Ethereum Will Fly From Here And Most Investors Aren't Ready (Here's Why)

Transcript

And the moneyiness proposition of ETH as an asset by bringing in that capital, those users, that economic activity is far far outweighs um the the tiny benefit we get from forcing everybody to hold $300 of ETH in their wallet so that they can pay gas fees. >> Just like the streets of Manhattan, I'm going to keep this quick. Over 70% of our viewers are not subscribers. [music] Yes, you. Every week, we interview some of the best entrepreneurs and investors in the financial industry. The easiest way to support our channel [music] is to hit the like and smash the subscribe button. Now, sit back, relax, and enjoy today's show.

All righty, guys. We're here in Tokization Tower with John Gillan. John, great to have you. I love the suit. Looks great. Uh for those of you guys who don't know, John is one of the hosts of Milkro Daily Show. Uh it's one of my favorite crypto pods. They get some of the best guests in the industry. Um I love their thumbnails. I love the whole vibe. John is ex BlackRock. Uh very smart guy, very bullish ETH. Um, and yeah, I mean, we I was a big fan of your pieces that you put out. You put out um the pieces about wartime Ethereum, situational awareness, and now about this this uh short squeeze. So, talk to us about what is going on in the land of Ethereum. What's got you so bold up?

>> Uh, well, a lot's going on. It's great to be here, Andy. Thanks for having me. Uh, big fan of your show, too. Um, so this all started for a long time. I have been uh a follower of a lot of different content outlets and media outlets in digital assets. Bank list has always been one of my favorite uh and one of the co-hosts of Banklist, David Hoffman, uh publicly sold his ETH and wrote an essay called why I sold my ETH. And there wasn't like anything like specific to David about this, but it was a bare market. The vibes were down and everybody was just kind of like rage quitting. And uh in general, I don't know, it just felt like a time for a rallying cry and like a call to action.

Um, so wartime Ethereum was uh an article that I wrote in response to to David's article about why I sold my ETH. And I was basically just saying that I think it's too early to call on this. He was saying that Ethereum has kind of reached this sort of like vague middle ground where it's going to like stay in this area for a while and not really rerate in price higher or lower. And I think Ethereum is either worth like 20 bucks or it's one of the most valuable assets in the world. So I wrote an essay saying like it's too soon to call on this. It's just bare market rage and frustration because it's been in a downtrend against Bitcoin for like 9 years. And um, you know, I don't know. just it's somebody had to like pound the table and say I still believe in this. I

believe in something. I believe in ETH. Um and so that's how it started. And then like I kept having um more every like couple of months I would have like more to say or like you know things would happen in the market that I felt beared additional commentary. And so the most recent one I wrote wartime Ethereum Blitzkrieg was about this massive short squeeze that we saw in Bitcoin and Ethereum and across the digital asset space that seems to have catalyzed us out of the bare market. It's been almost a month since that happened and the price action is holding. So the the momentum is going in a good direction. It's nice to see this kind of turn around and it's been nice to see the community really respond to those articles because I think there's a lot of people who are feeling these things

and um articulating them. I think it resonates with a lot of people and I was just happy to see that. >> Man, I put out a tweet today that was like >> nobody owns Ethereum. H how did we get here? H how did we get to a place where the number two crypto asset is not owned by people in the industry themselves? And I've been kind of working a scoop, John, that is whether the Clarity Act passes or not. I I don't really have specific intel there. I I'm hearing that it's been dead since July is what it is, right? There's, you know, Poly Market's got it at 15% chance this year. But what I do have scoop on is that there's an innovation exemption for tokenization coming imminently. Like I think clarity, my thesis is clarity fails. This

exemption comes immediately after. In my view, there is not a single better asset to be bullish on the tokenization thesis to express that bullishness than Ethereum. What are we missing? What is the market missing? John, >> I think that everybody has gotten a lot of things wrong about a lot of things. So, I want to correct a couple things here. Just I see this a little bit differently, right? Bitcoin's market cap is or rather Ethereum's market cap is like over $300 billion now. It's bigger than Coca-Cola. It's bigger than Bank of America. It's bigger than Chevron. It's the estimates that I've seen is that there's something like 190 million holders of Ethereum globally. It is a global asset. It is a censorship resistant open secure permissionless asset ecosystem network. And you're right, it does stand to benefit the most from some of the largest um momentum um

