Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
Blobs Hit Ethereum, Saylor Engages Beast Mode, and the Sphere Has a Hat
211 Plays7 months ago
In this week's episode of Off Chain, we discuss the following stories:
- The Ethereum Dencun Upgrade
- Microstrategy Doubles Down on Bitcoin... AGAIN
- WIF is set to appear on the Las Vegas Sphere
Recommended![CBDCs: The [Dark] Future of Money (Part 2 of 2) image](https://media.zencastr.com/cdn-cgi/image/width=112,quality=85/image-files/61fc0461fb20e00040aeb09e/5b9f1396-2a8e-418d-82a0-30fd00969266.jpg)
Transcript
Introduction to Crypto Podcast
00:00:12
Speaker
Hello and welcome to the Decrypting Crypto Podcast. It's March 14th, 2024, and this is Off Chain, your weekly recap of the biggest stories in the crypto space. I'm Matthew Housebarbie, and as always, I'm here with Austin Knight. How are you doing, Austin? I'm a 91 out of 100, which is to say, if you look at the fear and greed index right now, it's at a 91. So I might as well be there as well now.
00:00:38
Speaker
Oh yeah. I mean, we're recording today and Bitcoin has dipped to a mere 71 and a half thousand. That is not something I thought that last year that I would be saying on March 14th, 2024. So it's pretty amazing. I can't remember who tweeted this out, but
00:01:04
Speaker
when we broke through 73,000, which I think was like two days ago, maybe even yesterday. I can't even remember now. It's all blaring into one, but this is very obvious when you say it, but like just hearing it out loud was like, you know, at that exact moment, every single person that's ever bought Bitcoin ever is in profit. It's just a wonderful. Amazing. A wonderful thing to picture. And, you know, I mean, even last year,
00:01:33
Speaker
I think during the middle of last year when we were talking about Bitcoin, I think something like half of the Bitcoin supply that was held by individuals was like underwater, right? Like they were in the red. So what a, what a comeback for, for Bitcoin. And, you know, ETH has been on an absolute tear as well. We're going to talk a little bit about ETH today, as well as a few other areas, but
00:02:03
Speaker
Lots to be super positive about. And I mean, we've, we've both been a little bit tied up. We missed a couple of weeks of recording and it feels like in that time period, I mean, I think we've, we've jumped from around the, the fifties, uh, the 50 K marks of Bitcoin up to now and we're in the seventies. So, you know, I think our price predictions are going to get blown out of the water real quick.
00:02:28
Speaker
Uh, yeah, it's, uh, we're two and a half months into the year and my price prediction of 70 K has already been squashed. Nailed it. Yeah, exactly. Well, I'm glad to be wrong. Yeah, exactly. Well, you know, that's the sacrifice that we're all grateful for Austin. I think mine was like 74. So I am hanging in on a thread and I cannot wait to be proved wrong. So yeah.
Ethereum's Denken Upgrade: What Changes?
00:02:53
Speaker
All right. Let's dive into our first story of the day.
00:03:02
Speaker
The much anticipated Ethereum Denken upgrade went live yesterday, 1.55 PM UTC time. And with it, we saw the implementation of EIP4844, which you may know as ProtoDankSharding. We talked a little bit about this back in Feb on a podcast. And we had a pretty seamless,
00:03:28
Speaker
kind of roll out of the upgrade. And so why are we talking about this? Why is this important? Well, with Proto Danksharding, this introduced the concept of blobs, something that you've probably seen via several memes on Twitter, which have been very enjoyable to see. Blobs are important because
00:03:49
Speaker
You know, they pretty dramatically expand the amount of data that each Ethereum block can hold, so by around 10x. So on a prototype sharding now, we're able to carry closer to one megabyte of data in each block, which is up from what was previously anywhere between 50 to 100 kilobytes.
