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Today’s episode of “Markets Daily” begins with a minute of markets updates, followed by an interview with host Jennifer Sanasie and Leo Mizuhara, CEO of Hashnote on layer 2s to watch, the ongoing Coinbase versus SEC case and the resurgence of the Solana ecosystem.
This episode was hosted by Jennifer Sanasie. “Markets Daily” is executive produced by Jared Schwartz and produced and edited by Eleanor Pahl, alongside Senior Booking Producer Melissa Montañez. All original music by Doc Blust and Colin Mealey.
Audio Transcript: This transcript has not been edited and may contain errors.
According to CoinDesk Indices, at 8 a.m. Eastern time, bitcoin was trading down 2.18% over the past 24 hours at $40,802 after another disappointing week for bitcoin. Meanwhile, ether was down 3.95% over the same time period, sitting at $2372. Today’s ‘Mover’ in the CoinDesk Market Index is Cartesi, ticker CTSI, up 37% on the day. In traditional markets, both the NASDAQ and the S&P 500 rose over a percent in the last trading session. Notably, the S&P 500 reached a record high Friday, bolstered by strong performance in the tech sector. Stock futures are looking positive to start the week as traders aim to build on Friday’s standout performance. And in commodities, the Brent crude benchmark was trading at 75 dollars and 88 cents a barrel while gold was trading at 2029 dollars an ounce.
JENNIFER SANASIE:
For more on the markets action, let’s bring in Hashnote CEO Leo Mizuhara.
LEO MIZUHARA:
Hey, good to be back. Jen. How are you?
JENNIFER SANASIE:
I’m great. Leo, Happy New Year.
LEO MIZUHARA:
Happy New Year. Very exciting start to the new year.
JENNIFER SANASIE:
It has been a very, very exciting start to the new year. Let’s start off very broadly. What market trends are you watching? And I think I know what you’re gonna say.
LEO MIZUHARA:
Well, we’re obviously all watching bitcoin and how the new bitcoin ETF has changed our outlook on bitcoin and the influence that we’re expecting there. But I think the real story post-ETF has been Ethereum’s outperformance as we’re coming out of this. I think the market has really rotated from the story leading up to the ETF being that bitcoin is going to be bought up to the next story, which is potentially that Ethereum ETF is coming out. I would even suggest that we’re going to continue to look forward. And so the questions become what’s after the ether ETF? Are we looking at staked ETH, for example? You know, we’re quite focused on that at Hashnote right now in terms of being able to provide staked eth funds and altcoin funds as well. So I think the outperformance of eth is interesting and I think that continued rotation is going to be the story of the first quarter here.
JENNIFER SANASIE:
Let’s talk about eth because everyone was expecting the price of bitcoin to rally on that initial announcement and eth took off before bitcoin did. Were you expecting to see that? And how do you expect to see ether’s price progress over the rest of 2024?
LEO MIZUHARA:
Yeah, we had mixed opinions here at Hashnote actually, my personal opinion was that the bitcoin ETF is a big deal, but it’s going to be a slow trickle. Right? As RIAs come on board, more money managers start to onboard the ETF, we’re gonna see a lot of flows into bitcoin. And that’ll be big over the course of 2024. But everyone was expecting this big jump perhaps the weekend after or the week after, and that was not really my view. Although to be fair, you know, several others on my staff did believe that this would be a continued inflow, and they would see much more coming straight out of the ETF. I think it’s quite telling that Ethereum had its rally and hasn’t sold off the same way bitcoin has thereafter. And I think that’s really a rotation into what we’re looking for next, that Ethereum ETF is almost certainly on the horizon. I think Ethereum has a lot of interesting features, including the fact that it has a natural inborn yield provision or a dividend provision, depending on how you look at staking yields. And so, you know, I think staked ETH funds are going to have a lot of a lot of room to run over the next year. Not a lot of reason for people to stay in Ethereum ETFs, if they can get the dividend yield or the staking yield within a fund vehicle. And the next step after that is almost certainly altcoins. So we’ve seen a big run up in Solana, we’ve seen a big run up in Ethereum Layer 2s. I think the use cases around the Ethereum and the potential cash flows that come off of some of these Layer 2s as well as Ethereum itself are really interesting to investors going forward.
