Crypto Markets Trends as Traders Anticipate Spot Ether ETFs

Good morning, everyone. Welcome to another episode of Markets Daily. It's Wednesday, July 17th and it's been an eventful week so far in crypto, we found out Monday that the spot Ethereum ETF S will most likely launch next Tuesday. Later that day, former President, Donald Trump announced his pick for vice president Ohio, Senator JD Vance, who's in the past tried to bring clearer crypto legislation forward. He also holds Bitcoin. So I think crypto leaders work quite happy with that choice. He's expected to address the Republican party later today at the Republican National Convention. So we'll see if he brings up his views on digital assets there. Speaking of digital assets, Bitcoin is up by about 2.2% over the past 24 hours. Partly as a reaction to Trump's VP pick Ethereum is at 1.8% trading at $3471 at 10 a.m. Eastern time. Bit wise Chief Investment Officer Matt Hogan wrote in a note this morning that the launch of the Ether ETF S next week will push the price above $5000. So something to look out for there. But let's bring in our guests and make sense of it all. As always joining me now is Michael Anderson co-founder of Framework Ventures. Good morning, Michael morning. Uh Great to be here. Thanks for having me. Thanks for coming on this morning, Michael. Let's stick with the ETF talk here for a second. The spot. Bitcoin ETF S passed $16 billion of inflows yesterday after they took in, I believe 300 million on Monday. How do you think inflows and volume will change or, or will they not change at all? Once the spot Ether ETF S are on the market, do you expect any changes to that? Well, I I think that there's going to be changes just in the fact that there's going to be a relative um market cap discrepancy between Bitcoin and Ethereum. Some of the pundits um Matt Hogan included that you mentioned earlier um have talked about what is the percentage A um going to be the E ETF S versus the Bitcoin ETF S. Both of them have an overhang of G BT C and C respectively. Uh I think the overhang of is different. It's, it's slightly smaller than uh on a percentage basis than what you saw with G BT C. Um And the other factor too uh that I think will start to play out and we'll start to see with E ETF S is that there's over 40% of all e either being staked or being used in DFI in a bridge in an asset uh D I uh collateral protocol. And I think that that overall will, will take over as, as a major narrative because it will take less value going into these ETS less spot buying to start to drive some of the price appreciation that you would expect. And as we've seen with most of these price movements, um price kind of follows narrative and the narrative follows price. Um So I, I would expect there to be a lot more uh activity around the ETF and, and that I think we, we kind of take the narrative as soon as it launches. So with those ETF S mostly most likely launching less than a week from today, I'm sure stratify will certainly, you know, start paying closer attention to the Ethereum ecosystem. If they're looking to invest in it through one or more of the funds, what are some potential pain points in the ecosystem that traders should keep an eye on in the next couple of months? Well, maybe to touch on the first point, which is, I think it's an important moment where in most of the institutional conversations that we have, we're, we're talking to people who are saying, hey, I want some exposure to crypto um Bitcoin. I can understand that it's digital gold. Um The narrative with Ethereum really is OK. It's the app Store for Financial Services and you know, being able to understand that growth mindset that growth, uh asset class, um they can mental model uh how an App store or how that would, would play out if it was any other category. And so I think most investors want to have both um in, in terms, in terms of, you know, what we're looking for um with the uh ecosystem is we're starting to see more activity grow on the, on the on the platform, we're starting to see more layer twos launch. Um you know, gas fees have been the lowest that they've ever been uh due to some of the upgrades that gone through recently. But those are some of the metrics that we track in terms of activity cost um and number of applications building on top of it. Now, let's zoom out for a second. How do you expect the mackerel environment in the second half of the year to impact crypto, especially now that, you know, we'll most likely see a rate cut in September by the fed. Yeah, rate cuts, you know, people are pricing in 90 plus percent in September, uh potentially two by the end of the year. I I think we're about to enter into, you know, a classic rate cutting season. Uh And, and what that ultimately means is, um I believe last week was the highest amount. Uh we hit an all time high in terms of cash in money market accounts. And what I kind of liken that to is basically cash sitting on the