00:04:11
Speaker
And why this is important is much more focused on the layer two kind of roll-ups. The reason why data availability fees are so high is, and why they make up something like 90% of all of the fees that layer two roll-ups like Optimism, Stocknet, ZK Sync, Arbitrum, et cetera, all pay for,
00:04:38
Speaker
is because there's such a limited amount of space, so they're having to post so many more times onto the Ethereum layer one. This is really, really important. And since the rollout of the Denkonert Grade, we have seen an enormous reduction in gas fees on layer two rollups by the order of like around 90% reduction in places.
00:05:07
Speaker
So optimism is probably showing right now as the cheapest. It's under a penny for a transaction. It's like 0.001 or in and around the penny to 0.001 mark for sending ETH swapping tokens, which is pretty incredible. I mean, on the upper end of the scale, I think StarkNet was one of the
00:05:34
Speaker
more quote-unquote expensive at this point and you're talking about six cent for a transaction to be posted. So this is like pretty amazing for end users. I think though what I think is very important, so there's a couple of things here. So what you'll also see is across a load of different layer twos. I think right now we have somewhere in the region of 45, 50 different layer two roll ups that exist on the poster Ethereum right now.
00:06:05
Speaker
A number of them still have fees like, for example, Arbitrum, at the time of recording at least, fees for swapping a token that's close to $1 and for sending ETH is like $0.30. The reason for this is that while Ethereum Duncan upgrade has gone through and Protodank sharding his live,
00:06:27
Speaker
the each of these layer two blockchains still need to make some updates of their own just to kind of support this. So I imagine over the next week, all of these layer twos will dramatically come down in cost. This is great for end users. And I think it's just like one step towards
00:06:47
Speaker
these fees coming down even more. Where I actually think this is so much more important is it's just becoming significantly cheaper for layer twos to operate. And that's gonna mean that we should see this huge explosion in innovation as it becomes cheaper to build and scale networks within the Ethereum ecosystem. So this is a real net good. And I think if you listened to the podcast episode we did on Feb 8,
00:07:15
Speaker
You'll know this is kind of the first step towards full dank sharding, which, you know, this would further increase block capacity up from like around one megabyte now to up to like 16 megabytes. We are a little way away from this. There are other milestones along the way between there where for proto dank sharding, there's further updates that will come or further drive down fees.
00:07:42
Speaker
But, you know, this update is probably the biggest step forward in scalability since the merch. And all of this is happening while modular blockchain scaling is accelerating the background.
00:07:58
Speaker
And that aims to actually take a whole different approach and actually manage data availability outside of the Ethereum layer one. And that's what things like Celestia, EigenDA and others are attempting. And if you're kind of scratching your head thinking, you know, what the hell is data availability? This isn't data storage per se, like long-term data storage.
00:08:20
Speaker
This is just what the rollups will use for somewhat of like temporary data storage that's used to actually post transaction information up onto the layer one.
00:08:34
Speaker
It's pretty critical, but it's always been, and still is the largest chunk of like the fees that are paid, but making some great progress in driving that down. So a net good, but in typical crypto fashion,
00:08:51
Speaker
Uh, if had like a little bit of a sell-off today, you know, you add utility, Austin, make things better. Price go down. Turns out we should just not do anything and make things worse and price might go up. I think that's the solution to all of this.