JENNIFER SANASIE:
Let’s talk about those Layer 2s. We saw some of the tokens associated with Layer 2s also rally on the news of the spot bitcoin ETF approval. What Layer 2 tokens are you watching?
LEO MIZUHARA:
Yeah, that’s right. We saw a lot of, I think the whole ecosystem really rallied after after the bitcoin ETF. It kind of gave the whole industry some credibility, right. We’re watching some of the big ones around particularly Arbitrum, we’re thinking about out how to think about the Optimism layer as well. Matic is a classic Layer 2, although it hasn’t seen as much of a rally as the other ones have. I think one of the things I you know, Coinbase stock is actually a good way to play the Layer 2s right now as well, as Coinbase is not going well, it doesn’t sound like Coinbase is going to come out with a base token. But the profitability of the Base Layer 2 will go directly into Coinbase stock. These are interesting in that they can be, they can be analyzed more like traditional financial instruments, they have a business model that is almost like a secondary market reseller, they take blockspace that they are purchasing on Ethereum and reselling it to to Layer 2 or a secondary market users. And I think that’s going to be really appealing to Wall Street going forward. The fact that some of the layer ones like bitcoin have some sort of monetary value, they feel like gold, I think will give way to this very interesting, easy to analyze set of features on Layer 2s, and thus make them very appealing for Wall Street going forward.
JENNIFER SANASIE:
On the topic of Coinbase’s stock, we are waiting for judge to make a decision on whether or not the case the SEC brought against Coinbase is going to get thrown out. If it doesn’t, do you think that’s going to have a bearing on the price of COIN?
LEO MIZUHARA:
I mean, it’ll have some bearing. But I think the fact that it’s getting taken so seriously is very interesting. Generally speaking, getting these cases thrown out, my understanding is it’s quite difficult and rare. However, the fact that it’s getting so much airtime and there that the judge is taking it so seriously. I think it’s a very revealing in terms of how contentious this case is. And even in our initial oral arguments or in her response to the oral arguments, she showed a very good understanding of what the problems at stake are. I believe she said something along the lines of “You know, I’m presented with the specter of collectibles being regulated by the SEC, which includes things like sneakers and trading cards and luxury watches.” Like it all feels very out of the purview of the SEC, typically. But she has a very clear understanding that that’s the that’s the slippery slope that she’s standing on the precipice of.
JENNIFER SANASIE:
We’ll continue watching what happens in that case. But we can’t talk about the markets these days without talking about the Solana ecosystem. It is really making a comeback at the beginning of 2024. SOL has seen some major gains along with some of the meme coins in the Solana ecosystem like Dogwifhat, which I always have a really fun time saying and Bonk. Are you watching anything in particular there?
LEO MIZUHARA:
Yeah, I’ve always been a fan of the Solana ecosystem. I think the tech is really interesting. Certainly, we’ve seen a lot of renewed activity on Solana. It’s really picked up. At one point, Solana was seeing more activity in DeFi than Ethereum, which was one of the big headlines. It might be worth noting that even at the recent peak, it’s still about 10% of what it was at its like at the real peak in 2021. Also, perhaps worth noting that while the DeFi activity on Solana might be more than that of Ethereum, if you add Ethereum plus to Layer 2s, it’s not quite as stark that Solana is is taking up so much energy. But, certainly interesting to see the activity, I think they have a great product there. I think the meme coin stuff is not really my purview, so I don’t I don’t understand any of that, unfortunately, but it’s quite funny. I mean dogwifhat, I don’t have any, I wish I did. The other layer ones the other layer ones I’m looking at right now our guys like Near and Tron. I think they are also doing some interesting things, I know Near is building is really looking to build some real world use cases. And Tron is super interesting just because of the amount of stable coins that are trading on Tron. But yeah, there’s there’s a lot going on and alt layer ones and I think it’s showing a very clear use for a multi layer one ecosystem moving forward.
JENNIFER SANASIE:
Leo, you’re not the only one that doesn’t really understand what’s going on with that meme coin. So you’re in good company, but they are fun to watch.
LEO MIZUHARA:
Yeah, I wish I understood it better. I say it’s a place where you get the real volatility, right. But nevertheless, I also am not really an art collector, so you know.
JENNIFER SANASIE:
I don’t I don’t have the stomach for that kind of volatility. Leah, thank you so much for joining “Markets Daily” today. That was Hashnote CEO Leo Mizuhara. That’s it for today’s show.
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