their balance sheet. Now it they're claiming that these these are not operating companies that these are um essentially funds. Um but it seems extremely arbitrary because you know they're not penalizing other

companies that have more than 50% of their assets in some sorry 50% of their balance sheet in some other asset right whether it's property for you know real estate companies or some other asset. I mean, Goodwill is 70% of the Msei's own balance sheet. Msei is a listed company. Now, Goodwill is the most ephemeral sort of like, you know, um asset there is. I mean, like it's just it's a total intangible. Um, Bitcoin is a transparent asset. Uh, it is the new digital collateral and it is being heavily pushed by, you know, by the US government. Um, and it's being adopted at sovereign level all around the world.

So, you know, it seems rather discriminatory and also this 50% level, you know, is going to be very hard to adjudicate for a for an index manager or for the companies themselves. Um, so it just seems it seems very, you know, ill thought through. Uh, or it's on or it's it's on purpose. If you want to play take the conspiratory angle, it's on purpose. They just want to penalize Bitcoin companies for whatever reason. But to my earlier point, like the market was pricing these companies anyway. If like the market decided that Micro Strategy had no value or if the market decided that Bitcoin had no value, if Bitcoin is in the index, it would fall out. Sorry, if

Micro Strategy in the index, it would fall out of the index, right? The market will tell them. They don't need to overlay their own arbitrary view on what is an operational company. And to my earlier point as well, like you know, Micro Strategy has a software business. Um, Bitcoin is going to be provide credit. So, they're essentially becoming a financial institution in the digital economy. Blockchains are being adopted. Stable coins are going to grow from, you know, 300 billion to 3 trillion within the next 3 to 5 years according to the US secret um, Treasury Secretary. So, what are they doing? But, you know, I can't speak to their, you know, to their motives. you tweeted last week uh that we may have hit a turning point in m in micro strategy and bitcoin and that we

are kind of coming up and I think I think you were referencing I guess their ratio together but I'd love for you to kind of explain that and also what's driving that rebound because this week things feel a little bit positive. We're seeing bids on uh alts and other things and we'll get to that later but I want to stick I just want to wrap up this point for micro strategy in Bitcoin and what you think is maybe showing a little bit of a signs of life. >> Just I mean look if you look at the technicals um the exhaustion there was exhaustion indicators in terms of some of the oscillators but also demark indicators that I use on micro strategy but across most digital assets after some pretty hefty declines. And then you got some interesting reversal candles on large volume which we saw on

Micro Strategy last week as well. And that sort of indicates that a potential bottom is in for the short term at least and that uh it needs to basically break out um do a few more things on the upside to sort of clear some technical levels. But um you look at the ratio between Micro Strategy and Bitcoin, we're at lows that we saw back in 2022. Now I said in that report just to be perfectly um you know perfectly honest that I think the ultimate low could be around 120 or 130 on Micro Strategy but that is like you know that's pricing in a Bitcoin bare market which would see Bitcoin down at sort of like low70s now I think riskreward over time Bitcoin is looking really attractive at these

levels you know where it was a couple of when I put out that tweet which was sort of low 80s because I think you know you your downside. If this is a normal um sort of bare market, if you want to call it what we're in now, and not a midcycle pullback, the low70s look like a pretty decent support level. And then you've just got a function of like where global liquidity has to get to over the long term and take the beta on what or take the elasticity of what Bitcoin does when um when liquidity rises which is you know between six and 20 times depending on the type of environment we're in.

Bitcoin will move. So 1% on global liquidity, 6 to 7% in normal times, 20% in really bullish times. Um, and that just means that, you know, we're looking at, you know, a riskreward scenario where, you know, it's at least sort of 1 to five over the next sort of 3 to four years. >> Okay. Okay. I like that. I I I don't know. We've we have so much incredible research that comes across the show. And I think we're really at an interesting point of like will will we will we go down a little bit lower there? Kind of like what you're saying into this Bitcoin bare market. It's interesting.

You're saying that bit Bitcoin would go into a bare market and that you're not considering this current phase of bare market. Is that correct? >> So my view is that we are in a sort of midcycle pullback still because liquidity is going to rise next year and I think the Bitcoin sensitivity liquid to liquidity even though it's really lagged it so far. I don't think that changes over the medium term. Right? So you get these wriggles where you know Bitcoin doesn't react um but then eventually it has to catch up. And I think you know what you're seeing with adoption at the sovereign level, Bitcoin mining now driving a lot of energy grids or being used um to you know mediate some of the

energy grid issues that certain countries have as well as now an adjacent industry to um AI because of the way it can sort of intermittently turn on and off then you know what you've got all these significant drivers that come through but are not playing out right now because of like the liquidity aspect. they catch up, liquidity, the responsiveness, liquidity eventually kicks in and then Bitcoin goes a lot higher. But I mean, I I'm prepared to be wrong on that. I think if this is a if this is a bare market and we're still yet to um finish the um the cycle on the downside, I would and I don't think this is controversial. I would say that the the low should be around 70,000 because that

was the previous low. And if you look at the sorry, that was the previous high from the previous cycle. also where a lot of volume traded last year. Remember that sort of 30% decline that went on for like six to seven months which felt like an eternity? A ton of volume traded through there. If it breaks that, that would be a very um that would be potentially if it broke there, it would be a change to the cycle, change to the market structure for Bitcoin. The last time that happened where it broke the previous cycle high was obviously in 2022 when FTX happened and it broke 20,000 and went down to sort of 1617.

