Ethereum (ETH) $10K Merge Surge
🔥 🔥 Today’s Hot Crypto Topics:
- Rate hike FUD spread to crypto markets, but a bullish turn is coming. (5:47)
- NFTX (with more than $45 million already!) could be the future of NFTs and mass adoption. (21:30)
- Q&A: Keeping your crypto in an exchange or connecting your Wallet to DeFi. (30:50)
- And don’t miss this! Paul’s revealing “rebel stocks” next Tuesday. Details here.
This is a major moment for Ethereum 2.0 (ETH).
“The Merge” is coming.
It was delayed again. But that’s not a bad thing. They want to get this 100% right. So they’re taking the time to do that.
This delay actually gives you more opportunity to stake your ETH.
It’s a rough market. I’m going to be real with you — always.
Short term it could go either way. Long term? I am very #BOP (bullish, optimistic and positive).
It’s only a matter of time for innovation to become the norm.
When the crypto market recovers, I think ETH can shoot up to $10K post-merge. Check it out:
Hey everyone, welcome to this week’s IanCast. This week I want to talk about what went on with the rate hike this week, the market reaction and some things in crypto with Arweave, which is a project I’ve gone over before and something things with the Ethereum merge.
Lastly, I want to get into the alt coin of the week which is NFTX because there was a big thing that happened with NFTs. We’re going to take a look at that as well.
First, I want to share my screen and talk about what’s been going on with ARKK, which is the main ARK Innovation ETF.
As you can see, over the past month there’s been some serious inflows, despite the price continuing to go down. Here we can see one-month flows into ARKK is a net inflow of $365.68 million.
Big money continues to buy in in a big way behind the scenes. This is flying in the face of the actual stock price. It shows they believe the price is going to rebound, it has potential and there is a future in innovative companies. They have a very bright future. They are still growing at a fast pace when a lot of other companies are seeing issues with growth.
These are the ones that are remaining the most reliable in terms of future growth. A lot of these companies, as I went over last week, are trading at way lower multiples in terms of price to sales than even the trillion-dollar tech companies.
There is money still going into these stocks. Unfortunately, the stock still hasn’t turned around. It had a quick run after the rate hike decision, which I believe was mostly a short squeeze, but it also could have been due to the fact that Jay Powell said a 75 basis point rate hike next month is not on the table.
The market priced that in. We’re going to take a look at it in a second. First, we can take a look at ARKK.
This is total speculation, but why not. ARKK is this red line. SARK, the inverse ETF, is this orange line. TARK, the new 2x long ARKK ETF, is the blue line. This just came out.
It provides you with double the return of ARKK. If ARKK goes up, TARK is supposed to go up twice the amount. If ARKK goes down, TARK is supposed to go down twice the amount. One interesting thing I noticed was when SARK launched it was when we had the final run in ARKK.
That was the beginning of the big crash we saw. November 9 is when SARK went live and ARKK was trading at about $120 or a little higher than that. Obviously since then it’s down 55% to 60%. I think SARK had something to do with that because it funded a bunch of shorts against ARKK.
We might see something happen with TARK where this could be a signal of the bottom, just like SARK was kind of the top here, at least within the range it had been trading since May. That was really the top of this range. Then that was the beginning of the fall for ARKK.
We might see the opposite for TARK. Again, this is just total speculation. Obviously there is demand for a product that’s a leveraged ARKK product. This company went and made it happen and brought it live. Again, I am not saying this is absolutely the bottom, but at some point we have to reach the bottom.
I think it’s a good sign overall that this ETF went public and has gotten a good amount of attention so far. I am definitely keeping an eye on that going forward.
Another thing that suggests we’re nearing the bottom — who knows when it’s going to be, but we’re nearing it — is that Tuttle, the company that had SARK and brought them public, sold their assets to AXS. I know I am biased toward growth, but in my view this is a sign that the guy in charge of Tuttle thought, “I can sell this stuff and make a ton of money while they are still popular.”
This was reported on April 4 that Tuttle sold their ETFs. To me it was like he was taking the money and running because how much longer is this going to be a successful product? Shorting ARKK, shorting growth, shorting innovation, obviously there is a limited timeframe for that before the innovation becomes the norm.
And before these companies really start to dominate and the downside is very small. I see this as him taking the money and running and selling these ETFs to AXS. That was another thing I just thought was interesting and I thought I would share.