00:09:08
Speaker
yeah it is bizarre how that always happens but of course you know we we see the bounce backs time and time again so yeah bearish on utility here uh it's probably probably probably the reason why we're seeing an absolute frenzy in the mean coin world which uh yeah we'll we'll cover a little later
MicroStrategy's Massive Bitcoin Holdings
00:09:28
Speaker
But why don't we shift from the scaling of Ethereum to the scaling of a single company that has been pretty much synonymous with the world of Bitcoin. So yeah, let's dive into our next story of the day. MicroStrategy now has over 200,000 Bitcoins
00:09:55
Speaker
coming in at a valuation of over $15 billion. If you haven't heard of MicroStrategy or Michael Saylor, you've been living under a rock. I think it's safe to say that Saylor has brought his company along for the full roller coaster ride that our volatile crypto market
00:10:21
Speaker
has been on over the course of the last few years and it's really just been amazing to see how they've gone from, you know, Sailor really in particular has gone from hero to zero back to hero again so many times. You know, one day he's an absolute genius pulling in huge numbers like what we're seeing right now with this
00:10:43
Speaker
Bitcoin holding's valuation at over $15 billion to seemingly weeks, months later, you'll be hearing about the call for a vote of no confidence and for him to be removed from his post as CEO because he continues buying Bitcoin even when it's way, way down. In fact, he's been known to ramp things up when it's down at times, which is proven now to be yet again
00:11:12
Speaker
a shrewd thing to do. The only thing, the only explanation I have of this, of Michael Saylor and how he manages to ride both of these different waves is that he is either severely mentally ill or he is actually just a straight up lizard person from another planet.
00:11:32
Speaker
And I'm not gonna write off that he could be in the middle of that Venn diagram, but it's, you just gotta, you know, like the English dictionary has just got his face next to conviction. It's just outrageous. You just gotta respect it. The level of conviction is incredible. And yeah, I would put him in the middle of that Venn diagram. I would give that one a porque no los dos. You know?
00:12:00
Speaker
He's you have to be both. You know, there has to be a bit of genius and a bit of insanity. Right. Yeah. To pull something like this off. And, you know, maybe also a bit of psychopathy. Who knows? But so what's interesting about this is that on Monday, Michael Saylor announced that MicroStrategy had just purchased another 12000 bitcoins.
00:12:26
Speaker
for close to $822 million, quote, using proceeds from convertible notes and excess cash. This is after they raised $782 million in a debt sale for the purpose of acquiring
00:12:40
Speaker
additional Bitcoin. And I believe that came out of last week, they offered six hundred million dollars in convertible senior notes due in 2030 to buy up Bitcoin. So the number just keeps getting bigger and bigger. He's such a legend.
00:12:56
Speaker
It is just an absolutely legendary move, isn't it? I can't even imagine some of the bored conversations he's been in. It's incredible. You'd love to see it.
00:13:13
Speaker
I mean, it's yeah, it has to be absolute chaos. How do you go from like last week being like, you know, oh, we're gonna like raise $600 million. And then it's like, oh, actually, that turned into a $782 million debt sale. And then it's like, oh, by the way, we bought $822 million. What are these conversations like?
00:13:33
Speaker
And then how about this Matt, yesterday they announced a further offering of $500 million in convertible senior notes due in 2031. Surprise, surprise to buy up more Bitcoin. It's amazing. It's just, it's amazing. And Saylor is just like such good value on the interviews he does as well. He's just like the most meme-able man in the world.
00:14:03
Speaker
I absolutely love, the amount of like great podcast episodes I've heard over the various different cycles that Sailor has been on is just absolutely amazing. Yeah. I just, I just love it. And he's just like, I think like whenever he gets asked the question of like, how, how will you, how are you going to sell? Like, when are you going to sell? He's just like, I am never going to sell.
00:14:26
Speaker
It's just, I don't think you could become more of a maximalist if you tried. Oh yeah, I mean, he's basically become the de facto Bitcoin spokesperson at this point. I mean, you add it all up and MicroStrategy now holds roughly 205,000 Bitcoin. It's incredible. That is eye watering amounts. Yeah.
00:14:52
Speaker
It actually makes MicroStrategy the top public holder of Bitcoin. And get this, the second largest is Galaxy Digital Holdings. They have a whopping 17,000 Bitcoin. Like it's not even close. Rookie numbers. Tesla is number four.
