Unchained - With the Merge, Will Ethereum Take Over Bitcoin’s Title as Digital Gold? - Ep. 389

Starting point is 00:00:00 Hi everyone. Welcome to Unchained, your no-hype resource for all things Crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto seven years ago, and as a senior editor at Forbes, was the first mainstream media reporter to cover cryptocurrency full-time. This is the August 26th, 2022 episode of Unchained. Get access to more of my content through Bulletin, subscribe for an exclusive Discord channel, interviews you won't find anywhere else on Unchained, and more. Visit laura shin.billotin.com slash subscribe. Don't miss Mainnet, the most anticipated crypto event of the year, September 21st to 23rd in New York City.

Starting point is 00:00:43 Get $300 off your pass today by visiting mainnet. Events, and entering promo code unchained at checkout. See you this fall at Mainnet 2022. One inch is a top dex aggregator that finds the best rates across multiple networks. Why use a single decks when you can use them all? Get one inch on your phone now or swap on one inch.io. With the crypto.com app, you can buy, earn, and spend crypto in one place. Download and get $25 with the code Laura.

Starting point is 00:01:19 Link in the description. Today's guest is Travis Kling, Chief Investment Officer at Ikigigai. asset management. Welcome, Travis. Thanks for having me, Laura. How are we doing? I'm doing great. I'm excited to have you here to talk about the merge, which has been a hot topic. At the merge, Ethereum will finally move from being a proof of work blockchain to a proof of stake one. And although this sounds like a technical upgrade, the supply and demand dynamics of ETH will also change, and that in turn will affect its price. So can you walk us through what these changes are and why you think they might impact the price of EF? The bullish catalyst here, so I consider this the most significant catalyst in

Starting point is 00:02:01 crypto history in terms of its magnitude and the fact that ETH is the second largest crypto and just what it means. And it's, you know, I think of it as being, you know, even larger than Bitcoin halvings. And the bullish scenario around this, I think is relatively straightforward. Ether is going deflationary, eth is going yield generating, and eth is going ESG friendly, which the world cares a lot about ESG at the moment. So to me, I think the bullish case for it

Starting point is 00:02:33 is pretty straightforward, but I think I'd like to probably talk more about the risks around it today in terms of price action because people talk a little bit less about that and there's a lot right now. Okay, well, if you want to go ahead and type into that, go ahead. Yeah, so, I mean, there's many risks going into this merge during after, in terms of price,

Starting point is 00:02:58 technical design risk, technical implementation risk, hack risk, value accrual risk, price manipulation risk, illiquidity risk, there's a lot of risk. I think the risk is priced attractively, but I don't intimately understand every single one of those risks. And I could just be mispricing one or more of those, potentially grossly mispricing one or more of And I'm, you know, you may learn some new information and very rapidly decide that the risk isn't attractive anymore for any number of reasons. And if you're your long east today, you know, you need to understand these risks. And price could do literally anything, including go down 50% in the straight line.

Starting point is 00:03:39 It just did that like six weeks ago, two months ago. Price could go up a lot and then it could go down a lot on like a fade the news type of thing and then it could go up even more. or the merge could technically work and then price could go up a lot, but then value accrual, which is still an uncertain concept, value accrual could eventually fail, and Heath could bleed out into oblivion like Eos. That's not my base case, but it could happen. And that's kind of the like ETH specific stuff.

Starting point is 00:04:10 And then you've got like this whole other macro overlay that matters just as much. I would argue maybe potentially more than the ETH-specific stuff. Okay. Well, why don't we walk through some ETH-specific questions, and then we'll go in a macro. One of the points that I wanted to pull out was when Ethereum becomes a proof of stake chain, the ability to stake ETH will lock up some proportion of the coins. And I wondered if you had some percentage of ETH holders in mind that you expected to stake. But then I also wanted to ask you about the other issue,

Starting point is 00:04:45 which is that maybe about six months to a year after the merge, those who stakes will also then be able to finally what's draw their money, although they won't be able to all do that at once. So I kind of wondered when you look at those two levers, how you think those factors will affect the price of EF? Just from a trading perspective, to answer your first question, no, I don't have a base case estimate for what percent of Ease is going to get locked up. That overhang, you know, which is not near term,

Starting point is 00:05:14 but coming down the line from a pure like trading perspective, I don't love that. You just, you generally don't love that. It's like, it's kind of a minor version of like the Mount Gok's Bitcoin that's been, you know, locked up in these lawsuits for however many years at this point. And people are always watching for the updates there to see, okay, like when is all this Bitcoin finally going to get into the owner's hands and they can do what they want to with it? But it's like a similar type of situation to a lesser degree, I think, as the staking becomes unlocked and people can do whatever they want you to, just having that big overhang, just from a trading perspective, I don't love that. Yeah. So maybe because that's going to be delayed for a little while, perhaps we won't see that downward pressure in the beginning, but then maybe for a while after we might.

