ROLLUP: Tesla Sells Bitcoin | Minecraft NFT Ban | Polygon zkRollup | Genesis 3ac | Ethereum Merge

Is the bear market over?

Happy third week of July, Bankless Nation. Are you ready for it? I hope you are. It's another weekly roll-up where David and I download the week and David, today you are coming in from uh Paris, France, right?

Mm-hmm.

Yeah, yeah. So at ECC, uh where it all began, meaning uh a year ago, ECC or year ago was like the first conference that really kicked off conference season, and then just like a mania of conferences after that. Uh but now it's a year later, and it's crazy that it's only been one year since like the last ECC, which really like it kicked off in real life crypto for so many people, all the conferencers and conference goers of the of the world. Uh it's so much has happened in the last year. Um Vitalik had his talk about um uh non-financial use cases of blockchains a a year ago. And then like about six months later, we have things like Lens protocol gets shipped, uh, and then like Soulbound Tokens captures like everyone's attention. And then we have like uh verifiable credentials. And so he just had a a talk today. I actually didn't listen to it because um I had to come do this. Um but I was talking to him in my quick little interview, which we'll talk more about later. I was like, Vitalik, what what's what are you gonna talk about this year? What what do what are we gonna be focusing on in about six months as a result of this talk you're about to give? Uh and so I asked him that question in a little interview.

Imagine the power that of to speak things into existence. You're just like, oh, I think it'd be cool if we did this, and then boom, stuff starts happening. But I know you brought a lot of content home with you from ETHCC. And the great thing about it is, um, guys, you know, bakeless, I uh I don't get out as much as David. Of course, you guys know this, right? So David hits all of the conferences for me and for all of us collectively, because we can't go to everything. And I think you've brought home like two hours of content or something like this, a whole bunch of interviews. I haven't even seen some of this stuff, but I can't wait.

Mine like everyone else, Ryan.

Are you gonna are you gonna tell us about that now? Are you gonna tease that and talk about it toward the end of this episode?

I'll just say I interviewed eight people from across the ecosystem. We'll talk a little bit more uh about some of the Okay, here's one. Here's a uh here's a little bit. Um I asked Kane about his fight with Suzu, and so that was pretty fun.

And then I also asked the Starkware team if they if they would ever um move Starkware the layer two into Starkware of the Layer One. Um so you know things just have a a little bit more spiciness in real life. Uh so I I enjoyed that angle.

I love that. Uh, thanks for being spicy, man. These are the questions people want answered. But, guys, we have some of the topics that I think you're gonna want to hear about because the roll-up, the purpose of this show that we do every single Friday, and I hope you're enjoying your morning coffee. People are like, why coffee? Why not herbal tea? Whatever your hot beverage of choice is. I hope you are enjoying it.

If it's only black coffee, it's coffee. If you add anything to it, it's a beverage.

See, like more of this uh carbs minimalism coming out of David. I don't know. But uh we've got some topics to cover. We're gonna get through them in just a minute. The first is the question out of everyone's mind, I think, is is the merch being priced in? Okay, ETH prices are way up from the bottom. But was that the bottom? The question is was this the shortest bear market ever? What else are we gonna talk about this week?

You know, uh not too long ago, Ryan, there was the phone wars week where like Solana launched Itchphone, and then we had like three more like uh phone things get released on the same week. Like weird that that happened the same week. Well, this week it's ZK EVM week. Uh so Polygon just uh announced their ZK EVM, EVM equivalent. Um so did so did ZK Sync. Uh and then also Scroll, uh also another ZK EVM, also announced their ZK ZK EVM uh uh announcement. Uh so I guess this week is just ZK EVM week. Uh and so we'll we'll talk about why everyone's so excited about the ZK EVM. There's also, we get to actually get super detailed uh report as to what actually backs a USDC. So we'll talk about that. And of course, it's never ending, Ryan. The three arrow saga continues. Um, as it I probably will next week and the week after, and the week after, I bet.