00:15:12
Speaker
Wow. You may recall Elon Musk did a one and a half billion dollar transaction to purchase Bitcoin for Tesla's treasury a little while back. That makes Tesla the number four largest public holder of Bitcoin in the world with 10,000 Bitcoin. It's just the gap is so huge. It's amazing. And then would he put you fifth on the list, Austin?
00:15:42
Speaker
Oh, Matt, I really love talking to you every week. I can't promise you I'd be talking to you if I were number five on that list. You could think I'd be on Mars or something.
00:15:57
Speaker
Yeah, but OK, so think about this micro strategy has two hundred five thousand Bitcoin. We noted that that is worth about fifteen billion dollars today, but they acquired all of that Bitcoin for a grand total of six point nine one
00:16:14
Speaker
billion dollars. That means that the average price that they paid per Bitcoin was thirty three thousand seven hundred and six dollars. That's incredible. Amazing. Do you think he has it all just in coin gecko? I mean, it just shows like fifteen billion. The app just glitches out because so many zeros to show on the profit. They have to have like a sale of you for it. Do you think they bought all of those bitcoins from those Bitcoin ATMs and gas stations?
00:16:44
Speaker
I think so. Yeah, I reckon that's the only the only logical the only logical way. Yeah. Now, you know, it's actually kind of it kind of shocked me to really think about this because it seems like micro strategy and Michael Saylor have been such, you know, a huge meme almost within the space for so long. I mean, they're fully integrated into the world of crypto. I can't remember.
00:17:12
Speaker
You know, a time where where we weren't talking about them or they, you know, they weren't making some kind of news. But actually, it wasn't that long ago that micro strategy wasn't even involved in crypto. In fact, they began buying all of that Bitcoin.
00:17:28
Speaker
in 2020 with an initial, I think we actually refer to that. I think we refer to that year as zero AD actually. Yeah. That's, that's, I think when this really kicked off and, uh, you know, the, the, the second coming of, uh, of, of sailor arrived, uh, this, this year to just, you know, bring us, bring us back into the, the beauty of the bull market. Uh, and, and I am here for it.
00:17:55
Speaker
But yeah, it feels like way longer. I mean, sailor has been doing this for a long time himself. Right. And so it's, it's, it's felt like forever that micro strategy has as well. Yeah. Yeah. I mean, it's, it's amazing, um, to think that they've been able to acquire so much and to, you know, at least as of right now, post such gains.
00:18:20
Speaker
in such a short period of time, because I think that when you think about a company or an individual posting huge gains in crypto, at least for me, I almost have a little bit of like a defeatist attitude, which I think is wrong, which is that like, oh, if you weren't getting in in like 2013, 14, 15, 16, you're kind of fighting an uphill battle there, right?
00:18:49
Speaker
Uh, but that's just because that's, that's where your head goes to when, when you think about like the real low entry prices. Uh, of course, I'm sure there are other people that think, Oh no, if you weren't getting in at a dollar, then, you know, um, then you weren't really getting in. But I think that what this shows is, um, it's never too late, you know, and with, you know, the best time to buy Bitcoin was probably, yeah, when it was sub one dollar, the second best time is, you know, today.
00:19:16
Speaker
I think it was every single cycle, especially in the ball, you always feel like you're too late. And I think that's, um, that is the real challenge. We're trying to time stuff and figuring out, I feel like, you know, the lesson that many people learn is if you have conviction and you're hit for a long term is just not financial advice, just like dollar cost average into stuff and you'll, you'll feel good about it afterwards. Yeah. I mean, this is.
00:19:46
Speaker
This is like actually a, it's a dollar cost average story almost at scale. Yeah. A hundred percent. And, uh, you know, that, that gives them the leeway to probably have strong conviction in buying at like an all time high, which they, which they did in the last cycle a lot. Right. Um.