Starting point is 00:06:05 I did also notice that at the moment, the Ultrasound Money website says that after the merge, the amount of usage on Ethereum in the past year, if it were to happen post-merge, would result in a deflation of about 1.5% of the Ethereum supply. And I wondered how much do you expect that would boost the price of ETH, if at all? Oh, this is definitely not financial advice. And I try hard not to go on these types of things and make public price prediction. One thing I will say about that is, you know, the activity levels on East like today or over the last month are, you know, drastically lower than the average over the prior 12 months. So, you know, day one or say, you know, the first month or the first 90 days after the merge, you know, if we're still in this kind of macro driven bear market and there's, you know, we're still dealing with the kind of fallout of everything that this ecosystem has had happened to it over the last couple months.

Starting point is 00:07:05 then you wouldn't necessarily expect that that activity would ramp that much. So I think, you know, it's probably going to be plus or minus, you know, slightly inflationary versus, you know, maybe slightly deflationary, you know, probably somewhere around there just depending on activity levels. But that's obviously, you know, a massive reduction from what the supply schedule has looked like in proof of stake Ethereum. So you are talking about like, you know, I think in a conservative estimate, you know, it's like a probably a 75% reduction in emissions. And in a bull case,

Starting point is 00:07:44 you know, it would be north of 100. Yeah. Yeah. You said proof of stake. I think you meant proof of work at that time. But point taken, yeah. And you're right that when you change the settings on the website for the level of activity over the past like month or, you know, week or whatever, then yes, at that point, it looks like post-merge, ETH would continue to be inflationary. So as we speak, Ethereum's trading at roughly $1,700. And I wondered, you know, once it becomes a proof of stake chain, you know, you mentioned a few different factors. So how would you at that point start to kind of figure out what your price target is or

Starting point is 00:08:25 whether or not ETH is overpriced or underpriced? So there's all those risks specific to Eath that I laid out at the beginning. this conversation. You want to see how the implementation goes. You want to see if there's hiccups. You want to see what happens with this ETH proof of work fork that looks like it's going to happen. I'm not expecting, you know, anything particularly spectacular out of that, but it is going to be a factor that's going to be worth watching. Yeah, which is, yeah, people wanting to continue the old, the original chain. Right, right. And, you know, I think there's a, because you're asking you, this is a very tradery type of question, right? So you're asking like, so to give a traitory answer, it depends a lot

Starting point is 00:09:08 on positioning. So I think you've got to ask yourself the question of like how crowded is a directional ETH long right now. And I think, you know, the crypto, sort of crypto native capital has gotten smoked over the last couple months, right? Everybody knows what's happened over the last couple months. The capital that's left over, you know, I think it's mostly Long East. Now, in terms of the the large institutional capital that came into this space on the way up and came out, you know, just as quickly as the Fed started tightening interest rates, and that's been the price action we've had since November of last year, it's my guess that most of that traditional, institutional, real deep pocket type of capital is remaining on the sidelines for this merge event.

Starting point is 00:09:56 And I think part of that is the execution risk around that. But I think the larger factor there is the uncertainty around macro. And if you just look at, if you just take the NASDAQ and overlay it with ETH since November of 2021, like you can pretend like you're trading the merge, but you're trading the NASDAQ. And the NASDAQ is completely tied to monetary policy from central banks and some other things. but that's really the overarching thing. And there's still a ton of uncertainty in macro land right now that I think is probably not the bat drop that most pools of traditional capital want to see

Starting point is 00:10:40 to be firing into ease. Now, there's a path through the course of this year where you could thread the needle and get improvements on the macro, the couple macro factors that matter most right now. But then there's a whole set of outcomes where that's not so rosy, and you don't get that institutional capital coming in, say, after the merge is complete and it went okay. And the sort of crypto-native capital by itself, I think,

Starting point is 00:11:08 can probably only drive this thing so much higher without getting that extra list of, you know, real deep pockets from non-crypto-native money, if that makes sense. Yeah, yeah, it does. And I have a few more questions for you about institutional interest in Eath. But first, a quick word, from the sponsors who make this show possible. To swap crypto, a user has to choose among hundreds of dexes on multiple networks, all offering different rates and fees. Do you want to avoid that hassle? Swap on one inch, a top dex aggregator built to get you better rates than any single decks.