Rate Hike FUD Spread To Crypto Markets
Going back to the rate hikes, this is the expected Fed funds rate by the end of the year.
The Fed funds rate is the baseline interest rate for the United States. As you can see, since September/October it has gone up in a straight line here, which has also coincided with ARKK going down quite a bit.
It is now at 2.73%. After the rate hike on Wednesday, the Fed funds rate was brought up to a range between 0.75% and 1%. This is still pricing in almost two percentage points of rate hikes, which is about eight standard rate hikes, before the end of the year.
I believe two are in June, two in July and the rest are spread out over the following Fed meetings. As you can see, if we zoom in to an hourly chart, you can see where Powell said a 75 basis point rate hike was off the table. It topped out at 2.89% and dropped all the way to 2.64%.
That’s exactly 25 basis points, which he said was not going to happen. That was also interesting that it had that drop. I think we’ve reached the max here. We are getting to the point where Powell and the Fed are going to take a more dovish stance. Maybe we don’t get back-to-back double rate hikes from here in June and July.
I highly doubt we are going to see to more double-rate-hike meetings. I think they are going to backtrack steadily from here on out. This is now maxed out at 2.89%. The main reason for that is because between GDP growth, consumer sentiment is low, retail sales are struggling.
Consumer sentiment drives GDP. The weaker that gets the weaker GDP is going to become. The GDP report that came out last week with -1.4% for Q1 was way below expectations. It wasn’t even supposed to be negative. The expectation was that GDP grew 1% in the first quarter.
Instead, it actually shrank 1.4%. In the face of possible technical recession — the technical definition is back-to-back quarters of negative GDP growth — I don’t think the Fed is going to stay as hawkish as they have been. But we’ve also seen fears globally with other central banks continuing to tighten.
I know the Bank of England is hawkish overall and that might have something to do with the drop we saw yesterday. After this was reported, the market went immediately risk on. It might have been due to a short squeeze, that’s entirely possible.
Going forward, we are probably going to see more volatility. Volatility begets volatility. The big up and down moves are going to continue until they don’t anymore. That’s just how the markets work. Overall, I think there is so much more upside, especially in growth, than there is downside.
This is just because the Fed has been extremely hawkish for the past 9 to 12 months at this point. I don’t think that’s going to continue. I think this meeting this week was a turning point in that with Powell saying a 75 point hike is not going to happen in June.
That is the first sign they are going to start to go dovish. I wanted to cover that and go over ARKK, the money flowing into that and the projected rate went down by 25 basis points. It’s come back a little, but it dropped 25 basis points as soon as Powell said that.
Next, merge stuff with Ethereum (ETH). Unfortunately, it’s getting delayed again. The merge, according to Tim Beiko who is one of the main ETH developers, said it won’t happen in June but likely a few months after. There’s no firm date yet, but we are definitely in the final chapter of proof of work on ETH.
It’s been delayed time after time. That’s conjured up a lot of bearishness around ETH and a lot of FUD. I still believe it’s going to happen. The team around ETH is still working toward this. They had a very successful test on one of the ETH test nets. I believe it was supposed to be the final test.
They will probably have another one at this point. It was very successful. They have run into something that suggests maybe it wouldn’t be successful if it happened in June. Who knows how big of a deal that would be, right? They want to ensure the merge happens successfully.
If it doesn’t, that would be devastating to all crypto. ETH might fail in general if it happens. They are going to do everything in their power to prevent the merge from being something bad. They want it to be successful. They are doing everything in their power to do that.
They had to delay it again because they probably found something. Maybe it was a 0.001% chance of it happening, but they want to make sure it’s 100% guarantee this merge is going to go well. I am still bullish on ETH. This gives more time for people to stake their ETH, which locks up those tokens until the merge happens, which drives scarcity.
I’m still bullish. I think post-merge, in a good market environment, ETH is going to hit $10,000. That’s going to happen when the merge happens. It’s going to be post merge. I don’t think it’s going to be buy the rumor, sell the news. If the crypto market is strong, I could easily see ETH hitting $10,000 after this happens.
From here, that’s almost 300% gains. I’m still bullish on ETH going forward. Unfortunately we’re in a rough market right now for crypto, growth stocks and all risk-on assets. Short term, it could go either way honestly. Mid to long term I am still very bullish.
One other thing I wanted to point out, in this recent drop in crypto, we are now at the lowest amount of billion-dollar market caps I have seen since last summer when BTC went down to $29,000. I think ETH went down to $1,500 during that time. It was a rough part of the market.
