A highlight from 1275. Ethereum ETF Launches! | VanEck Predicts $11,000 Ethereum
All right, so let's roll into the ETF futures launch today. It has happened. This is going to be a big episode for you guys. You don't want to miss this one. If you're an Ethereum lover or maybe you're just trying to venture into crypto for the first time and you're finding out, hey, there's an ETF futures out there on this thing. We're going to teach you a little bit about that. My name is Paul Baron. Welcome back in The Tech Path. Let's talk a little bit about Ethereum, some of the projects it could affect, and also its future. That's what we're going to try to break down for you. I think you guys are going to like this. James Seaford, he's been on our show before, one of the ETF experts over at Bloomberg. He tweeted, updated version reflecting the change due to the end of the Kelly and Hashtag's partnership will just be the Kelly ETF's product. And he kind of breaks it down. But the point is, is you've got the ETFs that have launched here with VanEck leading the way right now. Of course, we've got a whole litany of these starting to roll out now. So this is going to get interesting around the ETFs as when it comes to the futures ETF for Ethereum. And we'll show some stuff on this and how this plays out. But very, very interesting. So further over here, here's kind of just the layout of the VanEck. Obviously the cheapest total expense ratio at about 0 .66. So one of the lowest fees out there in being able to get into an ETF for sure. VanEck also is starting to do a little bit of advertising. This is kind of interesting with them actually starting to promote an Ethereum ETF future. This is crazy. So truly, and this is obviously institutional finance, so good stuff out there. I want to play a clip of them talking about this. Let's go to that. Ethereum has emerged as the system for an age where connections are no longer bound by location or space. We're not just using the network. We are the network. So when you're ready, enter the ether. Now you can tap into Ethereum's potential with the VanEck Ethereum strategy ETF, EFUT. All right, there you go. Big, big news because that is mainstream advertising. And when you get into mainstream advertising, it means you're going to be getting into mainstream investing and investing is going to start to shift that. That's why ETH and this ETF is such a big thing. It's why we're seeing a little bit of movement on Ethereum itself. VanEck, of course, their Twitter account says, what sets the EFUT apart? Typical ETF setups don't give futures, good tax benefits. C Corp is set up now designed to have potential for better performance after taxes for people who invest in a long time. So there are some apparent tax benefits here that VanEck, of course, is touting. So if you are in that case, make sure and, you know, investigate it. Let me know what you guys think. Further into this, just to show you where you can get this, now you can invest through your brokerage account in Robinhood, SoFi, Charles Schwab, E -Trade, Fidelity, pretty much anywhere you can buy EFUT. So easy to do and easy to get into. I want to go to this next clip right here that kind of breaks down a little bit further into what VanEck is trying to do with Ethereum as a whole. And this is Mr. VanEck himself What do you see coming in the crypto space that you thought it was important enough to get your firm that was established in the 50s moving towards this new area? Talk about Ethereum and there was CryptoKitties and all the potential of the blockchain. It felt like a lot of talk back then and a lot of PowerPoint presentations. But over the last three years, especially this year, I mean, it's just amazing how many software projects are not only coming to the market, but also upgrading in a very significant extent. And that includes Ethereum. I see three major areas of finance being potentially disrupted. One is the banking and brokerage. The second is payments. And the third is banking and lending. I think the larger point is that Ethereum is the leader and Ethereum is making enhancements, if you will, to its software. And so it's getting better over time. I like the fact that we're starting to see real business people recognize what's happening because this is one of those things that happens in those early curves. And that I think VanEck is obviously all in. But there's many of them that are all in on this. And that's including companies like Fidelity. You look at what ARK and Cathie Wood has been talking about in terms of Ethereum growth. So where is Ethereum going as a whole? Well, here is a report by VanEck talking about Ethereum's price prediction. And this was $11 .8K by 2030. Now, I want you to think about that because Ethereum right now trading around $1 ,700. And look at that kind of growth in a very short period of time. We're talking about 2023, end of right now as we're recording this video. That's an accelerant that's pretty heavy. Let me go through a couple of things they highlighted in the report. So it's revenue rising from an annual rate of $2 .6 billion to $51 billion in 2030. Big move. ETH takes a 70 % market share amongst smart contract protocols, which implies a token price of around $11K by 2030, which we discount to around $5 .3K today. So that's what they think the core value is. And then we