ARK Analysts call $1M BTC, $180K ETH | Bullish Crypto Price Predictions

hey bankless nation welcome to another state of the nation edition david this is going to be a bullish episode are you ready to be bullish man oh always ryan it's my natural state uh and we're gonna get some extra help to do that today too uh yeah so we have uh two of the analysts be behind a report just put out by arc invest and so if you you remember the the arc folks we had kathy wood on the podcast a few months ago and with her an analyst yasin who covers this space we have two of the analysts who just published a

2022 update on prices and we gotta say it's maybe the most bullish price report that we've seen like i'm i'm almost worried david that uh these prices that we're about to say are uh more bullish than anything we've ever talked about on bankless yeah what are these price targets for bitcoin and eth yeah we are pretty coming in with a hot prediction of a million dollar per bitcoin and 180 000 per eth which is really bullish now granted we have between eight and ten

years to get those price prices it's not coming next month it's not next month it's not next year uh but still at the end of the day when it's when people like arc who you know are famous for actually being able to look into the future rather than look towards the path to guide the future come in with a hot prediction like that i want to understand the math and the analysis and the reasoning behind these numbers because these aren't just some random crypto youtubers pulling some numbers out of their wherevers like these are these are arc analysts who say that these are ridiculous numbers and so we

want to see why are they actually not ridiculous because there's a whole report which is also linked in the show notes as well uh if you guys want to follow along there's a whole report uh to guide some of these models and predictions so we got the receipts here we're going to go through uh the the slides go through the rationale of why 180k eth and why one million dollars per bitcoin uh in in just a minute uh david before we get in got to talk about our friends at notional finance so i'm gonna i'm about to sound like uh grandpa defy

here once again back in my day don't say that back in my day okay there was no such thing in d5 as a fixed-rate loan okay we had volatile like every block adjustment variable rate loans for just about everything and so if you took out a loan at like you know three percent uh one day it could crank up to like ten percent the next and the same defy summary got to 60. yeah i know and the same is true with interest right you could be making like nice you know

five percent gains one day and suddenly you're down to one percent you're like what happened well now the kids these days have the benefit of fixed apy loans okay and notional is putting one out there in d5 uh look at this 432 million dollars locked in this protocol 279 million loan value uh 8.57 fixed apy loan on up to a year for usdc that's what you can get at notional right now uh pretty awesome to see yeah

the last time i saw a fixed rate uh uh loan platform it was down at like three and a half percent uh this is the highest fixed rate uh apy platform that i've ever seen uh there is a link in the show notes to go check it out uh if you are interested in getting a fixed rate loan on your crypto assets there you go that that's it guys so uh head over to notional and um and make that happen get some of those fixed rate loans uh and uh and lend some of your your assets as well uh david gotta ask you the question we start every episode

with every state of the nation that is which is what is the state of the nation today uh it's bullish ryan state of the nation is is very bullish um yeah i mean bankless listeners will know that ryan and i are bullish but like we're always bullish so sometimes like we start making sick of hearing yeah so we start making content we start like interviewing people in like washington dc or we start you know asking vitalik about the future of the ethereum roadmap and then sometimes we forgot to forget to talk about like how incredibly bullish we are uh and it's also nice to bring in the arc analysts because they

come in it from a different perspective uh and and so we we like people who are bullish and want to talk about bullish things so ryan the state of the nation today is bullish all right well i'm ready to get more bullish and our guests are as well so guys we will be back with the arc analyst in uh arc analysts talking about one million bitcoin price target 180 k eth price target in just a minute before we do we want to thank the sponsors that made this episode possible so you've got some money and you want to