Obviously we are not that low at this point, but we are at the point where market cap is starting to fade for alt coins. Again, 80 billion-dollar valuations. Eight of those are alt coins. Some of those are things like wrapped Bitcoin (BTC) and staked ETH and things like that that don’t contribute to market cap.
Wrapped BTC is basically BTC that’s on ETH or another platform. It’s not additional BTC, so you can’t say it’s another market cap. CoinGecko does list it as that though. Looking at the market caps, it wouldn’t surprise me if we are near the lows at this point, just based on this.
A lot of money has flowed out. A lot of things are down. The sentiment is going to turn when the Fed goes fully dovish, eases up on rate hike expectations. Again, I think that’s going to happen in the next couple months. I do believe crypto is going to turn around.
Even though the crypto merge is delayed again, I am still bullish on that. The overall fundamentals of ETH are amazing. Really nothing else in crypto matches it on that scale, except for maybe BTC.
One other thing that is kinda crazy that happened in crypto is that a typo in a wallet address resulted in $36 million in June tokens going to the wrong wallet. As always, a reminder to everybody, make sure you do have the correct address you are sending to.
This can happen to anybody, even insiders, developers in a project can make this mistake. I am overly paranoid with this. I send a small amount to the wallet just to make sure I got the right wallet. I see that go through and then I sent the rest. Just a warning, reminder to everybody.
If you do send it to the wrong wallet, there’s no getting it back at that point. This can happen to anybody. This was a crazy thing. I can also drive FUD. This happened to drive FUD in the Cosmos ecosystem. That was something else I wanted to point out.
Arweave is now archiving data from their KYVE network to the BTC blockchain. That’s interesting. More and more I am starting to see BTC integrate with the rest of the developed crypto world. ETH is a different blockchain, Arweave is a different blockchain.
BTC seems to be spreading slowly but surely into other areas of the market, which is super bullish. Obviously the data from the BTC blockchain is extremely valuable. It’s imperative that stays intact. I thought it was cool that Arweave is heading the effort to make sure BTC blockchain data is preserved for the long term.
If you didn’t see my overview of Arweave, check that out. It was a few weeks ago. Basically with Arweave if you put data in there you are paying upfront for at least 200 years of storage on that network. It’s very important that BTC is doing this and it’s good to see.
Another cool Arweave, Sam Williams, the founder of Arweave, pointed this out. Another app ArDrive is seeing a 40x traffic drive in China today because people were sharing a locally censored video. In China there is huge censorship. It’s really rampant.
That’s an issue crypto is trying to solve in general. Arweave is one of the biggest proponents of this. They are totally anti-censorship, which I think is awesome. They were able to upload this video to the ArDrive app which stores things on Arweave. People were sharing it like crazy.
This drove a $10,000 grant to Arweave developers to build a storage app on Weibo, which is kind of the Chinese version of Twitter. We might see that roll out. They have it for Twitter, they don’t have it for Weibo yet, but obviously there’s a huge use case for that in China.
That would be cool to see them follow through with that. Next, I want to get into the overall amount of ETH burned. There was a huge thing last week with Bored Apes and a related land NFT sale from that community. Let me zoom this out.
This website is really cool: ultrasound money. You can see from what app the most ETH are burned from a number of different timeframes. This is a one-day timeframe. For example, OpenSea there’s been 589 ETH burned from transactions in the past 24 hours.
If we zoom that out to seven days, you see Otherdeeds, which is that land NFT from Yuga Labs which created Bored Apes NFTs. 55,908 ETH were burned in the past week. Most of that was in a couple-hour period. It was crazy. It really drove up gas prices a lot on ETH.
They are sitting right now at 53 according to Y Charts, 46 according to Ultra Sound. Either way, it was sitting at 50 to 60 before that, then it spiked to 474.57 briefly when that NFT sale went live. The amount of demand for that was crazy. It drove up all kinds of demand on the network.
It also unfortunately drove up transaction fees. It’s a blessing in disguise I think, unless you were involved in buying one of these and you had to pay those fees to do it. This just shows how this mechanism in ETH works with the burn with every transaction.
Again, EIP-1559 coming into play here as one of the most important things to happen to ETH. That’s almost 56,000 ETH tokens that are now out of circulation forever. That’s a really big driver of scarcity with ETH.
NFTX Could Be The Future!