value Ethereum by estimating cash flows because they're kind of treating the chain much like a business would be treated in terms of revenue and et cetera. A couple of points here that they look at here in their revenue price targets. You see the base case, bear case, and then the bull case. $11 .8K right there on the base case. $3 .43K on the bear case 2030. And then a $51K bull case. That's $51 ,000 per token right there on the bull case. So a lot in terms of confidence around what this is in terms of Ethereum as a whole. There was a We introduced a novel revenue item called security as a service, which is interesting, which is going to help businesses will be utilizing security through the ETH ecosystem to enhance, obviously, security around businesses themselves. So another big advantage there. Since ETH is a bearer asset, ETH can be locked behind some businesses or protocol guarantees to act honestly. So it's another way for how blockchain is permissionless. And it makes it easier for so much of what we see in Web2 to be completely revamped in Web3, which is what Van Eck was talking about there around blockchain and what Ethereum is doing in the banking space, the investment space, tokenizing a lot of things that we typically have to have these intermediaries to be talking to. Further into this report, we assume that 5%, 20%, and 10 % of the finance, metaverse, media, and tech infrastructure activity will move on chain. And what they're looking at is the base case, bull case kind of scenario that plays into finance, metaverse, and media, which is kind of an interesting mix between those. But media, we've talked about one of the reasons we do what we do. We believe that media is going to be moving on chain in the future. Further into this, let's see, we have one more couple of points here. Yeah, all right. Base case 2030 price target $11 .8 to Dermot valuation today's dollars. And then we find today's discounted price to be around $5 ,300. So not a bad value if you're looking at the overall on this. Let's go over to another clip here. And the other clip I want to get into is Matthew Siegel and kind of how they got to this level. Listen in. We're seeing a base case for 5 % or so of revenue banking is applied in some way to crypto and public blockchain. So that'd be the base. And so we dial it up a notch to 10%. Likewise, we do the same thing with each of the other categories, metaverse infrastructure, the bear case, we pull that down to 1%, 5%, 1 % respectively. And the idea behind that is that we see regulatory climate or adoption curve failing in each of those from the bear, hyper bear scenario. Not only is like the end markets not using blockchain, but Ethereum has a very small market share. Our assumption in the base and in the bull case is there's thousands of interchangeable L2s that don't have any real way to differentiate themselves. And so in that kind of scenario, you can see the cut rate that Ethereum can take of those settlements would be much, much higher or the underlying businesses. In our base case, we assume that Ethereum will take 70 % market share of all open source blockchains. And when we do our models on Solana, like that, our base case is that Solana takes 70%. And then we see what type of upside we get when we put in those assumptions. And we look at owning each of these tokens is basically we're owning a bunch of call options that each protocol will become the dominant protocol, even though it's impossible that they all could do so. And then we manage our position size based on what type of upside we see. Most of our deep dives have been on either layer ones or application specific. We have not done one of these models for L2s. And I think there's just more uncertainty around how that's going to play out. All right. So those were the VanEck analysts breaking this down that were part of that report that we just showed just a minute ago. So both of them kind of indicating that obviously ETH in a very bullish case, also Solana in a very bullish case. So another thing that is happening within VanEck, which is kind of interesting, is this right here. So they announced, let me kind of zoom in on this for you guys, that they intend to donate 10 % of our ETF profits into Protocol Guild for at least 10 years. So Protocol Guild obviously designed to help the ETH ecosystem develop, prosper, build on new Ethereum projects that are really kind of growing the ecosystem. So that is a pretty big statement, but it's also kind of investing in the infrastructure. It's interesting because you didn't really see that happen during the evolution of Silicon Valley, which is kind of where I case what's is we're in that kind of zone. They talked a little bit more about it. I'm not going to buy ETH Futures ETFs, but if I was, I would buy VanEcks mainly because they're doing what they should be doing, and that is supporting the industry and supporting where the growth is going to come from. So that's always benefited. I think the interesting thing there is that the space likes it. Here's Eric Balshunis, and they're off. ETH Futures Derby underway. VanEck is in slight early lead. Although it looks like a few of them are not necessarily out of the gate. We'll post updates as we go. VanEck, of course, leading the way right there and you've got Valkyrie coming in with a little bit of activity as