Starting point is 00:11:43 Enjoy unlimited liquidity across multiple networks and top-level security. Get one inch on your phone now or swap on one inch.i.o. The most anticipated crypto event of the year is back. Join us at Mainnet 2022, happening this September 21st to 23rd in New York City. Connect with 4,000-plus crypto builders and thought leaders for three days of can't-be-missed, keynotes, fireside chats, demos, networking, and more. Get $300 off your pass today by visiting mainnet. dot events and entering promo code unchained at checkout. That's mainnet. Dot events and promo code

Starting point is 00:12:27 unchained. See you this fall at Mainnet 2022. Back to my conversation with Travis. So you said that it's mostly the macro environment that you feel is affecting kind of, you know, whether or not institutional money gets involved in ETH. But I wondered now that most merge when the narrative around ETH changes. You know, there's been this talk of eith becoming ultrasound money at that point about it being this triple point asset, you know, as you mentioned yield bearings, you know, it'll be deflationary, etc. And I wondered, you know, Bitcoin's narrative so far has been that it's got this limited supply. Granted, it will be slightly inflationary for the next, what is it, you know, 120 years. But I wondered, do you see that narrative around digital gold changing because of these changes?

Starting point is 00:13:18 just to ETH or, you know, what's your perception of how the merge is changing the institutional narrative around these two assets? So I'm pretty certain that there's never been more institutional capital, sort of willing and able to buy ETH in size, pretty, pretty highly convicted around that. And there's just a lot more, you know, there's a lot less uncertainty around it. And it's just gotten a lot bigger. And you had, you know, defy and then you had NFTs and gaming. You've got multiple use cases that are happening on layer one smart contract platforms. And you juxtapose that against BTC's narrative, which is as challenged as I've seen it in the five years that I've been paying attention to this.

Starting point is 00:14:07 BTC did not really act as a CPI inflation hedge. I never, you can't find me ever saying it was going to, but other people were saying that. It was not an uncorrelated asset, which I think it was a pretty meaningful ding to Bitcoin's value proposition because anybody that was pitching institutional capital to buy Bitcoin had the page in their slide deck about how you could own, historically just own a little bit of Bitcoin in your overall portfolio allocation. It would juice your returns and juice your sharp ratio just by owning a little bit of it. Your risk adjusted returns get more attractive. And now it's just been trading in line with. with everything else.

Starting point is 00:14:47 But like everything is trading in line with everything else, right? Like it's not just crypto that's been so tied to this. You know, the 6040 portfolio, like bonds have gotten smoked this year. The 6040 portfolios had a very bad year so far. And I think that really just speaks to, you know, this adage of don't fight the Fed and it's all one trade. And those two things have just never been more in place than they are right now. this is J-Pow's world and every asset price on planet Earth basically is living in it. So, yeah.

Starting point is 00:15:20 All right. Well, you know, you sort of hinted at this earlier, but I did want to ask you directly, there's been a lot of activity in ETH futures trading. And I wondered when you looked at that trading, you know, what that indicated for the price of ETH kind of post-merge and beyond. Yeah, it's hard to say because there's some, I would say, meaningful amount of capital that is long spot short derivatives and playing for, you know, getting like a free fork, basically. And it's just kind of hard to know how much of the open

Starting point is 00:15:56 interest in Ethereum has that type of trade on versus, you know, just levered long, you know, the ETH PERP, basically. And then there's, on the ETH options side, there's more ETH options activity than there has ever been before. It just recently surpassed Bitcoin options activity for the first time ever. And you've got options dealers that are, you know, presumably selling calls to people that are bullish on the merge and want to get upside through calls.

Starting point is 00:16:30 And then those dealers have to go do something with that risk. And it's, I would say it's pretty opaque in terms of trying to get a sense of what, you know, if you're, if you just think about all the different entities that are selling calls to the people that are trying to be directionally long, eth into the merge through buying calls, that whole universe of sellers of calls, like what do they do with that risk? Like it's, it's kind of hard to say, you know, they're probably sitting on, you know, some amount of spot east, but then they may go do things in the derivatives market. That would make a lot of sense as well, too, because they're not obviously trying to just be naked short a ton of these calls.