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to bridge your assets between eth optimism arbitrary or boba networks hey guys we are back with the analyst from arkhanvest want to introduce you to yaseen almadra he's been on the podcast before you seen joined arc invest in july 2018 uh he was arc's blockchain crypto analyst still is his research focuses on crypto assets of course as well as a bitcoin mining i've i've been told you seen is the bitcoin bull in the group uh

also joining who's joining us is frank downing frank joined ark in april 2021 he uh was an analyst for ark's next generation internet strategies focused on cloud computing software as a service now crypto assets guys the two of you wrote a fantastic report really excited to dive into it welcome to bankless thanks for having us uh honored to be here good to be back again this time with uh with my partner in crime frank uh so

we're really excited to share some of this this moon juice that we have for you good description moon juice uh all right you know what i think just maybe getting some background on both of you would be would be useful before we dive into the the details of this big ideas uh report maybe listeners want to peek in the the inside life of an arc analyst so what does it actually mean to be an analyst at arc what's the day-to-day you've seen why don't we start with you sure i mean i guess the best way to

describe it is it's really just the front row seat on all things tech uh by way of background i studied engineering and finance when i was in school and fell down the crypto rabbit hole uh in in early 2017 and kind of told myself okay i'm committed to finding an opportunity that will allow me to basically fall down the rabbit hole even further uh and stumbled upon arc through twitter and ultimately uh here i am about four years later as an analyst that that really has a lot

of flexibility in terms of discovering kind of the different multiple rabbit holes within crypto so i'd say much of the work is divided between just day-to-day kind of research of okay let's think kind of top-down long-term theses of how we think the industry is evolving uh combined with you know more of the product development side of okay we are asset managers and what how do we answer the question of what's the best way to gain exposure uh to this asset class

frank how about you so you've been at arc for uh almost up to a year now so what's the day-to-day like for you what would you add to what you seen said yeah getting up on a year now it's it's pretty crazy how fast time has flown um but i actually somebody seen i studied business and computer science and um fell into the crypto rabbit hole also in 2017 um building my i spent pretty much all the cash i had to build a few gpu mining rigs at my house and had to convince my parents that i wasn't going to set the house on fire well that is the same exact story how i

got into ethereum at the same time yeah um but but the the day-to-day at arc i mean it was it was pitched to me as uh essentially getting paid to to study and report on what you're most interested in which uh for me is both crypto and cloud computing my previous career i was a data engineer and a cloud engineer and i now get to do both of those day to day at arc which is awesome

we spend our weeks kind of chalked up into a few different segments mondays are always portfolio reviews looking at our holdings and in aggregate what happened over the market in the past week the middle of the week is more this long form long-term thinking research that you've seen mentioned and then fridays we have a brainstorm with um a group of advisors and external parties to help battle test our thinking and talk about the latest and greatest things and crypto even just over my time here crypto has

taken up a larger and larger portion of that brainstorm which is always pretty fun well guys it sounds like you guys both have dream jobs that you have a ton of fun in uh and while right before we get and into this report i just kind of want to also give context to the listeners about what this report actually is it's not just about crypto it's about everything that arc pays attention to uh and which is a lot um and so there's even more than just crypto in here cryptos actually does one of many sections in here as well but did you guys have are your

guys's fingerprints in this report did you guys help like write this or how were you guys involved with the actual creation of this report sure so i mean maybe taking a step back and giving context as to how we're divided um across the analyst team so we are kind of a traditional uh asset management shop where uh our analysts are divided by sectors they're actually divided by technology platforms and uh we have three uh i'm sorry five technology platforms that we uh effectively center our research around

um so uh you know crypto is one of those we have genomics dna sequencing energy robotics ai deep learning and so our analysts are kind of experts in these thematic platforms so there are five thematic platforms that all have 14 emerging technologies that come out of those platforms and you can see here there are you know a dozen or so sections that touch on it uh and each analyst effectively is is the one you know

drafting and and building out their respective sections okay so uh just to reiterate you seen you are the big bitcoin bull so it sounds like you had a lot of your fingerprints on the bitcoin section and then frank you're the the ethereum ethol uh were you also involved frank with the nft metaverse side as well yeah it was uh myself plus our uh other next generation internet analyst nick groos and andrew kim who also work on that team we try to be as collaborative as

possible particularly because a lot of these technologies are converging and crypto is especially when you get into web3 metaverse is so tightly integrated to the consumer internet uh that nick plays as much a hand in that section as we play um and we you know the the crypto overview section the first crypto section that's in there was really the whole team working on it um and it's uh it's awesome to see that report come out and get to talk about it in more long-form environments like this it really is the culmination of like six plus months worth of work to put that