well. VanEck with their low fees and what they're doing as an overall strategy might be the winner here. Remember, they were the first one. So it goes back to first mover. If you look at the current ETH Fut, of course, it's very early trading, but you can kind of see the big boom and then a little bit of a slight down where they are holding right around $16 .91. So interesting stuff. Let's go over to this next clip. This will break down a couple of things, I think, when you really consider what the store of value argument is around Ethereum. Let's just play this next clip. You'll get what I'm saying. So the whole exercise of the store value discussion is a little bit, you know, I really have to put a big caveat in there because what I'm really doing is mind reading. I can't point to a statistic and say, people, there was no poll that says I bought Bitcoin because it's a store of value. Things could be built on top of Bitcoin as well. And maybe they're just saying, oh, no, actually, I think Bitcoin's the best smart contract software. So I'm not a mind reader. So these are kind of generalizations and best guesses based on the narrative. And if you look at the transactions, on -chain Bitcoin transactions are about $400 ,000 a day. And that hasn't changed a lot over the last several years, which I think is interesting. But if you look at Ethereum, the Ethereum transactions, the total amount of transactions on the Ethereum blockchain is in the trillions annually now. That's a big number. Ethereum is the most famous. Solana has performed really well this year. I actually think that will continue next year. That category of digital asset tokens has been the best performing this year. We think that's kind of accessing the blockchain and that's the space that we're most interested as a firm. All right. Well, it's good to know. I mean, because I think they hit on both the tokens that we like, which is Solana and ETH. And if you do look at Bitcoin's transactions that it was mentioning there, and I meant to say Bitcoin transactions, but this is the one year and if you just go out to the three year, there has been a little bit of an uptick here. But I think some of this has been the idea of where all of this is going, because just in the essence of what is happening in crypto in general, it's starting to accelerate in a big way. And what he mentioned there, meaning Van Eck mentioned, is that the explosion has been happening around Ethereum. Of course, if you look at Ethereum's transactions, almost same period of time, you see the kind of movement that we're talking about here all the way back from 2019 right there into 2020, all the way to where we are right now, which is in the depth of a bear market. We are in the depth of a bear market when all this is happening. And when NFTs are dead and all those kind of things that really cause pain in the ETH that's ecosystem, the kind of transaction levels that we're continuing to see. Now, other things that are driving this, there's been a couple of projects that have launched here recently. One, of course, is Pudgy Penguins. We did a full report on this, but Pudgy Penguins ran a live shopping experience on TechTok. And there are some interesting things within this that is going on. And what I want you to think about is just forget that it's Pudgy Penguin, I just want to think about retail in general, because retail in general is going to start to implicate. Now, obviously, a Pudgy Penguins project, they're very native to what's happening in crypto. But the cool thing is, is direct sales, they have some key insights. Let me zoom in on this for you. Direct sales showcase products, increase discoverability, audience engagement, global reach. Any retailer out there, especially direct consumer, etc., would love those kinds of insights coming out of something in terms of a digital campaign. So, big deal. A couple of things that came, they did a pin appeared, allowing viewers to add the featured toy to their cart and then check out directly within the app. Remember, this is the digital version of the NFT. And then Pudgy Penguins received over 33 ,000 likes. TechTok Shop recently launched in the U .S. It was available through parts of Asia and the United Kingdom. And then live shopping is expected to reach around $235 billion in sales this year in China. That's insane. And then Pudgy Penguins obviously is a unique position to leverage TikTok Shop to expand their brand. This will grow globally for them, but I think what you're going to see is more retail and also more projects that understand how to leverage all of this. Remember, this is all riding on Ethereum. So, it plays right into the hands of think of what's happening here. So, it's not all friendly Penguins. Now, we've got the Swiss bank UBS launching tokenized money market fund on ETH. And I think this is just one of those things. They're doing an exploratory initiative, but they are going to go through traditional financial institutions, fintech providers, etc. Further into this, you get Ethereum applications from the New York Stock Exchange to the SEC. All of this riding on Ethereum. This is the point that I talk about often, and that is this whole adoption curve. Many people think it's that slow curve, and then all of a sudden it's just straight up. I don't know if we're there yet, but what I am thinking is that