let's say narratives or just like changes that we're seeing to global monetary, financial, and economic systems, namely tokenization and agentic finance. I talked about this a lot in this episode, this interview I did with Tom Lee a couple of weeks ago where I talked about he talks about Ethereum as the solution to the uncanny valley of wealth. And so what he's talking about is this this double narrative that's happening where you know Vlad Tennov has talked about the the tokenization super cycle. All assets are migrating on chain and in addition to that we're able to tokenize things that previously we didn't have a way to trade in a fungeible way in markets and like like make these um assets that can be commoditized and sold. So, you're going to be able to swap Twitter clout for a rimbrand painting and stuff like that and like fractions of these things. So,

there's a huge amount of um things that are unlocked for capital markets by tokenization. This is just the early days of that combined with the rise of agent commerce. And you're going to need some kind of a way through smart contract technology or or leveraging um the solutions that blockchain technology unlocks and makes possible to maintain human supervision of uh this new rising economy of trillions of agentic actors trading you know hundreds of trillions of dollars of value. Uh and so that is kind of the the the thesis that Tom has.

And there's always been this like third thing which is just the rise of stable coins which is just in my view another um iteration instantiation of the tokenization thesis of tokenizing the dollar and other assets. Revolute is tokenizing the euro also on Ethereum on the Ethereum blockchain. So all these things are converging on ETH. They have been for a long time and I think that there's just been an impatience right like Ethereum's initial pump. We've been in this like sideways channel ranging here for like 5 years on Ethereum on the USD chart. And I think the initial pump that got us up here was the best performance from any asset in history. and it was pricing in over overexuberantly this reality that is now starting to manifest. So now we've had a long time for people to like rage quit capitulate because of the frustration. But now

these things are actually starting to plan out. I agree with you. I don't really care if the Fed hikes or holds. I don't care if the security or if the Clarity Act um passes or fails. >> All these things cannot be stopped. This is like a broader secular >> trend >> and it all benefits. It converges on Ethereum and benefits the asset >> 100%. And that was always the thing that Tom Lee haters had >> in their arsenal was kind of like, well, sure, we're going to tokenize all these assets. We're going to have all these stable coins. All this is happening, but like how does it benefit ETH? And the second that we get Animal Spirits back enthused into this market, that was a very bare market take. That was a very bare market take because Hyperl was dominating. Why? Made a bunch of money,

bought back the token. That's not the only way. It's certainly not the only way for the world's largest decentralized permissionless censorship resistant smart contract layer. They don't have to play by the same rules as Hyperlid. Right. >> Right. And there's a different game here. And so this tokenization thesis, the beautiful thing about it is that it's permeating Wall Street and global finance and Vlad is going to war for it. And I think that Ethereum is going to be Wall Street's new favorite shitcoin. And I love it. And I love it. >> I don't think that term applies to Ethereum anymore. Uh but I I think that it's it's going to become one of the most popular and most respected assets on Wall Street very quickly. I think you're right that and Tom himself said this at the time that a lot of this is

just bare market frustration. I said this to David, too. You know, just to defend David like as well, like he rotated his capital into a lot of other assets that are performing very strongly, but they're higher risk because they have much less adoption, much le much much less like lindy effects. You know, like lighter is a great asset. It's only a billion dollar, slightly over a billion dollar market cap. Hyperl you mentioned, is been on a generational run, right? It's a like a 20 22 billion market cap and Ethereum is well over 300 billion and growing. So I think that you have to have that network effect, that Lindy effect, the um the the momentum and the the liquidity in order for major institutions to be able to consider building or deploying capital into some of these ecosystems.