together well you guys are certainly making our job easier at bank list to report on why these big ideas are so fun to talk about so let's go ahead and dive right into it and it sounds like this show is going to come in three sections and also i'm going to start reformatting this obs that's why the screen is moving around for these viewers out there um so we're going to talk about bitcoin first and then we're going to talk about eth second but then nft metaverse third so you see it's probably going to have most of the floor for the first half of the show and then we'll finish up with frank for the ethereum metaverse stuff for the second half of the show but this is this

this is probably the section that you were talking about where everyone probably had their hands in these first few slides about blockchains and crypto assets and it's just a really nice slide to start on first and again if listeners want to go and click that link in the show notes so they can follow along this is slide number 41 but this is just the bold case for crypto and blockchain at large and the title of this slide is public blockchains could transform every traditional asset class and this is the metaphor that i think maybe people have heard before where for you know we had all these different communication mediums the radio the tv the newspaper

the uh and and then the internet came along and then all of a sudden all those things got bundled up into the internet and this slide is doing the same thing for financial assets uh is this basically is the conclusion of uh arc and and also this part of the report just that every single financial asset will eventually become a crypto asset i think that's that's spot on in terms of the framing i think part of the reason for this slide is that usually the framing to describe crypto assets is entirely new asset

class is one that suggests that it's distinct from traditional asset classes right and spans every super class so you know we published a paper in 2017 that basically suggested that crypto assets can't really fit under the equity bucket or the bond bucket or the physical commodities bucket uh it's not really a capital asset or a store of value asset or consumable transformative asset it's almost like all and all the same so the initial premise is not only is crypto distinct from traditional asset classes but it also is going to transform

traditional asset classes and it's going to affect the same asset classes that doesn't really fit under uh this was actually a framing that was introduced by biology cernavasanan who like quite eloquently explains how we're seeing a generational shift from internet to crypto uh in the same way that we saw shift from like desktop to the internet and the analogy that he likes to give is like blockchains are to scarcity what the internet was to information and this fundamentally changes kind of

how software is developed how it's funded how it's monetized how it's used and we're moving from kind of online to on chain and by moving online to on chain then we have these sort of assets that can that of course can represent scarcity that can represent ownership that effectively uh you know that affect traditional asset classes so whether that's synthetic equity exposure through crypto equities whether it's kind of the crypto commodities through kind of the ability uh to to send

bandwidth or storage uh we're seeing the rise of nfts and crypto art store value assets or you know maybe the traditional kind of corporate structure endows so all of these really are our derivatives of traditional asset classes that cryptos distinct from but in turn we're actually seeing that it's impacting them frank if you want to add anything onto that go ahead but i also want to throw to you the question i'm assuming at some time in your role in arc you guys have to explain concepts like this to people who are

still trying to wrap their heads around it how does that mental model land with people is that helpful to explain crypto or are people skeptical when you explain that concept to them so i i would say that the the easiest explanation is one that shows crypto as being a distinct and separate asset class right so it's like okay how do you value crypto well you can't value it like an equity or you can't apply like a dcf necessarily especially for these non-productive monetary assets um it's not really like

a bond it's not really like a commodity and so and so providing a framework by which they understand how to assess uh traditional asset classes you can then just say crypto asset the reason why you don't understand it is because it requires an entirely new framework um so so it's effectively don't try to force fit the traditional framework into trying to uh understand uh crypto assets i i think increasingly there is uh people are resonating with how crypto can transform every traditional asset

class especially as the investment theses and the use cases in crypto develop uh where there isn't necessarily a one size fits all model we're seeing a lot of kind of revolutions emerge that are in parallel with you know the bitcoin or the monetary revolution that might require like a new kind of framing uh that more closely aligns to what they're familiar with so any opportunity that we have to draw to kind of the old world or traditional frameworks is one

