Latest / The Paul Barron Crypto Show / $50k ETH + Solana ETF by VanEck🚀 with Mathew Sigel

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$50k ETH + Solana ETF by VanEck🚀 with Mathew Sigel · The Paul Barron Crypto Show

0:07
Crypto markets now on the move. We've got a little bit of news for
0:10
you on the CPI but also around macro and then also we're going to give
0:15
you a surprise around Solana and an ETF that might be brewing. You don't
0:19
want to miss it. Money was Paul Barren. Welcome back into tech path.
0:21
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0:56
Let's get into it today. A couple of things. Of course,
0:58
everybody wondering what is going on with CPI. Well, there you have it,
1:02
one of the biggest drops we've seen in a while. From what was
1:06
three to three in June we expected a three to one, now coming down
1:08
to three point zero. This is fantastic because it appears that the Fed is
1:14
going to get a chance to see a two percent CPI this summer. We
1:19
may see this actually appear that in itself, I think will be a huge
1:23
catalyst for as we see the markets going in very good sign here September FED
1:27
rate cut probability has now jumped to eighty one percent. This is insane eighty
1:34
one percent. I still think it's gonna be a little later, but hey,
1:36
listen, I will not worry if it's a September ray cut. I
1:41
want to get to a couple other things right here before we bring our guest
1:44
on today our investment. This is Kathy Woods talking about defending her strategy and
1:48
letter to investors. A couple of points within the article here is really around
1:52
the macro environment that she and others are faced with. Some stock picks,
1:56
of course, have had some challenging position, but you know, you know
2:00
the arc situation I think most of you will, and that is they're very
2:04
committed to innovation across all the different categories that they invest in, so we
2:08
know what, of course is very into what they call rare and deep value
2:15
territory. Empoyesed for a disproportionately jump once the interest rate cuts begin. She
2:22
thinks that we are going to see massive moves in the market once the chair
2:25
palel and the Fed starts to soften up just a little bit. There's a
2:30
lot of course brewing within the markets right now. So I wanted to bring
2:34
on the expert in this, and this is, of course, is mister
2:37
Matthew Siegel, head of Digital assets over at Vanett. Great to have you
2:40
back, Hey, Paul. How's it going, man? Great, you
2:46
look like you've been You're kind of relaxed there under the circumstances of the markets
2:50
are shuffling. We got round tables happening at the White House, and CPI
2:55
is falling, and you're just like chill, well, yeah, I mean
3:00
we try to zoom out a little bit, you know, a small bitcoin
3:06
correction here. We're off about twenty percent from the all time highs in March.
3:09
But when we look at the past cycles in the twenty twenty one bill
3:14
market, bitcoin had three twenty percent draw downs. In twenty sixteen seventeen there
3:20
were seven twenty percent draw downs, So this correction looks pretty normal in the
3:27
context of what is a very volatile asset. I think there's some specific reasons
3:31
why we've sold off, notably the German government selling Mount Cox starting to distribute,
3:39
But as you noted in the intro, a lot of positive things happening
3:43
on the macro front, Elections getting closer, and we feel good about the
3:46
second half of the year. Listen, you know, Matthew, I always
3:51
commend you because I feel like you've been really hard on the SEC, not
3:54
a bad way, but you're just like calling them to the desk and saying,
3:58
hey, you guys need to do things right. One of the things
4:00
that happened, of course, this week, was the SEC officially ended their
4:03
investigation with the stable coin issuer Paxos. This was busd as, not a
4:09
security. So these again, along with many other situations I won't call them
4:15
losses, but just not wins for the SEC that have happened over the last
4:18
several months we've had on our show. When you look at the SEC today
4:23
and you think about the number of people that are starting rotating out of their
4:27
positions over at the SEC, A lot of people leaving. Where do you
4:30
think the SEC is right now in their stance on blockchain innovation and what we're
4:36
seeing in the greater market. Well, I think they're in the middle of
4:43
losing, losing in the court of public opinion, which is causing lawmakers to
4:49
rethink their votes on this issue, and losing in the courts. And the
4:55
most I think recent notable example of that was Finance winning its case on the
5:02
sale of secondary BnB tokens, and a federal judge in DC ruled that those
5:10
sales are not securities. That's exactly what was decided in the XRP case a
5:15
year ago. So we see, you know, the SEC's legal objection to
5:20
many of these proof of stake coins like eth and Soul, those objections are
5:26
getting whittled away by the courts, and that's part of what is giving the
5:30
confidence here, giving us the confidence to step on the accelerator and put some
5:35
new filings in the queue. Yeah, for sure, I wanted to get