So I think in my framing that would there would have to be some sort of event that would you know credit event maybe a DAB or something that would push it below those levels but that's definitely not my base case. And then just sort of on a riskreward it looks pretty attractive from here. As you guys are listening to the show, you know that there's something hanging over the entire economy, and that's AI. And the problem with AI content is that almost no one explains what the news actually means for investors. Our new AI newsletter fixes that. Twice a week, we break down the moves, the winners, the risks, and where the puck might be going. If you invest in tech at all, the link is in the description below. Check it out. Let's talk about uh other assets than Bitcoin. Jamie, you also wrote a

great report recently about chain valuations and that you had pretty much come up with, I guess, your own uh potentially proprietary metric for evaluating how much L1's are actually worth. And obviously that has been a huge debate on crypto Twitter and in the space lately. We had Nibbon this week to give us his take. his best metric was that TVL and maybe daily active users were the only thing that we have, but you have one called ENI, effective network intensity. Give us a little breakdown of what that is and why you think it measures uh the chain value so well.

>> Yeah. Um yeah, I'd be happy to. So, you know, I've been meaning to do this for such a long time. Um, but this was really my first the first part of a a series of um uh research papers that I I plan to publish to try and build out a far more complete and comprehensive overview of how to value smart contract platforms. It's by no means perfect, but it's firstly it recognizes in my view that there is credence to the view that smart contract platforms um are priced to some part on metaf's law. So the you know the value of the network is proportional to the

number of nodes on the network. Now what happened in the early days when this was sort of proposed and this has been a this has been a theory and a and a model that's worked really well for other technology companies over the years for telecommunications for internet companies social media and so forth when it was applied in the first iteration and and you know RA was very early on like many many years ago talking about this um but it was published in academic um you know academic papers and whatnot what they did was they used daily active addresses and settlement values as really the the components of the mech um valuation. Now, in the early days, um, well, Bitcoin is essentially a a transfer mechanism, right? A monetary

system that allows you to transfer Bitcoin. It doesn't do anything else. So, it's a very one-dimensional um monetary network. And Ethereum in the early days, even though it was smart, smart contract plat U enabled, there was no activity, there was no applications in those first couple of years. So when when um those models were done, they came up with pretty strong relationships between that definition of metaf's law and um the market cap. But the space has evolved. If you look at smart contract platforms today, they are multi-layered, multi-nodal, multi-dimensional. There is a lot more activity happening. There is the settlement layer. Then there is the then there is the application layer. So

there's an economy that's growing up around on top of it. Then you've got obviously the validators are are an important part that secure the network. So the the the approach I took was like we need to think and and also let me just sort of point out what the issue is with daily active addresses like most people would admit like across all metrics in crypto. Let's be clear there is a lot of manipulation and there is a lot of fake activity. There's a lot of spam. There's a lot of bots and so forth. I've tried to research as much as I can um on how and how to quantify that like what percent. I've gone out to the data providers, they don't know. There's been published reports that put it um

somewhere between sort of five and maybe 15 or 20%. Um it there's just no comprehensive data on it unfortunately, but let's assume it's there and let's assume it's probably uniform across all the assets. Does activity on the chain still explain the price even if you take that into account? Yes, it does. But what daily active addresses does in isolation is that it it explains less and less of the value now. So there had to be a better way to model activity on the network rather than just daily active addresses and like how much value is transferred.

So just taking that sort of multi-layered approach um I created something called the ENI or economic network intensity um and this is going to change it's going to be updated but like the initial approach was like let's just let's move beyond daily active addresses which we all understand is problematic and incorporate things like how many validators are actively securing the network and then how many applications are actually generating revenue on the network and then you get a much more I think comprehensive view of the multi-layered smart contract platform ecosystem when you do that at least from my analysis and you do it at the aggregate level right so this works this is

analysis done on all the uh smart contract the major smart contract platforms layer ones in aggregate and what that did was it pretty much um improved the metastas law model significantly um from like explaining 50% of the of the market value to about 70% of the market value. But it doesn't end there and you should never hang your hat on just that one thing because there's obviously there's a lot else there's a lot more going on. But I did in that paper I talked through the reasons why it's a sound foundation. I did it out of sample and in sample. So I looked at just the last two years and looked at how both models perform and they both degraded. So they both they both explained less about this last two years

than the previous six or seven years in the back test. But the ENI model, my model stood up actually. It didn't degrade as much as the other model. In fact, it still explained over 50% of the market value even through this very very choppy and different type of environment that we've been in. Whereas the daily active address model basically crashed to have no relationship. So discard that and let's move on and start thinking about these um assets as more sort of like you know ecosystems with a network intensity that better explains why there's value to the underlying asset.