Starting point is 00:17:12 So it's pretty kind of convoluted right now. Yeah. All right. Well, another wrench that could be thrown into everything, as you mentioned earlier, is that the original proof of work chain may be continued. It likely will be continued. And there will even be a coin associated with it. ETHW, I think, is the ticker.

Starting point is 00:17:33 And a lot of analyses say that this chain is unlikely to really gain long-term traction. So I kind of wondered what your perspective was on trading this token. Who is it for? Who is it not for? Is this considered a long-term investment or a short-term trade? What are your thoughts on that? Oh, man. A clean way to think about it is the percent of the market cap, like, ETH proof of work, like what percent of ETH proof of stakes value is it going to trade at? you can go back and look at the BCH fork for BTC back in the fall of 2017. Trading it, you know, I don't know, it was like around 10 percent, got a little bit higher than that for a little while. And there's, you know, some reason to make that comparison.

Starting point is 00:18:18 I think this is, it's pretty different this setup. And I think that the value of ETH Proof of Work is probably going to be very heavily tied to, like, how smoothly does the merge go? if there's like real problems with with the merge for some reason that's not my base case that you know they've been testing this thing extremely heavily for a long time but you just you never know right and in this market i have no doubt that you know there are predatory actors in this market that if they see some sort of opportunity to cause some chaos you know i think history would tell us that that that they would take that opportunity so if there's some kind of hiccups with east proof of stake you know i think that that would directly translate into into

Starting point is 00:18:58 to ease proof of work. But other than that, I would be generally worried about the amount of one-way flow of just selling ETHW that people aren't interested in it. It's a free dividend. The BCH story would tell you that the best time to sell it is basically right at the beginning because it bled out forever after that.

Starting point is 00:19:21 The market knows that. So it's going to be interesting to see just how one way, you know, the EW cell flow is. Yeah. In terms of saying that, you know, this may have happened before, you may not have read my book, but around the Dow hard fork, you know, people didn't realize that the Ethereum Classic chain was going to keep going. And some people were trying to buy it on the cheap.

Starting point is 00:19:47 And then once the token got listed, then you're right. Then there was mayhem. And I think people made a killing. And I did find out that Kevin Joe was one of those people who was trying to get it early on, and he's when making a lot of noise about this for coming up. So as you've kind of sprinkled throughout your comments during our chat, you have talked about macro affecting all this. So here we are kind of focused in on, you know, all these things going on in Ethereum. But when you look at that bigger picture, you know, what do you think

Starting point is 00:20:17 will be the impact post-merge or how much do you think it might dampen any effect of the merge? Yeah, I think you have a big effect. I mean, if you, if it didn't have a big effect, he would be betting on a decoupling, which, like, to my point at the beginning of this conversation about this being the most significant catalyst in crypto history, there's a chance it's significant enough to decouple, but I wouldn't put like all my eggs in that basket. That doesn't feel particularly safe to me. And so, you know, then that the macro setup that we're looking at right now is we're recording this Thursday the day before Jackson Hole. Jackson Hole is going to matter. It's going to be nuanced. It would be my base.

Starting point is 00:20:56 case, I think Powell could say a couple things that lean doveish or a couple things that lean hawkish on the margin and that will have a significant impact on asset prices. I mean, that's what we saw at the July FOMC meeting, which wasn't like outright doveish, but it was sort of dovish on the margin relative to how hawkish he had been for the number of meetings preceding the July meeting and relative to positioning and relative to expectations. and you got this lift and asset prices through the back part of July and the first part of August. So I think it's going to come down to that much nuance again tomorrow. And then sort of whatever happens there is going to affect, you know,

Starting point is 00:21:43 it's going to inform the market's view of what's going to happen with the next FOMC meeting, which is on September 21st, rate decision meeting. So whether we go 50 bibs or 75 Bips in September, there's a good chance that'll get sorted out from this Jackson Hole commentary. And in between tomorrow and September 21st, you've got the CPI print on September 13th, which it looks like there's a decent chance is going to be kind of lower and serve to further firm up this sort of like declining inflation growth trajectory that the market is looking for so that the market can understand the Fed, you know, slowing down.