there's so much activity in this space and the timing through this bear market has been so suppressive of some of these digital assets that we could be right there on the cusp of an explosion. Now, obviously, there's a lot of other things that have to happen. Some of the things that could happen to cause that kind of explosion are things like this. Is BlackRock's next to file for a spot ETF? That would be huge. If BlackRock said, we're going to go the Ethereum route as well, absolutely massive for the ETH ecosystem. So, for sure. Now, this was an interesting statement. Ripple effect of grayscale decisions is massive. SEC would have faced similar legal challenges for denying ETH futures and ETFs. By approving ETH futures, ETF, now the SEC is effectively conceding that ETH is not a security. This will no doubt impact the Coinbase and Binance litigation. All of that starts to play into this. You start to get a picture of this global reaction that is going to happen within this ETH ecosystem. And I think this is the kind of thing that starts to put you in a position where you can really start to leverage against these. Now, it's not all beautiful, but this was Dave Levine. He talks about this whole ETF futures thing as a scam. I want to play a clip for you. Listen to what he had to say. Do not be fooled by the news that there is an Ethereum ETF. There is an Ethereum ETF, but it's not buying Ethereum. In other words, Bitcoin went up 35%. It's a pretty big game. But if you bought the fake ETF that is not buying Bitcoin, you only went up 14%. So where did that other, where did 50 % of your gains go? They're lying in the pockets of the bankers. Again, it's supposed to be protecting investors. You know, that's why I call these ETFs a scam and they use the name Bitcoin to say what you're buying and it's not what you're buying and it's guaranteed to underperform. I mean, what is the definition of a scam, right? He is a hired gun to do that stuff, right? And the, and the court ruled on it. They said that the SEC loses on all counts because its case and its, and its, uh, its arguments are capricious and incoherent. And there is this risk that, you know, ETH goes up so much, so fast. The Wall Street bank that is trying to track the price because they don't actually own ETH can't actually track it because whatever they're holding doesn't go up anything close as much. And then they go bankrupt because they can't meet the obligations. Believe me, if some Wall Street bank goes bankrupt because ETH goes up or Bitcoin goes up so much because they were playing games and they got exposed, they're going to blame crypto, not their shenanigans. So the whole thing stinks. Coinbase has a thing, it's called stand with crypto click. It tells you who your Congress person is, gives you a little script. I went off script and gave them an air full. Do it. All right. So he hits on a few things with point with these future ETFs is it happens in all markets. This is, this is just one of many out there that are non crypto related. It's obviously being crypto related. So I would dispel the fact that these are scam. These are yes, they're high fee scenarios. There are other ways to invest in these assets, but people look at this in a different way. Mainly this is mainstream investors wanting to go in on these assets and they're not ready to open an account with Coinbase or other things like that. But he did mention something at the end and that is stand with crypto. Listen, this, if you're not already doing it, you should be doing it. Go out and just hit stand with crypto. You can call your Congressman, email your Congressman and it helps you kind of go through the process of letting people know where you stand on all of the 16 ,000 contacts right now at the Congress. So huge, huge movement here. 150 ,000 crypto advocates. This is going to be a big part of next year because next year we are talking about an election year. So it's going to be huge. So definitely. Now if you are interested in buying ETH directly, you can actually do this in a traditional finance way right through the Fidelity app. So check it out if you're not a Fidelity customer. They're not a sponsor, but we've used it, we've tested it and it's fantastic. So that's another way to go. All right guys, we're going to wrap that one up from here. One thing to remember, and I'll leave you with this, this is Mr. Patrick McHenry hitting it in right there home. And that is SEC Chair Gensler refuses scheduled commission vote to provide Congress with requested documents. They are talking about the first subpoena to the SEC ever. That would be huge in the way of who knows what they'll find. What would we see in the way of bipartisan, you know, enforcement that we've seen the FCC pretty much put at will to go out. This may play its course right now with Patrick McHenry. He's not playing around anymore. We'll see how it all plays out. But you guys know what to do and that is join the diamond circle so you can follow what's playing it out. Not only the legislative side but also taking a look at some of the projects that we break down and of course some of our additional content including our Web3 podcast over there with Kyle. We do a We'll leave a link down below if you guys want to catch me on Twitter. It's out there at Paul Baron. We'll catch you next time right here on Tech Path.