00:20:06
Speaker
So here's a thought exercise that I always find funny to think about in microstrategy. What most people in crypto forget is that microstrategy literally does nothing to do with Bitcoin. It's a public company in its own right. It's like a business intelligence company. Imagine working at microstrategy
00:20:26
Speaker
and just selling business intelligence and not being interested in Bitcoin. What a bizarre place it would be to work. I feel like everyone that spoke to you would want to ask you about the Bitcoin stuff. Like, it's just what a crazy place it would be to work. Well, Matt, I will tell you, there is another company in that list of top 10 public holders of Bitcoin that I'm very familiar with. Oh, yeah, I imagine.
00:20:56
Speaker
Yes. And yeah, you know, it's interesting. I imagine, at least from my experience, having been through a similar thing, working for a company that isn't explicitly involved in Bitcoin, although I will say it's much closer to the space than MicroStrategy is, but certainly is a huge holder of Bitcoin and has made some huge bets in that way. You know, you get a lot of internal divide and what it
00:21:26
Speaker
What it takes is strong conviction from leadership and a willingness to be accountable when things are down and when, when everybody's feeling the pain, you know, and that's not a fun position to be in.
00:21:42
Speaker
And I know that sailor has been in that position many times over now as, as the company has gone through these cycles, but also imagine the position that he's in right now. Right. And this just continues to happen over and over again, where his, his conviction is proven to be correct. Um, we said they began buying in 2020 with that initial commitment of $250 million at the time microstrategies market cap was $1.1 billion.
00:22:08
Speaker
today, that company is worth $30 billion. All right. Now it doesn't matter whether you care about Bitcoin or not. If you're just a business intelligence analyst working at micro strategy and your company 30 X in value in the last few years, something's going right. You have to, it was good. Feels pretty good. I imagine. Yep. Yep.
00:22:32
Speaker
In fact, MicroStrategy has purchased close to 16,000 Bitcoins since the start of the year. Two and a half months in, 16,000 Bitcoins purchased. And, you know, if you look at their stock, their shares are up 180% this year. And last year, their shares grew 346% in value. In fact, its stock is growing faster than the rate of growth of its Bitcoin holdings.
00:22:59
Speaker
And a can accord analysis showed that micro strategies, equity value premium over its Bitcoin holdings is somewhere in the neighborhood of 99%. So there's a lot of different ways to interpret that. You could on the one hand say, Oh, are they being like overvalued? Is this a hype train? Definitely. There's probably part of that. On the other hand, you could say that maybe the market is pricing in the long-term plan and conviction that the company's leadership has.
00:23:28
Speaker
Yeah. And I think that's the, that's the play here, right? Um, looking at, you know, their annual revenue is just under 500 million. Right. You know, that's, it's not a lot of money. Um, and you're probably looking and that, that was a slight decline from 2022 ever so slight, right? So, you know, like you look at that, maybe if you were like comparable,
00:23:58
Speaker
with like an attractive multiple on top of that in business intelligence, SaaS. Maybe you're looking at like a $8 billion business if we're like kind of being generous here. So like, you know, looking at it through that lens and then layering on the fact you've also got $15 billion worth of current market value of Bitcoin that's like, you know, hard backing to the company.
00:24:28
Speaker
It's, yeah, it's pretty attractive. I get it. And I think it's been interesting. Pre ETFs, I feel like MicroStrategy and Coinbase were often used as like a proxy security that you could buy to get exposure to Bitcoin really without actually buying Bitcoin, which has been kind of interesting to see. But yeah, the MicroStrategy story
00:24:56
Speaker
you just you feel like this this is just going to be a story for the ages uh like regardless of where this nets out this is in its own right even now today a fascinating story of just complete conviction um super cool all right let's talk about the whole other end of the spectrum in our final story today
Meme Coin Market Surge: What's Driving It?