The reason I want to go over NFTX today is because they are a DeFi on ETH platform. They are DeFi for NFTs. The market cap is extremely low. They are the 628th biggest market cap. They are sitting around $40 million to $41 million. Like I said last week with Aave, it’s important to look at the total supply and the market cap relative to that.
Some of these projects coming out have maybe 2% to 5% of the total supply in actual circulation. Then when you look at the actual fully diluted valuation, it’s 20 to 50 times higher than what you’re seeing in the actual market cap. That’s not the case with NFTX.
A lot of the extra tokens not in circulation are held in the Treasury for NFTX itself. So it’s not like there’s going to be crazy inflation like there is with a lot of coins out there. Like I said, NFTX had something to do with this Otherdeed. It has 76 of the deeds from which to choose.
That was as of May 2, so there are most likely a lot more at this point. That was a big deal for NFTX. It drove a ton of usage onto the platform. The APR from staking Otherdeeds spiked to 300%. Basically the way NFTX works is you can deposit your NFTs onto NFTX and earn interest on them.
In response to depositing them, you get fractionalized versions of those NFTs. Say you wanted to deposit one of the Otherdeeds NFTs onto NFTX. In that case, you will get one OTHR token, which is equivalent to the value of the Otherdeeds NFT. Of course you can sell a tiny fraction of that if you want.
It also gives to option to buy a tiny part of the NFT for people who couldn’t otherwise buy a whole one. A lot of the NFTs out there are crazy expensive. Most of the popular ones are still above 1 ETH in the floor price for NFTs. That’s almost $3,000. A lot of people don’t want to spend $3,000 on an NFT.
In this case, you can buy a fraction of it. I think that has a huge use case in DeFi in general. It also rewards people who hold the NFTs because you can earn these APRs on them. That’s extremely valuable to the NFT space overall.
Going back to the fractionalization and why it’s important with Bored Apes especially, the Bored Apes I think are around $350,000 for the floor price right now. A lot of people want to be invested in that, which we saw in the Ape token.
It’s not a fractionalized Bored Ape NFT, but it is a way for people to buy into that brand. That saw a ton of demand. I think it’s still in the top 30 market caps.
Next, I want to take a look at the usage of NFTX. This Otherdeeds sale I think spiked demand for the platform in general and made some people aware of NFTX that weren’t otherwise aware. Just looked at the TVL (total value locked) they have about $46 million. It’s pretty good considering their market cap is just over $40 million.
They have a lot of NFTs now that they hold and that people are earning interest on and trading in a fractional way. They have made $1,341, 011 in fees in the past 30 days. That’s solid too, especially for such a low market cap coin. They are the leader in this space too.
The fact that they’re not even in the top 600 market caps to me is crazy. I’m not saying to buy it. It’s not financial advice or anything, but the price right now I think is solid. Obviously that’s subject to the rest of the crypto. But I think it’s saying something that they are providing such a valuable service with such a low market cap.
They have 2,155 users in the past 30 days. Obviously that’s probably impacted somewhat by the Otherdeeds sale, but some of those users are going to be sticky and there are going to be things like Otherdeeds going forward that is going to drive even more usage to the platform.
NFTs are hot right now and that’s definitely translating over the NFTX. The TVL is at all-time highs. There was the first big wave of NFT hype in August and September. That drove the TVL up over $30 million. Now it’s substantially higher than that.
Another thing we can look at is overall revenue for NFTX.
The amount of money they have already made in May is impressive: $378,600. That’s compared to $1.1 million in April, which was almost a record high but not quite what they had back in August during that main hype cycle.
That’s probably going to be surpassed here in May. They would be at $2 million if they continued at this rate. I think the attention to DeFi NFT platforms is going to be high. I think NFTX is going to capture a lot of that market share.
Looking at OpenSea is another way to gauge NFTs. That’s going to overflow into NFTX too. People buy NFTs mainly on OpenSea. They have a majority of the market share. They don’t sell fractionalized NFTs. The future of NFTs I think is going to be whales buying the popular ones and then converting them into shares.
Then people can buy a share of any NFT. That’s how it’s going to go with any of the really popular expensive stuff. We can see that OpenSea had almost record revenue of $393.9 million in April. January was the highest with more than $461 million.
This is already way higher than August. I think NFTX is going to surpass that this month.
Another interesting thing going on with NFTX is the FloorDAO. Basically you can see why it might take a while for something like NFTX to take off because, first of all, it needs to gain attention. I think Otherdeeds had a big impact with that. Overall, you still need regular users on your platform.