Guys, quick PSA for you as well. Did you know if you're listening to Bankless on Spotify? You can also see Bankless on Spotify. This is a new feature that they just launched. They they pick Bankless as a podcast that they're co-launching this with, where inside of the Spotify app, you actually get video. So go check that out on Spotify. I uh watch some of the podcasts I enjoy this way as well. It's kind of a cool format. And it gets some distribution outside of YouTube. So we've got a few different ways we are distributing Bankless visual content. Uh and we do have some visuals in the show, so it can be useful to go check that out. Uh, David.

Did you know, Ryan, that on the on the road, uh people that listen to the podcast often think I'm Ryan because they don't know what we look like?

No way.

Yeah, they say very frequently like, oh Ryan from Bankless. I'm like, no.

The other one.

Because I've never seen your face.

Yeah, they don't know what we look like.

Guys, if you don't know what David or myself look like, you know, You're missing out. You're missing some pretty faces. You're missing out on at least one of us, okay? Uh

but go check out Spotify. Just catch a glimpse. If you see us in person, you'll know who's David and who's Ryan. Um

We have to do that. Yeah, we have okay cameras. That's right. David, let's get to markets, man. Bitcoin. We got the happy music playing. We should play some happy music in the background because uh we're up a little bit on the week. Let me share the Bitcoin charts and you tell us what's going on.

Yeah, Bitcoin up about eleven percent this week. It started about twenty thousand two hundred dollars and we are up to twenty-two thousand six hundred dollars. Eleven percent, double digit percent. You you can't be sad about that. That is a good week.

I'm not sad about that. I'm very happy about that actually. And uh ETH tells a similar story. What are we looking at here?

Uh more more than 11%, Ryan. Uh ETH is up 31%. Uh going up from about 1150 to where it is now at 1500. It hit uh $1,650 at the peak, which is pretty crazy. That is pretty crazy. That is a good week. There's not very many weeks that you see 30% in a blue chip like ETH.

No, that's huge, right? And so let's get into it. Because the question on everyone's mind, I think, is twofold, right? So we have the first question of is the bear market over? And everyone always asked this, right? Question. But but the truth is, ETH is up 73% from lows. At least it went up that high. Uh ETH lows, if you recall, look at this, David. 897 was the low. We got into triple digits. We got like

That makes my $904 buy feel really good.

Yeah. We just wow, you got one of those?

I I got a $904, yeah. Uh huh.

I hope it was a big one. You time you may have timed the bottom. But that was only a month ago, guys.

Right.

All right. And now, of course, because price drives narrative, as we all know, price drives sentiment, as we all know. A bunch of people are asking, is the bear market over? Crypto's up. It must be over. Um, crypto market cap is over a trillion dollars. So that's one question. The other question is well, um, it seems like ETH went up a whole lot more than Bitcoin this week. Is news of the merge finally getting priced in? Let's take those questions one at a time. So, first, bullish David.

Mm-hmm.

Is the bear market over? What what's the case for that? What's the case whatever whatever you say, I'll make the case for the opposite case. So why why why don't you tell us about the bear market?

I think it's actually worth going back and to the 2022 predictions uh post that we made at Bankless. Um I said one of my predictions uh was that the the the merge would happen in 2022 and that Ether will not be in a bear market about three to six months post-merge. As in, like the merg the effects of the merge would cause not necessarily a bull market, but like we would be out of the bear market as a result of the merge. And you're starting to see that being priced in like right now. Like this is clearly and unequivocally, absolutely the merge having a price impact on Ether, the asset today. Uh we go for you, like not very even in a bull market, even in a mania, it is not, it it takes a lot for something to go up 30% in one week. It takes a lot more for something to go 30 up 30% in a bear market. Going up and but also, okay, granted, we bottomed at 900 and things generally bounced off of the bottom no matter what. So if that was the bottom, then you definitely get a bounce. But like a bounce up to like 1100, 1200 is a good trade. What is that? Like 30% off the bottom? But we went 30% more up off the bottom up to where we are now at $1,500. Um, is the bear market over? Bear market is like it's kind of a sentiment. Like you're only in a bear market if you feel like you're in a bear market. But I will say, for me, Ryan, $1,500 does not feel like a bear market. Like that for in the grand scheme of things, like $1,500 is actually pretty expensive. Like that's that's that's four digits. There's four digits in there.