Starting point is 00:22:25 tightening. That's kind of what I think that path looks like. But then you have to overlay that with quantitative tightening, you know, rolling off the Fed's balance sheet, which is ongoing. They've been running down the Treasury General account since they started QE. So it hasn't really had the net tightening effect that it would have if the Treasury General account didn't have, you know, a couple trillion dollars in it. And then the other really big thing is natural gas supply situation in the European Union due to the Ukraine conflict. And electricity prices are already absolutely through the roof in the European Union. And we haven't even started winter yet. And that is a situation that has the potential to get really bad in a hurry. Their indicator,

Starting point is 00:23:16 you know, you look at the euro, the currency, you look at peripheral sovereign debt yields, CDS, just European equities in general, the market's telling you that it is very worried about this. And Putin, from what I can tell, is in a strong position of power with this. And I would guess that the West is trying to figure out a way to hand him what he wants in order to get movement towards a credible treaty in the Ukraine conflict, in order to get movement towards a credible treaty in to not cause what looks like potentially widespread economic calamity in the European Union due to natural gas prices come winter. But they've got to figure out how to do that while simultaneously saving face on a global scale, which is not an easy thing to do. But I think that

Starting point is 00:24:12 that is probably the critical macro factor. And there is a series of outcomes where you know, that Fed timeline that I just I just talked about is, you know, negative enough. And then this, this gas situation in the EU is negative enough that this massive catalyst in the ETH merge is either, you know, sort of price reaction is either delayed or just like canceled essentially because the overarching macro picture is just that bad. And so it's just, it's just kind of tough right here. Like, it's like, should ETH thread the needle with implementation, should Ease value accrual hold, should the Fed slow tightening, should QT not implode some corner of the U.S. financial market, should the global financial markets remain reasonably stable? Should Taiwan not cause World War III? Should Ukraine not hold the EU hostage or Russia hold the EU hostage over natural gas and cause continent-wide? economic collapse and potential collapse of the euro, should all of that happen, then East should work really well. But that's a whole bunch of qualifiers. And so that's like that's, I think that's

Starting point is 00:25:31 where we're at. Wow. Okay. Well, that was definitely, I mean, quite the overview of factors there. But I agree that, you know, a lot of things that are sort of unrelated to Ethereum itself could really affect how the markets react after the merge. So I love to see what happens. Travis, this has been Wonderful. Thank you so much for coming on Unchained. I enjoyed it. Thanks for having me. Don't forget. Next up is the weekly news recap. Stick around for this week in crypto after this short break. Join over 10 million people using crypto.com.

Starting point is 00:26:04 The easiest place to buy, earn, and spend over 150 cryptocurrencies. Spend your crypto anywhere using the crypto.com visa card. Get up to 8% cash back instantly. Plus 100% rebates for your Netflix, Spotify, and Amazon Prime subscriptions. Download the crypto.com app now and get $25 with the code Laura. Link in the description. Thanks for tuning in to this week's news recap. Tether is not yet abiding by the sanctions on Tornado Cash.

Starting point is 00:26:37 Tether, the world's largest stable coin issuer, announced it would stick to its decision to not freeze tornado cash addresses, at least for now. The announcement came shortly after a report from the Washington Post that alleged Tornado was defying yet. U.S. sanctions on tornado cash. Earlier this month, the U.S. Office of Foreign Assets and Control sanctioned tornado cash, a decentralized cryptocurrency mixer for allegedly laundering billions of dollars. Following the sanctions, Circle, the U.S.-based entity behind the Stablecoin USDC,

Starting point is 00:27:09 froze over $75,000 in funds linked to tornado cash addresses. However, Tether, a Hong Kong-based company whose legal obligations to the sanctions are unclear, has decided to take a different path, as it has not yet frozen any assets related to the platform. According to the statement released on Wednesday, Tether has not received any request from either U.S. law enforcement or regulators to freeze addresses involved with the mixer. Unilaterally freezing secondary market addresses could be a highly disruptive and reckless move by Tether, the company stated. Still, the company said it is in contact with law enforcement almost daily, and it also hinted that it would comply with regulators if it was asked to freeze addresses.