You need a liquid market because if you only have a few Bored Apes on your platform or a few Cryptopunks, it’s illiquid. You don’t get a good price for what you buy. The bid-ask spread is too high in that case. FloorDAO is working to make a much more liquid market on NFTX so you don’t get as hurt with price slippage.
For example, if you wanted to buy 0.1 Bored Apes, instead of $3,000 you might have to pay $4,000 because the liquidity is so low. In this case, with FloorDAO they are aiming to combat that. That’s a crucial part of NFTX gaining adoption. They already have more than $13 million worth of NFTs in their treasury.
What they do is deposit these onto NFTX and then fractionalize them. From there, people are able to buy them. I think this is an important service. It’s good to see. It’s actually associated with NFTX. It’s good to see them roll this out as a way to bolster adoption even more.
If you have a useful product it’s great, but if people aren’t able to use it well, which in this case is low liquidity and high spreads people don’t want to bother with, you’re not going to succeed. I think this is an important part of NFTX going forward.
As you can see, they have some really popular ones here. They have Cryptopunks, Wizard, Mutant Apes, which is a derivative of Bored Apes from Yuga Labs. So they have some high demand items in their inventory. They are working to fractionalize these to provide liquidity to NFTX and provide fractional tokens to exchanges like SushiSwap.
With NFTX, once you fractionalize those you can sell them on an exchange like SushiSwap or Uniswap. They are supplying most, if not all of this, on SushiSwap at this point. There’s also action being taken behind the scenes to expand to Uniswap.
This would be super valuable because Uniswap is still the most popular decentralized exchange, by far, out there. That would be good for them to expand there. That was my overview of NFTX. I think the NFT market is just getting started. We’re not only going to see this with art, we are also going to see this with real world assets.
With Aave last week, I covered Centrifuge and their partnership with Aave. Aave is allowing lending and borrowing to take place with real world assets through Centrifuge. Those can be very expensive. If you are putting some big real estate item on the blockchain, you don’t want it to be a single item.
You want that to be fractionalized. Real estate NFTs, property NFTs are going to be fractionalized. That’s how they are going to gain adoption. NFTX is the number one leading provider of a service where you can fractionalize NFTs.
I wanted to go over them. I think they are an important project. I hope everyone enjoyed that.
Keeping Your Crypto In An Exchange
Lastly, I want to get into a question I got on Twitter. I thought this was a good question and I have seen a lot of people ask something similar. This was from John. He says,
“I noticed I can connect my Coinbase wallet to Aave, Uniswap, etc. What are the pros and cons of leaving crypto in the exchange versus moving it to a wallet and possibly connecting my wallet to DeFis like Aave and Uniswap? Do you have any thoughts about Uniswap? Thank you.”
The pros and cons of having crypto on an exchange versus moving to a wallet, I think the pros would be once you have your money in Coinbase Wallet, they don’t have control of your money anymore. I believe with Coinbase Wallet you get your own private key.
The old saying is, “Not your keys, not your crypto.” If you have yours on Coinbase Wallet, yes it has the Coinbase brand, but it’s not controlled by Coinbase. It’s a decentralized wallet. They will no longer have the ability to freeze your account or whatever. I hope that would never happen, but we have already seen it happen.
Even the CEO of Coinbase said you are better off with your coins in cold storage. The main benefit of that is you have your own private key. I believe, again, I am not 100% positive but I believe it’s the case with Coinbase Wallet.
The cons of that would be if you have your money in Coinbase Wallet I don’t know how decentralized their node providers are. I went over Pocket Network a few weeks ago. In that one I went over decentralization of these relay services. Pocket Network provides that.
There’s also big networks like Infura that handles most of the traffic on Metamask. I am not sure if that’s the case with Coinbase. A con of having your coins on Coinbase assuming they have something like Infura, is if that service goes down it could really so some damage to your wallet and the coins in your wallet.
I think that’s the main pro and con I can think of for having your coins on centralized versus decentralized exchange. That’s something to look into, the decentralized services brought by Pocket Network that counter that downside of having a service where if that goes down the entire network goes down.
It has happened a couple times in Metamask. Thankfully, it hasn’t done serious damage yet, but it’s good to be aware of that. I hope that answers your question.
That’s it for this week. Everybody, thank you so much for watching. Leave more questions down below or reach out on Twitter. I will answer those in future updates. I will see you again next week.
Editor, Crypto Flash Trader