that resonates with with the people that we're speaking to and i think this does a pretty good job doing that frank you you came from like a software as a service next-gen cloud platform sort of world 2 and like the engineering background you know a16z talks about this in a similar term they talk about it look software's eating the world and now the framing for uh crypto is software is coming to eat money and finance and digitally scarce things all of the all of the scarce things that we have as assets is that good framing in

your mind do you think that this is just the same movement of software eating the world and this time it's coming for banks yeah i i think it is and i'll steal i think one of yaseen's line but lions but uh we're at a stage where you know uh every bank and traditional financial firm has to have a fintech strategy now because fintech has been disrupting the traditional banks and i think we're getting to a stage going forward where every fintech needs to have a crypto strategy and crypto is where that industry is evolving and moving on to

more crypto native rails and with regards to kind of this slide and especially relating it to the internet and software i think the more that we can tie these new paradigms to you know what the traditional world thinks i think like the evolution of the internet is a very a tangible topic for people because they use these services every day and being able to relate that to how crypto is slowly taking over those more traditional platforms or the more traditional financial services uh the better we can be at educating okay so uh let's keep moving in the

slide deck and i want to move maybe to uh slide 43 which um the title of this slide is each revolution involves a different level of trust and i think at this point in the crypto section you sort of establish that crypto is coming for finance and digital scarcity it is eating the world this is another you know software eating the world type moment and the next question that somebody new to crypto might have for you even somebody in crypto is okay yeah but what's the difference between a bitcoin and ethereum and avalanche and tara and like binance uh smart chain and go down the

list of all of these assets and to someone who's new they look at the assets and they're just like ah they kind of all look the same like what's the difference and i think this slide does a really good job talking about the spectrum of centralized trust and decentralized trust so decentralized trust on the left and centralized trust on the right and the use cases that generally fall out of that section so there are three use cases here the first requiring the highest degree

of decentralized trust is the money revolution we could talk about that somewhat in the middle but still skewing towards the decentralized trust side of things is the financial and internet revolution so we might fit defy here as well as um you know some of the web 3 things that are coming out and then on the on the right side of the spectrum the centralized trust side of the spectrum is basically traditional finance where we have the status quo and the banking system as we know it and each of these platforms each of these chains each of

these assets sort of fit in different places on the the spectrum of centralization and decentralization you seen could you give us kind of the big idea from this slide and talk about where some of these major platforms fit and why they fit in the places they do in in your opinion sure honestly i think you summed it up perfectly and it's it's great that that you did because we grappled a lot with this slide with the main takeaway that we wanted from this slide to be that there are no

solutions there are only trade-offs and these trade-offs are made to achieve the functionality and the security appropriate for a specific use case so the the idea that we compare blockchains without recognizing their distinctive design or value proposition i think is very counterproductive and why you know there's so much animosity between chains uh what we've tried to present here is that there are different revolutions that are evolving in parallel uh we think that the most profound is the money revolution but

each of these revolutions are going to require uh a different set of trade-offs and network implementations and so you have especially these newer market participants that are questioning you know why are bitcoiners so only interested in bitcoin right or why do you have these bitcoin maximalists that think all these other chains are a scam uh and and they kind of fault them for being closed-minded or unwilling to compromise uh but it actually ties back to some of bitcoin's principles which you know in our view can't be replicated

by other public blockchains and this includes like a very strong regard for property rights or high predictability and monetary policy a commitment to cheap validation and decentralization of fairness and issuance through proof-of-work all of these we think make it a prime candidate to compete as a global-based money which we think is a revolution that necessitates decentralization and security over something like uh scalability or features uh but as we move along this spectrum and into your

point ryan we start to see public blockchains like ethereum and it's an even larger extent solana and avalanche and terra that are that are trading off that potential trust minimization for convenience for more features for higher throughput which which to your point if you are going to kind of create a d5 ecosystem or a web 3.0 it is likely you know necessary to fulfill those those demands that users have um so the biggest question is like

what does that that perfect balance look like especially in the financial internet revolution i think we have a good idea that the money revolution is going to require max conservatism uh and the more boring and predictable it is the better and on the status quo it's like you're unapologetically centralized so if you're a visa or paypal it's like i kind of trust the the intermediaries that are facilitating the flow of transactions so the big question and i know frank has a lot on a lot of thoughts on this is what does that