Starting point is 00:27:53 Speaking of Tether, last week, Bdeo Italia, the accounting firm hired by the stablecoin issuer to publish attestation reports, revealed a 58% decrease in the company's commercial paper holdings at the end of the last quarter from the previous quarter. The reduction from $20 billion to $8.5 billion in commercial paper holdings is in line with its promise to cut its exposure to those assets by year's end. Congressman demands answers on the tornado cash sanctions. The news about tornado cash doesn't end with tether. This week, U.S. Congressman Tom Emmer sent a letter to U.S. Treasury Secretary Jenna

Starting point is 00:28:28 Ellen demanding answers on the tornado cash sanctions. Representative Emmer is an advocate of the crypto industry and has addressed many of the concerns raised by the community. These sanctions are unique in that they were not levied against a person or an entity, but against privacy-enabling code, he wrote. After Tornado Cash was sanctioned, Alexei Perzzev, one of the main developers of the platform, was arrested in Amsterdam. Last Saturday, a group of 50 people gathered in the city's Dam Square to protest against the arrest

Starting point is 00:28:59 and demanded Pertsov's freedom. However, on Wednesday, a judge in the Netherlands ruled that Perzsev must stay in jail for 90 days until the initiation of the public hearing. Ethereum merges kickoff date is confirmed. The Ethereum Foundation has confirmed, since then. September 6th as the date for the initial kickoff of the merge. In a blog post, the foundation wrote, following years of hard work, Ethereum's proof-of-stake upgrade is finally here. The successful upgrade of all public test nets is now complete, and the merge has been scheduled for the Ethereum

Starting point is 00:29:33 main net. The transition to proof of stake is split into two upgrades called Belatrix and Paris. The first upgrade, Belatrix, is scheduled for September 6th at 1134 a.m. UTC. In the blog post, the foundation included the links to upgrade the necessary Ethereum clients, a compulsory step for the Belatrix update to happen. Celsius, bankrupt and embroiled in legal battles. Cryptolender Celsius, which is going through bankruptcy proceedings, has filed two lawsuits this week. The first one is against a former business partner, Prime Trust, which was providing Celsius with custody services. Celsius is claiming that when it terminated the business relationship with Prime Trust in June of 2021, the letter did not return all the assets it was handling.

Starting point is 00:30:16 Prime Trust has allegedly kept $17 million worth of crypto assets, and Celsius is now asking those assets to be returned plus damages to be determined by the court. The second one is actually a countersuit against Kifi. In July, Jason Stone, Kifai's founder, had filed a lawsuit claiming that Celsius manipulated the price of the CEL token, failed to hedge against Kifai's trading activities as they had agreed upon, and that the company's financial mismanagement had created an accounting hole of $200 million. Now Celsius is countersuing Kifai and its founder, accusing them of stealing, losing, and laundering millions of dollars worth of cryptocurrency through tornado cash. As for Celsius's financial health, CFO Chris Ferraro said during a bankruptcy hearing call with creditors that the company will likely not run out of cash until the end of the year. Previously, law firm Kirkland and Ellis had estimated that this would happen in October. Ferraro is now saying that Celsius will receive additional funds. from maturing loans, savings on sales, and savings on use taxes on mining rigs, and it will be able to stay cash flow positive for the remainder of the year.

Starting point is 00:31:26 This week for my premium subscription, I interviewed Thomas Brazil, the founder of 507 Capital who has been buying distressed crypto claims since the Mount Cox bankruptcy. He had a lot of insight into Celsius' bankruptcy and discussed the likelihood of its survival. Big name exchanges, I Voyager's distressed assets. According to CoinDesk, the distressed assets of Voyager, another bankrupt crypto lender, are attracting some interest from the biggest players in the industry. FTX and Binance are reportedly among the companies exploring bidding for Voyager's assets, which will have to go through a sale following the Chapter 11 bankruptcy.

Starting point is 00:32:04 Voyager was allowed by a court to pay employees' retention bonuses for up to $1.6 million. Per the judge's decision, the names of the approximately 30 employees receiving the bonuses will not be publicly disclosed. On the topic of troubled crypto lenders, CoinDisc reported that FTCS could end up buying BlockFi for only $15 million. After FTCS gave BlockFi a $400 million credit line, Sam Bankman-Fried's company got the option to acquire BlockFi for up to $240 million. However, CoinDest revealed that the minimum price of the deal is actually $15 million,

Starting point is 00:32:42 and that BlockFi is very far off from the goals established. to be acquired at the maximum price. And for the last note this week on all these bankrupt and troubled companies, 3-euro's capital liquidators got approval from McCourt in Singapore to recognize the liquidation order in that country. This will allow Teneo, the company appointed to liquidate 3A's assets, to dig deeper into what happened with the hedge fund, as it will be able to request access to all the financial records.