5:39
your opinion on this because back to your point in terms of just the losses
5:43
that have come in this of course, just in CFTC chairman says Illinois,
5:46
of course ruled a Bitcoin and ether are now commodities, so this falls under
5:49
the CFTC. Are we kind of going out of the lions den and into
5:56
the fire with the CFTC as the new maybe the new regul liatory body that
6:00
could be really addressing a lot of things like ethereum and Salona. What's your
6:04
opinion on the CFTs stands. I know, you know rustn Venham, who
6:10
has talked about this before, has been kind of in and out of you
6:15
know, pro I won't say pro crypto, but definitely pro innovation. What's
6:19
your opinion on how the CFTC might handle this? Well? I think with
6:27
you it's become clear that these ethereum spot ETFs are going to launch with the
6:33
SEC's blessing, and so that is the SEC explicitly agreeing that they're that they
6:41
are commodities and letting us file these products like under the CFTC's decision on what
6:49
constitutes the commodity. And since there are futures markets trading on ethan bitcoin,
6:57
uh, you know, becomes clear that these are commodities. I think it's
7:00
the second order effect when you get into okay, so eth itself is not
7:04
a commodity, but is staking ether commodity. Well, SEC hasn't agreed on
7:10
that yet. And what about all the DeFi activity that's happening on top of
7:15
the ethereum protocol. It's pretty clear over the last couple of years that the
7:17
CFTC you know, does not countenance DeFi and has made you know, several
7:24
enforcement actions in the space. If you're going to trade derivatives and you know,
7:29
not be licensed by the CFTC, that's going to be a problem.
7:31
So I think it's like a you know, it's positive for eth specifically the
7:36
asset, but there are still a whole number of unanswered questions that you know,
7:42
could get resolved with Fit twenty one, but from my reading of Fit
7:45
twenty one that it would still be a quite challenging environment for DeFi and DeFi
7:51
tokens. Long story short, I think you're like careful what you wish for
7:56
with the CFTC, is you know an accurate concern. Yeah, that is
8:01
a kind of a concern of mind. You know, anytime we have these
8:03
regulatory bodies, even though we have seen Chevron deference kind of get pulled back,
8:07
so the overreach may start to get a little bit more aligned, even
8:11
even though I think still the clarity back to your point is it could slow
8:16
things down from clarity standpoint, because now you've got Congress that is going to
8:20
have to be making a lot of these much more clear renderings of their laws
8:24
so that it can be read by courts as opposed to basically deferring to these
8:30
agencies to make the rules up. So definitely agree with you. There.
8:33
Here's Nate Garassi. He's jumping in and says, this is a reference to
8:37
the eth ETF as to whether or not July eighteenth could be the day,
8:41
because everybody's looking at a date here, and if you can look at if
8:45
you can look at what's happening with the great scale ethereum, the mini trusts,
8:48
and they're moving some you know, some ethe around. Does this give
8:52
you any indication that we might see this eth ETF actually launch on July eighteenth
8:58
or close to. I'm not sure that it says much about the date that
9:05
these will trade. I think the bigger news here is that Grayscale you recognizes
9:11
that the g bt C outflows after the QUINTF launches were pretty disorderly, right.
9:20
They lost like two thirds of their assets in a matter of weeks,
9:24
and one way to ring fence some of their client assets is by pledging a
9:31
portion of the ethereum inside of eth G into their new spot ethereum structure.
9:39
So I thought that was a modest positive that, you know, the market
9:43
may not see as much ETH selling as before Grayscale announced this, but not
9:52
going to make a call on which day the products trade exactly. Yeah,
9:56
I understand, Hey, we've got fud here eth outl E outflows with the
10:01
ETF launch very likely overblown. They had six weeks to exit near parity if
10:07
you wanted out. So we're seeing a little bit of arbitration selling right now
10:11
in terms of what's happening out there in contrast with GBDC, which was around
10:16
negative six and a half percent discount just two days ago. So when you
10:20
look at that the setup on this compared to what we saw with the Bitcoin
10:24
ETF and the explosion of inflows, we know where those you know, typically
10:30
could come from. Some was the open market, but some was at GBDC.
10:33
What do you think this does in terms of inflows for Ethereum's ETF potential
10:41
going forward once we get the ETF I mean when I look at the etch
10:46
right now, it's trading at basically no premium or discounts into NAV. So
10:54
you know, theoretically investors who want to get out of that product could do
10:56
so at any time without a discount. They wouldn't have anything to put it
11:01
into if they want to keep you know, the underlying ethereum exposure. So
11:05
that's why I think that you know, the great scale kind of spin off
11:07
ten percent into the spot trust is a you know, a good move.