There's a lot of great projects that are technically very advanced and sophisticated, but if they only have like a billion or$2 billion dollar market cap, we can't migrate $700 trillion of assets into that ecosystem because it doesn't have the track record, the trust um and the credible um neutrality and censorship resistance um and the zero downtime that Ethereum can offer those institutions. All these things matter a lot because they think in terms of the language of risk and counterparty risk is a major thing that you have to consider if you're deploying capital into an ecosystem that is very small and only run by a few people. Um but yeah, I agree with you. There's a lot of of things that are converging on ETH here. And I think as far as the price action goes, this narrative will flip once that price action flips. And

that may have started today because $2,500 has been a key resistance level on Ethereum that we've tested I don't know how many times at this point throughout ETH's history over not just this recent like month of the last five years, right? And you know, last I checked my phone, we're we're we're over 2500. We're holding there. We'll see what happens. I'm not really like going to make a short-term price prediction here, but I think if we can get over 2500 and hold it, the next target is 3,000 pretty quickly. And I think that brings back animal spirits. It brings back this hot ball of capital. This is why for months I've been saying um if you're an AI pivot to crypto because although I think that trade will continue to work out, those AI stocks are are going to continue to perform well. Everybody had been max bearish

crypto and digital assets, particularly ETH for a really, really long time. This is why ETH outperformed when that short squeeze happened because there were so many people who were short that they got wrecked really bad. Yeah. And so ETH went up higher even than Bitcoin or anything else. So um yeah, there's a lot of things. >> I'll make a price prediction. This thing's going to hit 4,000 before the end of the year. I think I mean look, I mean it looks fantastic. I think it could double quickly. This tokenization exemption comes through. Um you know, we get a a little bit more Tom Lee getting to his 5% target. I mean, you just spoke to him and he's a couple I mean, he's a couple more buys away from being there.

I think he's got half a billion in cash ready to go. It might be him hitting the market today. I you know, who knows? We'll know next week what he did this week. And I mean, it's the most hated asset in crypto and it's very reflexive because Ethereum's narrative is terrible when it's going down because it has no value acrruel. It has it it's not like Bitcoin. It's not a store value asset. It's it it doesn't really compete against Salana. But when it's going up, it's like, well, duh. The world needs a permissionless decentralized credibly neutral base layer for the future of finance. It's always been Ethereum. What the hell are what, you know, what were we thinking? And so it crypto is very reflexive in that way, right? And I think we're kind of going through that immediate short-term

reflexivity across the board currently. >> I think all markets are reflective reflexive in that way. I think that a lot of these things are working out in Ethereum's favor right now. I don't agree that Ethereum doesn't capture these narratives, though. think that their strategy is different. So on the fee generation thing, they are deliberately allowing themselves to um benefit things like arbitum, like Robin Hood chain, like base, like Coinbase in order to create the network effects that are necessary to sustain the long-term dominance of Ethereum and the EVM ecosystem. That's a trade-off in the moment. In the long term, that generates an enormous amount of feed demand for ETH, for Ethereum. All these things are denominated in and settled down in Ethereum that will pan out. the the the gas on Ethereum is at all-time highs in terms of like how much volume is going

through ETH right now. Unis swap is seeing alltime highs in volume. So that the thesis is playing out. It just needs time to actually metriculate into burning ETH which will come. It's just it's a process of development. >> Let me just add something there. So uh Paul Frambot the CEO of Morpho came out on our show and said look I'm not doing buybacks. I'm not playing for the 5 10% you know you know kind of like a dividend. I'm playing for the 100x. And so people have been criticizing Ethereum for Robin Hood chain because Robin Hood chain's been making $2 to $3 million of revenue per day from their single sequencer arbitrum chain. Arbitrum's getting 10% and Ethereum is making like 150 bucks a day.

>> Y >> that doesn't concern you at all. You're just like this is a pure bootstrapping Amazon selling books. Now we're selling this. Now we're selling this. Now we're selling this. All of a sudden Amazon's one of the biggest companies in the world. That's how you see this. >> I think that it's totally legitimate to be concerned about that and a lot of people are and I think that they should ask those questions and make noise about that. However, the response from the Ethereum community and the strategy that Ethereum has taken, which Joe Luben talked about this on the show. I did I asked him this question. I've asked the ETH labs guys this. I've asked Ethereum institutional this. The strategy that they are taking is exactly that that Walmart Amazon strategy of like offer the best solution at the lowest cost.