Starting point is 00:33:12 The case against NFTs as securities. A lot happened around NFTs this week. Nathaniel Chastain, former head of product at OpenC, filed a motion with the DOJ to dismiss the charges that he engaged in insider trading. Chastain is accused of defrauding OpenC by allegedly buying the digital assets prior to them being shown on the platform's homepage and then later selling them for a profit. His lawyers are arguing that since NFTs are neither securities nor commodities, the charges should be dropped. In addition, Chastain's attorneys made the money. the case that their client wasn't concealing anything, as every transaction was made public on

Starting point is 00:33:50 the Ethereum blockchain. Board apes hit the floor. Speaking of NFTs, the floor price of the Borde A Bia Biae-C NFT collection hit its lowest since the beginning of the year. It was even momentarily flipped by Cryptopunks, the second largest NFT collection by market cap. This drop in the floor price caused concern about a major liquidation in the NFT market because of a situation that arose in an NFT lending protocol called Bend Dow. The protocol basically allows people to put up their NFTs as collateral to borrow ether. As the prices of the NFTs were declining, liquidations were on order and the risk of a death spiral was now a real thing. To make matters worse, Bend Tao started suffering a classic bank run as lenders lost their confidence in the platform's

Starting point is 00:34:36 ability to repay them and decided to what's rather eth. However, at the moment, the issue has stabilized because the Dow voted in favor of an emergency proposal to change its liquidation parameters. The lending rates on the platform, which had spiked to over 100% at the time of the bank run, now at 3% again. In addition, it looks like the recovery in the major NFT floor prices helped as well. In the past several days, BAC's floor price has increased by more than 10%. Anyone saying that this is the next 3AC, Luna, 08 housing crisis, etc., was being sensitive. The scale of the problem wasn't that big for the market, said NFT statistics on ETH,

Starting point is 00:35:18 the director of research at Proof Collective. Another NFT project that saw great gains this week was the Pudgy Penguin's Ethereum NFT collection, which almost doubled in the past few days. One penguin was sold for 400Eath this week, around $650,000. Lawsuit sparks solidarity in the crypto community. YouTuber BitBoy Crypto filed a defamation suit against another YouTuber called Atozzi, who had made a video on how Bitboy promoted a crypto token that later failed. On Twitter, Atosie revealed that he was being sued and asked the community to help him with the funds needed to pay for the legal fees. Jordan Fish, most commonly known as Kobe, donated 100,000 USDC.

Starting point is 00:36:02 Then, Ben Armstrong, the man behind BitBoy Crypto, decided to drop the legal charges because he never intended the suit to be public. It could be argued, though, that he dropped it because of all the best. commentary he was getting on social media. The $200,000 in funds raised will be returned. Once I have the confirmation that the lawsuit is officially pulled, I will be refunding everyone who donated, said Atosie. Time for FunBits.

Starting point is 00:36:29 The latest strategy to 20x your money. Algon Trading, a popular crypto Twitter account, is trying to turn $50,000 into $1 million. You might wonder how. New trading indicators, leveraging the merger, trade? No, the strategy is much simpler than that. He will just do the exact opposite of whatever Jim Kramer says. Jim Kramer is a CNBC host and has become a meme due to his mistaken forecasts. There's even an account called Inverse Kramer ETF. The incredible thing is that the inverse strategy

Starting point is 00:37:03 is working out. So far, Al-God trading has been able to double the net value of the account. I asked Al-God trading if there's a way to see how much you would lose if you followed Kramer's advice. Unluckily for me, he didn't want to spend the time researching my idea. Thanks so much for joining us today to learn more about Travis, the merge, and how to trade it. Check out the show notes for this episode. Don't miss the Unchained Daily Newsletter roundup of the biggest news in crypto every weekday morning. Visit Unchainedpodcast.com to subscribe. Unchained is produced by me, Laura Shin, with help from Anthony Yun, Matt Pilchard, Wanda Ranovich, Pamma Jim Dar, Shashonk, and CLK transcription. Thanks for listening.

Starting point is 00:37:43 Thank you.

Unchained - With the Merge, Will Ethereum Take Over Bitcoin’s Title as Digital Gold? - Ep. 389

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.