11:13
Yeah. Interesting. Garassi goes on here says if you want to invest in
11:16
the growth of tokenization, eth is like the picks and shovels play. It
11:20
underpins all of this came from Matt Hogan. Hogan has talked about this quite
11:24
a bit. He's a big you know, I will say, he's a
11:26
very forward thinking asset manager out there. What do you when you look at
11:31
you know, dealing with clients and you know, high networth individuals obviously other
11:37
asset managers, do you think they understand ethereum and what it's real potential is
11:43
going forward? Do you think that are we at that stage right now?
11:48
I don't think we are. And I think it's something like a flipping that
11:54
will tell you when we're at this stage, right, because when you look
11:58
at the market value of all the productive assets in the world, you know,
12:03
it's north of five hundred trillion dollars and the gold market is call it
12:09
ten trillion, So the overall market for productive assets is fifty times bigger.
12:15
And if Ethereum can realize its potential as an open source app store that's going
12:22
to offer entrepreneurs and developers a better experience than building on like Apple or Android
12:30
and with a lower take rate, then you know, clearly we're not at
12:33
that point yet, and we're you know, looking forward to educating kind of
12:37
the traditional finance market participants on how Ethereum might be a hedge on some of
12:43
their you know, large fang exposure. By Fang, I mean the big
12:48
Web point Web two dot O stocks. And when we analyze the twenty twenty
12:52
one twenty twenty two bear market, Ethereum actually held up quite well versus many
13:00
of those megacap tech stocks. The peak to trough decline you know, about
13:05
eighty percent on par with Facebook stock, Ethereum actually had fewer down months than
13:11
most of those megacap equities and tech and it obviously, you know, outperformed
13:16
on the upside, we think that this open source app store is taking mark
13:22
a share and taking margin dollars away from these big tech tech stocks, and
13:28
that the traditional allocators will put a little bit in that bucket as they become
13:35
more aware of the thesis. So that's why we put out that monster report
13:39
a couple of weeks ago with our new ethh price target and doing some quant
13:43
work around what is the ideal kind of bitcoin to ethereum mix in a standard
13:50
sixty to forty portfolio, and we're having a good time presenting those findings to
13:54
clients ahead of this launch. Yeah, I think the key here we're very
13:58
much in the same camp in terms of understanding the potential for ethereum and really
14:03
the ecosystem as a whole. To your point, the opportunity here is much
14:07
like it was in the early nineties or even mid nineties when we saw that
14:09
bomb and the birth of a lot of new technology companies that now are part
14:15
of the top tier of the S and P five hundred. So I think
14:18
you're exactly right. The key here is going to be the run rate it
14:22
takes to get that linear to bell curve adoption. For what you're pointing at,
14:28
there's just so many technologies that it touches. Though it's a different game
14:31
now because it touches finance tech evolution around decentralized five and then also just the
14:37
functional aspects of business, so it hits on all those things. I want
14:41
to hint on a couple points. With that being said, ETHTF bullish bears
14:46
short run balshunis He's coming in and say, hey, about a ten to
14:48
fifteen percent of the bitcoin which etf inflow. That in itself would be pretty
14:54
significant and would be considered one of the best ETFs. Yet do you think
14:58
we're going to see that kind of level or something better or a little bit
15:01
less. So we're saying twenty percent of the bitcoin etf AUM within twelve months,
15:11
so you know that would be a total asset base of roughly fifteen billion,
15:16
And we've seen some evidence that you know, each dollar of inflow into
15:22
Ether has a larger price impact because of the lower liquidity for the asset and
15:30
inflect In fact, Ethereum's inflation rate is lower than Bitcoin at the moment,
15:35
and there's even less available on exchange for purchase. So even that kind of
15:39
twenty percent estimate could lead to you know, fifty percent plus rally in the
15:46
price of the token. And just to kind of give some context around what
15:54
what the rally might look like. If we reach five k per ETH,
16:00
which is roughly the previous cycles all time high, that is about a six
16:06
hundred billion dollar market cap, and it's roughly the size of Visa, okay
16:12
in terms of market cap, So ETH is already doing almost as much transaction
16:18
volume as Visa. If we reach ten k, ten thousand per Ethereum,
16:22
that's a one point two trillion dollar asset, and that would be equivalent to
16:26
Visa plus MasterCard plus American Express. And let's just throw out the extreme bowalcase
16:34
because we have it. You never know ETH at fifty k, all right,
16:37
wrap your head around on that about roughly you know, twenty x return,
16:41
that would be six trillion in market cap. Six trillion. What's the
16:45
equivalent asset Apple plus Google? Okay, Right, So if you start to
16:52
if Ethereum can start to make meaningful inroads into the market share of app stores
16:57
by taking some users are away from Apple and Google, you know, getting
17:03
to fifty k ease by twenty thirty it's about a fifty percent compound annual growth
17:07
rate, and that would assume that Google and Apple don't grow it all from
17:12
here. Yeah, exactly. We don't think these estimates are like tremendously aggressive.