Get the whole market and then once you've got all that market share, it's much easier to maintain and defend it rather than trying to have it compete in other ways that you can say that's not an effective strategy, but it is the one that they're going with. We'll see if it works or not, right? that there's a risk to all these things and you can have criticism of them. All right? Like so I I don't think that anybody should not be able to make that point of view. I do too. I I ask these questions a lot of course as you should. >> Right. Exactly. But so on the other side of this, right, like as all of this capital and user adoption comes to Ethereum, that drives the store value thesis on Ethereum. It makes it a more compelling collateral asset, capital asset, and store value asset. And that's

I think what the market is pricing in as well. Um, so it, you know, I think one of the things that people struggle with with Ethereum is that there's not a clean, simple, one-s sentence digital gold thesis on Ethereum. It is a complex, complicated, and uh, evolving asset. And the thesis of it is unlike any we've ever seen because we've never seen an asset like ETH and a network like Ethereum before. So, I think that that's something where you just have to be able to expand your imagination and understand that there are multiple things that drive value to this network and to this asset. the strategy that they're deploying seems to be working now. If something else beats it and finds product market fit that the market will tell us that too. But right now, Ethereum is winning. The way Joe Shalom of Sharp Link likes to say it is that

Ethereum has the license to win. Yeah, they are currently winning. You can look at the scoreboard on almost any metric you want in terms of stable coins, tokenization of real world assets, uh volume, users, market cap, all these things. Um and price action will resolve to the upside as well to follow that. But it's just a really interesting time in digital assets. I'm not by any means an ETH maxi, by the way. Sure. I I'd like to mention that um because I don't think that you should be loyal to one asset or one idea, one organization. The idea of what we're trying to build in digital assets of this global decentralized, credibly neutral, um open permissionless secure scalable ecosystem, um for economic, monetary, and financial activity. That is what I'm loyal to. That's what I'm bullish on.

That's what I want to invest in and and move my capital towards. Uh, and right now Ethereum is just like the best and the the leader in that um, category. So that's why I I focus my concentration of energy and capital on this asset for right now. >> Yeah. Okay. And so when you're thinking about this whole issuance conversation that came out that's kind of came and went, you were I assume you were just on the side of that's not going to happen and there's no need for that to happen and it's just a silly proposal or what was your take on that? Yeah, I never really like pounded the table too hard one way or the other on this because I think that the Ethereum community had that dialogue and conversation amongst themselves and made sure that that decision. Salana and a lot of other

ecosystems have had this dialogue amongst themselves and come to different decisions, but they all are starting from a different place in terms of their issuance. Um, and they're all like got different competing objectives, different situations in the market. So, you know, I'm I'm happy, let's say, with the outcome of that, but I don't think that it's a settled closed thing. I think that there are um there are legitimate ways to say that different aspects of Ethereum and its issuance could be more optimized. However, I think it's a little bit like uh not the right time and tinkering with something that >> isn't there's not enough pain from the problem of it frankly in order to make it something that the community all like desperately needs to solve. And I you know I've told this to people before but I think that >> if that problem ever gets painful enough

for ETH for Ethereum then I do believe that there will be a solution implemented. But you know that that optimized issuance curve is going to kind of vary based on a lot of circumstances and dynamics around the asset and in the market. And so it's a little bit hard to like fine-tune that right now when we should be focused on other things such as increasing the demand for Ethereum and the use cases for Ethereum and the adoption of Ethereum as opposed to tinkering with some minor minutia of of supply dynamics. Not that it's trivial. I mean there is a discussion to be had there but I just to me it wasn't uh >> I'm happy with the outcome. Let's just say >> sure sure. Um when you think about the kind of ETH Bitcoin ratio and just kind of how you anticipate capital flowing

into Ethereum from other areas, right? Whether it be the AI trade, Bitcoin, institutional allocation. Who do you think is the next marginal buyer of Ethereum from this point forward? Like we need something. Tom Lee's almost tapped out. Shalom hasn't been buying that much as of late. uh some of these dats are kind of like, you know, they're they're as happy as a man could be having this bounce back and I think they're going to have a roaring comeback and I think there's an interesting trade to be put on be looking at Bit Mine and Sharp and Sharp Link as kind of like premium beta plays to Ethereum if if you you know if that's your style. Um what is the next who's the next marginal buyer?