So I think what people are asking are when we're in the bear market is is this just a temporary blip up before we take another plunge down to new lows? That's really the big question. Are we gonna are we gonna hit new lows? And so, you know, first of all, I'll you kind of address your your question, your your your your thought about the merge being the ETH effect, the ETH price jump is because of the merge. I I completely agree with that, actually. And I I don't think I've ever seen the market price in some fundamentals in the way that I saw that happen this week. Like the market is kind of uh, to be honest, a short, short-term dumb. Like it doesn't, uh I guess because in this case the merge as a fundamental is also a narrative. The the market only kind of prices narratives. And so um now we see, look at this difference down from all-time high. We were at like 83% or something for ETH and set, you know, low 70 percentages for Bitcoin. ETH has just caught right back up. It's only 68% down from all-time high number, and Bitcoin is 67% down from all-time high. And you can also see, I mean, look at this jump on the ETH Bitcoin ratio. Uh, we're up like 22% on the ratio. So, relative to Bitcoin, ETH has gone up 22%, and that has to be the merge. So, I'm with you on that. I think the merge is starting to get priced in, and it's just starting to get priced in. All right. So, like, maybe there's more to that to to come. But let me give kind of the bear case of like why we may not have hit the bottom yet, David. And I think I don't want to hear it. No, you gotta hear this, okay? And like, I think some of the reasons that that um you stated you you you make the argument for the for the bull case, but what scares me most, probably, is uh macro, the macro setup, right? We had Luke Grauman on the episode last week. He's the worst he's ever seen in his career. Um, we had uh Travis Kling on earlier this week, and he talked about the macro setup and what happens if something breaks in the broader macro environment. Uh the Fed raises rates too quickly, bond markets break. What's happening with the euro? What's happening with the yen now? Like everything in macro is feeling kind of shaky. And merge or not, if something breaks or something gets really shaky in macro, like we're going down, and we ain't seen the bottom yet, in my opinion. I don't think the the merge can save us if that is the setup and if that's what we go to. And I would also say, recall 2018, all right? We go go down 80%, something like this, and then we we'd pop back up, and everyone'd be like, oh, it's over. That was the dip. I hope you bought the dip. Did you buy the dip? And then back down again, and the plunge was even lower than the previous. So this is also the nature of a recovery. It's like a staggered recovery where you go up and you go down and you go up and you go down, and it's like a staggered uh plunge as well on the way down. We still might be in that staggered plunge area, and um.

If if you were to ask me, I'd still probably hmm, I'm probably 50-50 on it, David. That's probably where I am. So like both both are kind of equal probabilities. One that we're done, that we've hit the bottoms, and the other that we've still got a ways to go. What do you think about this?

Yeah, I think that's all a bunch of BS. I think we had the button.

You ready to call it? You're buying in now?

Um I mean, okay, so like d this falls into the same category that I see a lot of people doing. It's like, oh, let's let's like retrofit 2018 and apply it to 2022. And yeah, I mean, to some degree, like manias and bubbles and when when prices get out over their ski tips, it's all going back to the same pattern, which is like the human psyche. So, like, yeah, of course it's gonna repeat. It's the human psyche that is making like bubbles happen. Um but that's actually different. This it's quote unquote is different this time because of the actual merge. Like the merge is the most, it's the biggest catalyst in crypto ever. Like you would expect it to be different. And the whole point of it is that it is different. Uh proof of Ethereum moving to proof of stake is unlike any other proof of stake network. The fundamentals behind Ether the Asset are unlike any other fundamentals. And like, so like this is this is not just some like narrative. This actually sh this is supposed to show up in the charts.