sidelines waiting for interest rates to change such that that cash can go off and find a better rate of return. Uh And what I would expect is that as we start to see some of these rate cuts happening, uh a couple of things will happen. The first is, you know, the, the valuation models for these different assets will change, you know, when you're able to change, what is the discount rate, what is that interest rate? And it decreases, the valuation goes up? Um So growth assets will we see a price appreciation? But then we'll also start to see cash moving from the sidelines into some of the more high risk, high reward asset classes like crypto. And so I I would expect that this won't necessarily happen with that first rate cut, but it will start to happen as we see more and more rate cuts over the course of the next 12 months. Now, do you have a price target for Bitcoin and Ethereum for say 2025? No, no price targets? Um I, I think there's so many variables, it's, it's impossible for us to predict. Um But we're, we're continuing to see inflows, we're continuing to see activity. Um And I, I would say it's definitely um something that we're excited about over the next 12 months. Now, when you say cut several cuts by the fed, if you know, they indeed start cutting rates in September, what will the fed have to see happening to cut it further over the next say 12 months. Well, I, I think the same activity that would lead to a cut in September will lead to further cuts over the next 12 months. And, and looking at the dot Plots, the expectations are that we'll probably see another 1.5 to 2% rate cuts over the next two years leading to about 3 to 3.5% interest rates by the end of 2026. And what that really means is that we're going to probably see anywhere from 8 to 1025 basis point rate cuts over that period of time. And you know, the, the classic signals will, will be the leading determination of whether or not, you know, we go higher whether or not we, we go even further than that. Um But it will be inflation and we expect inflation will continue to, to um go down. We expect um you know, the labor market seems to be taking up at least on the last uh employment, unemployment figures that we saw. Um Those are the two mandates of the fed and, and those are the metrics that I'm sure, you know, everybody is tracking very well. Now, we don't talk a lot about gaming here on this podcast, but I do know that framework ventures heavily invest in crypto gaming among other branches. Of course. So for all our gamers out there. What does the crypto gaming landscape look like right now? And what are some other areas that you're looking to invest in in the next year or so? Yep. I, I think the um the crypto landscape if I could pay it to one kind of market narrative right now is that it's just beginning. Um What we have seen over the last six months is we've seen our first multimillion uh monthly active game in the form of pixels. Um In the last 30 days, they had over 1.5 million uh active players uh in, in that game ecosystem. Um And what we're also seeing is platforms like immutable, hitting 2 million uh individual signups onto their passport, their wallet product. Um There's over 275 games launching on immutable in the next 18 months. And I'm sure that for every single gamer out there, you're gonna be able to find a game within that 275 that you find interesting or, or something that you, you really like. Um And so I would imagine that this trend really becomes a pretty large narrative just based off of the sheer numbers. Um And you can imagine some of these games will be wildly successful, tens of millions of monthly active, some of them won't be as successful, but that's sort of the, the na the nature of the beast. Um But I would imagine if we're talking about games this time next year. Um It's probably one of the core categories just like D I has been over the last few years. Um And some of the market narratives that we're, we're continuing to see. We've announced a couple of investments in the A I Space. Um really, really talented founders are coming into the space right now. Um Whether it be from Google uh or Tesla or any of the other kind of notable A I ecosystems of traditional tech companies. Um They're starting to come into the crypto space because they recognize that blockchains are going to be the monetization layer for, for A I. Um It's not necessarily going to be the compute layer as much, but it's gonna be the monetization layer and, and I think we can um work collaboratively with the rest of the A I ecosystem to build that out. Um And so, yeah, tho those are kind of the main, you know, things that we've been looking at over the last couple of months and um always excited to be surprised whenever we meet a new founder working on something totally different. Awesome Michael. Well, I think we have to leave it here, but uh thanks so much for joining us this morning and for sharing your insights. Yeah. Thanks for having me.