perfect balance look like um and what are some of the dynamics that are emerging let's say between ethereum versus solana and trying to strike that perfect balance i think it's interesting so you know how you how you drew this where bitcoin is squarely in the money revolution you have ethereum sort of spanning money revolution and financial and internet revolutions and like in the in the center not necessarily dipping into money or like solana avalanche and tara and binance is sort of almost a little bit status quo ridiculously centralized right it's much

more centralized like and i do think probably some people looking at this slide might quibble with you know where the placement is right so um like myself personally i probably would have extended ethereum even further into the money revolution um but also it's interesting because some of these these platforms change over time right and so maybe you might argue ethereum squarely started in the center and has kind of stretched into the money revolution over time as it's being used more as as money but regardless i'm curious frank maybe you

could weigh in here on the rationale so why is bitcoin squarely on the left why is ethereum sort of spanning why are solana avalanche and terra kind of in the center why is binance smart chain why is it sticking into the status quo lane can you just give us a high level for why these specific projects in the in the place that they're in definitely and first i draw the the difference one of the primary differences that leads to placement between the money revolution and the financial and internet revolutions like you seen said

is conservatism for a base money that is resistant to nation-state-level attacks or influences that has maximal assurances of seizure resistance you need to know that what you're building on or what you're holding is consistent and not changing and that's actually completely different from what you may need to compete in the financial and internet revolutions which is the frontier of technology being able to push out updates so you can process more transactions or enable new types of transactions or generally enable greater

functionality and so that's why bitcoin uh because it has this ethos of we are not changing we are not evolving uh at least uh to the extent that these other chains are uh puts it in that monetary revolution when you look towards financial internet to compete ethereum we know has the eth 2.0 vision we're going to go proof of stake we're going to uh enable sharding we're pushing on roll ups where we're we have many eips that are being rolled out and

and that's what enables it really to to compete with some of these newer chains like solana avalanche and terra which uh don't necessarily have the stability or the track record to be considered money and the economies that are built on top of them are much smaller so they're not really being used as money uh to the extent extent as ether is uh if you look at ether and defy it's a pristine form of collateral it's with eth 2.0 or with proof of state going to be this internet bond so to speak with the staking yield

um it does for and it's the main currency denominating a majority of nft volume across any chain uh so it is functioning as money and that's why we have it splayed across um solana avalanche and tara are making this uh what we would consider a distinct trade-off of pushing through more throughput at a lower fee uh but sacrificing some of that stability and some of that level of decentralization by having greater requirements to operate the network or having a more centralized token holder

base which is increasingly important uh in terms of the level of decentralization in proof-of-stake compared to proof-of-work because in proof-of-stake your influences denominated in the tokens that you hold rather than the mining hardware which is uh off network um when you look at binance smart chain it has some of the aspects of public blockchains it's composable it's open and transparent mostly anybody can read and write with the exception that that guarantee that anybody can read and write is dictated

by a much smaller more centralized group of validators so it may look like it offers you everything as public as a public blockchain but you need to make a trust assumption that these validators will continue to operate that network in a way that gives you these features and so that's what pushes it closer to the status quo if there was a desire to censor some transactions or throttle the network in some way the validators controlled by binance could probably do that pretty easily which is not unlike amazon de-listing a seller visa blocking

certain transactions and the the more you make these uh trade-offs in terms of this trust assumptions required to operate the network the closer you get to the status quo on the right fun fact about binance smart chain they just renamed themselves to bnb chain i saw this morning i think they want to separate i think they want to separate the binance name from this thing that they're creating so that they're not known as like binance affiliated right so it's an interesting way to try to try to spam these columns here and that's also like

to your point how they they can change over time based on how the network evolves is that is solana which is i would say made sacrifices and decentralization to promote high throughput going to progressively decentralize and move its place on this chain and is ether or ethereum in uh in necessity to compete with solana on the throughput is that going to force ethereum to make some sacrifices on decentralization as well to compete on the throughput side