Let me ask though, do you think it could overcome

catastrophic or very bad macro news? Macro.

No, I don't I don't think I don't think that it will. However, also on our show with Groman, we also painted the picture of like okay, macro could break and everything could go to zero and that'd be bad. Things going to zero would be bad. Um but also there's the inverse side where like there's like a needle to thread where like the Fed could turn on the money printer at the same time of the merge, and that's uber bullish. Yeah. And so those things cancel each other out. And so I think you just like don't consider that at all and just like take it for what it is. And I s what I see is the merge being priced in.

Do you know? I actually think Arthur Hayes of BitMEX made the best case for that um this week. And we're gonna get into that in a little bit. But uh so guys, stay tuned. Anyway, this is the debate, and the market is absolutely having this debate. Uh bear market or bull market, not too sure, but we do know that the merge is a positive catalyst. I rattled off the market cap numbers, but we're above a trillion now, aren't we? That's good news.

Oh, hooray. I feel like that's a pretty safe bull bear market line, is one trillion dollar market cap.

Yeah, it's uh it's definitely it's definitely a good meme line for sure. Uh jumping to uh this chart for a second, this was interesting. I saw this on Twitter this week. This is uh macro elf. 200 years of inflation adjusted returns for different asset classes. We're all dead in 200 years, but still quite interesting. And they're showing a chart of assets over time here, David. And this goes all the way back to the 1800s, right? So you kind of want to answer that question of everyone's asking, what is the best asset class to hold for the long run? Even though you know things go down, things go up. If you're a long term investor, you want to know. And you look at this annualized return over 200 years, stocks, 6.6%, bonds, 3.6%, T bills, 2.7%, gold, 0.1 percent.

US dollar negative one point four percent.

And I thought this was very interesting. I have a caveat to this and a very important caveat, but I want to get your reaction first. What do you think this is telling us?

Well, my first thought is that if crypto was on this chart, its line would be like way higher than like 45 degrees. It would be like 50 or 60 degrees. Yeah, it's uh invisible on the

Yeah, 10 years ago. We don't, we don't, yeah. We did not have crypto in 1802. So we went, you know. But uh like the the annualized return of the crypto industry is it's something like 50% year over year, which is absolutely insane. And it's been like that ever since uh uh you know Bitcoin started in two in 2009. Uh that's really the only thing that I thought about when I saw this trait.

Do you know I think the takeaways for many people in the traditional finance space are like, oh, this is why you should always hold stocks forever. And gold is such a scam. Like gold is but but here here's the problem with that. And by the way, everyone will agree holding fiat is a bad bad idea.

Right.

Do you remember the Ray Dalio book um that uh we just read? Um

Changing world orders.

Changing World Orders? Okay.

Yeah. That's

This is just

our title close enough.

This is just US assets. All of these are US assets. And the US has massive survivorship bias in that it basically became the world empire in the last 200 years and survived wars, all sorts of like macro events. This is like an example of a successful economy, an empire. Go look at Germany, where how many times did they like reset their currency? How many times did their stock market like go to zero, basically? Go look at Russia. Go look even at the UK, and you have a vastly different picture. So I think it's a uh a complete mistake for people to look at this, especially when we're we're dealing with a changing world order, right? Um, to look at this and to say, oh, I should always hold all of my assets in US stocks. This assumes a lot about the US's position of dominance in the future. And you might not want to make that assumption. And uh anyway, it's just a fallacy I see when people throw up these charts. Because, like, if you were in Germany, for example, you had no access to stocks. Germany during like during one of the uh intervening periods where the currency dropped to zero and you know, stocks went to zero, et cetera, then gold was like the best option for you. And so massive survivorship bias in this chart is what I see.