Now the the question everyone should ask is okay like you know over the last few years explained about 50% so what explains the other 50%. Right? And that is where the area that's where the research needs to take me next. assets need to look at. You know, for me, I think supply plays a big part. My thesis all along was that not only Mechaf's law that these are sort of network assets but the activity on these chains is distorted by the supply of the or the the supply aspects the tokconomic aspects. Huge overhangs, large FTVs versus market cap um unlocks and high inflation rates either distort or destroy um activity. And so my view is

that over time this metric should explain more of the value of these assets as the unlocks start to wind down and as the inflation rates start to come down and you get a more clearer read. So there's um much more that needs to be done on that side of things. And then there is one more aspect to the value of smart contract platforms which I think is important is is there any monetary premium in the underlying token. And the way you can think about that is like how much of that token is being used in the DeFi pools um as collateral because that is effectively someone saying I think this is a store of value enough for me to risk it as um collateral to do other things with and then you can sort of measure how much of it's being used in

those in those ways. what sort of utility it has. And clearly Ethereum has monetary premium, but a lot of the other tokens don't. And so that sort of explains some of the disparities, but it's all part of like a a long-term project to um try to get a better read on what these assets, how these assets are priced. >> Stable coins are the biggest use case in crypto right now, but let's be real, using them on chain is still way too complex. That's exactly the problem Bridge is solving. Recently acquired by Stripe. Yep, that's right. Bridge helps businesses send, store, accept, and launch stable coins instantly. Explore the future of global financial infrastructure at milkroad.com/bridge.

That's valuable work, man. I like that. I think I think that's a sophisticated approach and something that's desperately needed in the space. It's just something more evolved. One thing you noted in your report is Salana's score and you said that Salana actually may trade like quite accurately to its fundamentals. I I think that's an interesting take especially that you mentioned that you mentioned potential like fake wallets and may not represent real users. Salana being a landing spot for that with so many meme coins and so much that happening. Uh tell me a little bit more about that that evaluation of Salana.

>> Well, because it's because it's being used there's a couple of things, right? So, um, the analysis looks at a whole bunch of like these top 10 L1s. Um, and you rightly pointed out like when you rank them on this methodology, Salana actually fits this methodology quite well. Ethereum doesn't. Um, and so I've sort of talked about, you know, where the discrepancies are and and and potentially areas of new research, but what I my thesis is on why I'm seeing that in the in the model is that firstly, Salana's monolithic chain, right? So, it doesn't have L2s that are distorting the activity or, you know, leeching activity away is probably unfair on Ethereum, but

there's like activity that's happening offchain or sorry, off the L1 that relates back to the L1 settlement fees, but it's a um you know, a direct or indirect sort of um uh distortion depending on where you look at it. Sign doesn't have that issue. The other issue is that sign is used like there is activity on that chain and also it's much more further into its um supply overhang. So I think maybe there's like 15 or 10 to 15% left uh until all the unlocks are finished and so you're starting to get a much clearer read. Now there's other chains that are sort of in the same picture like NI has basically got no overhang but it has very little

correlation to this model. So there's something else driving those particular assets and clearly if you look at Salana's activity you know the the number of apps that are being built on that chain versus say NIA is dramatically different. So I just think that you know if a if a chain is successful it will grow into this model um because the economic activity is not being distorted and number one and number two is there actually is economic activity. So if there's no economic activity, it's very hard and and it's multi-layered and it's very hard for that model to fit it. So it's sort of it is somewhat aspirational too like this is where I think we'll get to over time with how to model these um these

networks. But like they're just um some of these chains are um you know like if you look at Cardano like there is no explanation in my mind why it has the valuation it has given the economic network intensity of the asset. And that again is, you know, is the floor of the model potentially like what are we missing here that gives um Kadano value. Um it's going to be a fertile area of new research. >> Oh man, I was hoping you would be able to explain away some of the great mysteries of crypto, but looks like there there's what's nice is that you have a good model. It's working in some cases, but there's there's clearly plenty left to be discovered. Let's put it that way.

>> Yeah. Yeah. It's um it's a you know everyone this debate that's going on at the moment which is like the number one debate outside of like you know whether treasury liquidity is better than central bank liquidity. The other one is like you know should these assets be valued on something like a metast saying you know um TVL and I think it's good like I think it's really really healthy. Um, everyone's got their their views and, you know, we're, you know, Twitter and, um, the open platforms that we still have left in the world are great places to thrash out these ideas and hopefully get to some source of truth.

>> Mhm. Mhm. Especially as more L2s are released and, you know, people continue to wonder about the value of Ethereum, which is clearly, you know, the one that suffers the most from having so many side chains, right? Um, so I think that that's that's something that is very helpful to to have in the ecosystem. Jamie, I think we're going to wrap up there. I think we've we've loaded a lot into less than 40 minutes, man. It's been great to have you on. Uh, and thank you for coming back on Milk Road. >> Yeah, it's always a pleasure. Thanks, LJ. >> Want insights on what's moving crypto markets and how we're trading each event? Subscribe to our channel and join the Milk Road daily and pro newsletters and start investing like the top 1%.

This show is for educational purposes only. Nothing we say is financial advice. Investing is risky. Never invest more than you can afford to lose.