17:18
Yeah, okay, I think that. Well, first of all,
17:22
you kind of got me shook on fifty k ETH. That's a pretty significant
17:27
leap. I haven't heard that word come out of anybody's anybody's mouth yet of
17:30
fifty k eh. But yeah, it's not a price target. We just
17:34
like contextual Well, what the world looks like. You know, I get
17:38
you, Yes, I get you. Well, you did hit on something
17:41
that I think is important, and that of course is availability of supply.
17:45
Here's a good example of forty percent of ETH right now basically locked up right
17:49
now. You look at twenty eight percent stake, twelve percent smart contractors and
17:53
bridges, and the supply is shrinking. You know, if you look at
17:57
the overall since June, it's been shrinking. This goes back to your point,
18:03
just availability of it is going to put some pressure on this price and
18:07
demand for even without a clear breakthrough of adoption. You know, this is
18:12
just going to be the the insiders that know about eth that are betting on
18:18
it, you know that have started to say I think I should go a
18:19
little bit further into it. So I'm almost in agree with you. Twenty
18:23
percent of the bitcoin ETF inflows by your you're saying by end of year,
18:30
that's what you're thinking, end of year. Yeah, twelve month launch Okay,
18:33
yeah, all right, within twelve months to launch. Yeah, I
18:36
think that's very reasonable with what the opportunity is here. All right, Here
18:41
was a tweet. This was just a reference of what something you had said.
18:45
I think odds are eighty percent if Trump wins. If he does,
18:48
I think seventy five percent of chance that Salana ETF could be trading within a
18:52
couple of quarters of the inauguration. This came from you when you look at
18:56
Solana right now and the fact that we don't have a futures market, and
19:00
the fact that you know there's that argument that comes into this. Do you
19:04
think it is reality for a Solana ETF to I know you're going to answer
19:10
this, Yes, you guys have fold for one. But I got to
19:12
push back a little bit. I mean, and I love Solon, I
19:15
love what they're doing. The projects are clear. It's a very you know,
19:18
But why would eth not be enough for the modern day investor today?
19:22
Why do we need a Salona ETF. Well, we're in the business of
19:29
designing like intelligently designed investment products and then letting our clients choose what they want
19:37
to buy. So we look at these blockchains as winner take all assets that
19:47
one of them is likely to garner eighty percent plus market share. If Ethereum
19:52
can do that, you know, we think it's worth up to twenty thousand
19:56
per coin. If Solana can do that starting from a much lower base than
20:03
the upside is going to be that much larger. So that's basically the bet
20:10
is let the client decide. And as it pertains to the regulatory backdrop,
20:17
this requirement that an asset underlying an ETF has to have a futures market,
20:25
a regulated futures market of significant size, we think that that is a Gensler
20:30
syop. The SEC has never had such a strict reading of those rules until
20:37
he launched, and we can point to several other asset classes like shipping,
20:44
electricity, uranium where there have been ETFs in the past. But even if
20:51
there were a regulated futures market, it wasn't a meaningful contributor to price formation.
20:56
Even the oil market. Look at the difference between Brent wto There's all
21:00
these different flavors of the oil market. The ETF doesn't require that each one
21:06
pertained to a specific futures contract. We just think that they're being too strict
21:11
in the reading of the law and we look forward to a different administration and
21:17
different sec chair being more amenable to that interpretation. Well, I think you're
21:23
correct. If we do get a different administration, it's probably going to change
21:27
things quite dramatically in terms of innovation and people that are looking for especially financial
21:33
instruments such as ETF's definitely an opportunity here. I want to jump over to
21:37
something that's happening in the NFT side of things. This is, of course
21:41
the US course decide if NFTs are security. This comes on the DraftKings case
21:45
going to trial within this article from aicon, but this came over from decryp.
21:49
There was a statement that you made that you wrote about the significance of
21:55
NFTs companies like DraftKings five percent of earnings. But then you on to say
22:00
that you know an NFT, you know this is set to generate like seventy
22:03
million in HIMARG revenue boostib et cetera. Obviously there's some big opportunity here for
22:10
companies that really understand how to move in this direction around brand IPM going on
22:15
chain, like what draft Kings has been able to do. How big of
22:19
a court decision is this for the NFT market right now? Yeah, I
22:26
mean, let's take a step back and just look at year to date.