00:25:23
Speaker
It wouldn't be a bull market if we weren't talking about meme coins. And let me tell you something. There are a lot of people talking about meme coins right now because they've been on absolute tear. And the leader of the pack has been a cute little dog wearing a beanie hat. That is a dog with hat. And I, you just, I,
00:25:48
Speaker
I try sometimes to make sense of the meme coin market and I realize that I'm already approaching it incorrectly by trying to understand any kind of logic in amongst all of this. But with the meme coin represented by Dog with Hat, it just did a $3 billion market cap. That is just a casual thousand percent plus move since the start of the year.
00:26:18
Speaker
I owned a little bit of With back in November, 2023.
00:26:28
Speaker
which I sold for a $90 loss in December. So follow me for more great trading advice. And that marked the end of me ever buying a meme coin ever again. I'm wonderful at round tripping this stuff. This is not where my strong suit is. But when the story is not that I am just a terrible DJ, it's that
00:26:56
Speaker
you are going to most likely hear a lot more about this meme coin over the next coming kind of like weeks and months because outside of just attracting the attention of the crypto degen community and even being mentioned a couple of times on Bloomberg, which I watched live, which was pretty hilarious, where I think that they said that
00:27:25
Speaker
Dog with hat has captured the crypto zeitgeist, which what a statement from from Bloomberg. But in an attempt to kind of continue to build on this momentum, the community has been kind of trying to do like a bunch of these bigger PR stunts. And most recently, it had these grand plans to get the Las Vegas sphere, which I'm sure everyone listening has probably heard of if you haven't.
00:27:54
Speaker
Google it. It's freaking amazing. It plans to
00:27:59
Speaker
pay to just have a giant image of the dog with hat on the Las Vegas sphere. So to do this, they believe that they needed around $650,000, I think it was. Well, they raised this in four days from donations from the community. And now they're gonna use this to put the big dog up on the big sphere. So I am sure,
00:28:26
Speaker
there is going to be a frenzy that kicks off around when this happens um unfortunately for the rest of us that's it it is uh the top signal that we have been waiting for the bull market is over sell everything and uh i'll see you in three years for for the next bull um no of course uh that is not financial advice uh and if i
00:28:51
Speaker
if I have at least given you a sense into my ability to predict the price of meme coins and otherwise, you know, probably don't trust me on that front. But yeah, what do you think about this? Full of deep fundamentals here. Here, Austin, are you super bullish? Oh, well, I mean,
00:29:11
Speaker
I do imagine that of the, what did you say? Like $650,000 that they're going to spend on this sphere placement. I'll bet that the market cap goes up in excess of that after they do this because the amount of media attention that the Las Vegas sphere pulls is incredible. And I mean, look at this, like it hasn't even happened yet and it's already being talked about.
00:29:39
Speaker
The people that made those donations, I imagine most of them hold the coin itself and are expecting that they're probably going to get a return in excess of their donations. And that respect, it seems like a bit of a smart investment almost. The sphere itself, I don't know if you've seen it, Matt, but it really is a sight to behold. I'll tell you what. I haven't seen it in person, but you can see all the videos, but it looks
00:30:05
Speaker
Unbelievable, really. Yeah. And I do absolutely love the idea of this just being plastered on. Yeah. And then it begs the real question here that I'm sure everyone here is thinking is when will we have the WIF spot ETF? I'm sure BlackRock could be.
00:30:26
Speaker
eyeing this up as the next big AUM driver for them. So, you know, stay tuned for that. You heard it here first with ETF in the works. I'm sure, no doubt, Larry Fink will be after he's finished listening to this episode onto his minions to get that happening. So with that, we'll bring this episode to a close. We've got a lot of exciting time and it just shows that actually maybe Ethereum shouldn't focus on
00:30:56
Speaker
blockchain scalability and instead maybe all we just need is Vitalik with hat on a Las Vegas to take us all to Michael Saylor territory. All right, Austin, it's been a pleasure. I'll see you next week. See you next week.
00:31:33
Speaker
The contents of the Decrypting Crypto podcast should not be used and are not intended as investment advice. Please do your own due diligence before making any investment, cryptocurrency or otherwise.