22:30
Right what's happened to NFC sales is that they're down sixty three percent, all
22:34
right, NFTs have been obliterated, and it's meme coins which have taken the
22:41
mantle. So meme coins up fifty percent, NFTs down sixty percent. And
22:45
I think the legal challenges are contributing to that decline and as are you know,
22:53
some of Ethereum's scaling challenges. And the coin rise reflects how easy it
23:02
is to create an asset on Solana. So I still think this is growing
23:07
pains. I don't think that DraftKings is going to be liable for this like
23:14
NFTs as securities. I think that they will eventually win this suit. And
23:18
if you look at the coinbase state of blockchain that they just released, they
23:22
had a study on the percentage of fortune one hundred companies that are building on
23:27
chain and that hit an all time high. So, you know, DraftKings
23:32
has kind of company specific issues. I think that relate to the fact that
23:37
they are a gambling platform. Anyway, I don't think it's going to be
23:42
a meaningful have meaningful impact on their business things that are moving back to the
23:48
cyclical scenarios. One thing that has been in you know, in the news
23:53
quite a bit, especially around the elections, is what polymarket has been doing.
23:56
These are these predictive platforms. Have you been following this, Matthew,
24:00
Yeah, it's now the most liquid place to make a political bet. It's
24:03
on poly market. Yeah. I mean that was helped by regulation too,
24:07
right, because CFTC tried to shut down some of these prediction markets and failed,
24:14
and I think that is what opened up poly market to some of this
24:17
viral growth. Look at it early active users, that's daily active users since
24:22
April, you know explosion. This is only going to get I think it
24:25
more relevant because of just what's happening in the elections. We got four months
24:30
now to November, so likelihoods we'll see a lot more activity there. Do
24:33
you think this has a future in kind of taking over the the at least
24:40
the gambling scene, because you've got ESPN BAT out there, DraftKings, many
24:44
others that are sort of kind of gone in this direction, and now what
24:48
is an on chain solution that seems to be showcasing its ability. I think
24:55
it'll be a tougher competitive environment in sports because of the partnerships between the gaming
25:03
platforms and the leagues and teams themselves, and that requires a degree of like
25:08
centralized marketing, which the crypto projects don't have, so kind of specific event
25:17
driven betting, political betting. It's historically been a pretty small market relative to
25:22
sports. I hope I'm wrong. I hope one of these crypto projects can
25:26
gain a lot of market share in sports, but right now it takes a
25:29
lot of dollars to compete in that market, and the DraftKings and the fanduels
25:33
like have those marketing dollars. The crypto projects at the moment don't. Well.
25:38
I mean on the political side, yes, I think there's a huge
25:44
opportunity there, but I also you even look at the scenario around true inflation
25:48
also predictive markets, looking at variations on that along with many other industries,
25:53
I could see this outside the sports betting arena and getting into all things,
26:00
you know, whether it's fashion, oil, outside sports, maybe into companies,
26:04
all sorts of you know, scenarios and angles that could play into this.
26:07
So it's definitely one to keep an eye on. What can you tell
26:12
me anything new about your filing for the Salona ETF that you guys can share
26:18
is what's your current state right now of the ETF filing itself. Yeah,
26:25
so, our exchange partner, the Chicago Board of Exchange CBOE, filed our
26:33
nineteen B four, which is one of the required filings a couple of days
26:37
ago. That will get entered into the federal Registry within the next week or
26:44
so, and that will start the two hundred and forty day clock that the
26:48
SEC will have to either approve or deny our application. So that puts the
26:55
final deadline probably somewhere in March, you know, theoretically early enough for a
27:02
new administration to give new instructions to a new SEC chair, but not certain.
27:08
And that's why I made the comment that you highlighted that I see a
27:14
seventy five percent chance that under a Trump administration they could get something like a
27:18
Salona ETF out the door within six months a couple of quarters. Yeah,
27:22
okay, man, there's a lot happening right now. I don't know.
27:26
We have hard time keeping trace of this. It made whether you look at
27:30
the political landscape, what's happening on the macro side, then you look at
27:33
the project changes that are happening out there, whether it's a ECC revealed so
27:38
much this week. It just is crazy how busy the markets are right now
27:44
around digital assets. So always fun having you on the show. Matthew,
27:48
Thank you so much for coming in today. We appreciate it. See you
27:52
soon, Paul. All right, thanke care all right, you guys,
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so you've got a whole forum that you can chat with other users. All
28:25
that good stuff is available right there at paulburdnetwork dot com and be part of
28:30
that. Of course. If you're out there on X just follow me there
28:32
at Paul Baron. I'll catch you next time right here on tech Path