>> So I'm going to answer this in a way that you may not expect, but I think this is something that's very important to me. Every episode of Milk Road that I do, I end by saying stay safe, stay educated, and stay bullish. It is very important to me to try to contribute something. This is why I took this job. I left I was at Black Rockck for six years on the Aladdin platform. I worked a little bit with the digital assets team there. I wanted to move my career in the direction of digital assets for a long time. I was writing for some crypto YouTube channels. Um, I got this opportunity to host this podcast and I took this because I think this is one of the most important moments in uh the history of financial and capital markets and trying to participate in sharing

good information with people and just like being a resource for people as they try to navigate this I think is really important right now. >> The answer to your question there's a a person named Samira Cohen who is I think like global executive committee level at Black Rockck. She's been there for like over 20 30 years something like that. She's the leader of their ETF business. She said that the struggle that investors on Wall Street had in prior generations was converting savers to investors. Meaning the people that survived who had survived the Great Depression were very reluctant to put their capital back into investments because they didn't trust banks. They didn't trust the financial system. The problem now is converting what people would say are politely self-directed speculators but are really more closer to gamblers. Converting them into

investors. So, what I want to try to do is help this community, this community of digital asset native investors, self-directed investors who I have a lot of respect for, to develop respect for themselves and for their capital and to develop a longer term hope and faith-based strategy of deploying their capital into something that has a long-term value thesis like an Ethereum, like a Bitcoin, as opposed to treating their capital like a lottery ticket or um a poker chip and uh gambling with it just for short-term fun and gratification. You know, a lot of these things I know you're quite bullish on it. I don't want to like tell anybody what to do with their their capital, but a lot of people lose money. It's like 90 95% of people who speculate on these meme coins and I'm not bullish on memecoins.

>> Well, no, I'm not trying on people's stopping sports gambling and learning what a portfolio allocation looks like, even if it starts with memecoins. Sure. Because when you sports bet, there is no portfolio, right? There is just a number for the day and that number is usually gone by the next day and you need a restart. At least when they open their memecoin portfolio the next day they can see green or red. I mean, hey, it's not much better, but it's a start. Okay. >> I think you're right that it's a way to onboard people, but I also don't want that onboarding to experience to just be they lost all their money and they left, right? I want to um try to convert that that the the the general >> thesis for me though is just like move people move people with capital away

from speculation and gambling and more towards a longer term mindset and investing mindset and basing that on respect for themselves and for their capital and trust that there is a possibility of a better way to have monetary and financial systems set up in this world and that Ethereum and digital assets can offer the way to that. Um so who's the next marginal buyer? The answer to this really institutions, Wall Street, everybody's coming to this slowly. It seems like they've all gotten here, but they're still coming around to this. They're still trying to compete with Ethereum. They're I think we're just now getting to the then they fight you phase of Ethereum's adoption and growth. Um eventually institutional capital will with size and conviction rotate towards Ethereum. Um, but I think for right now the opportunity is for retail, for self-directed investors to

position themselves uh to be ahead of that and to to ride the next 5 10 years of of growth of Ethereum, of digital assets, and of ETH. So, I don't know. It's not so much that I'm like an ETH maxi or telling everybody to fullport ETH by any means, but that's the general way I think about this and that's who I I would hope the next marginal buyer would be would be just self-directed investors who understand how important they and their capital are and to treat it with the respect of of investing with it rather than speculating with it. >> Yep. I like it. I like it and I agree. Um, you know, when it comes to thinking about ETH, it's just something that you can put money in and just kind of forget about it. That's like the that's like the beautiful thing about kind of store

value assets, gold, Bitcoin, even though this quantum thing, you can still kind of just put money in Bitcoin and be like, it'll be there in five years. I mean, unless QA comes and you got to like change your wallet and things, I mean, there's a whole kind of conversation there. One thing that I like to ask about though is I saw some news that I didn't really understand, which was Ethereum is going to allow users to pay gas fees in USDC instead of ETH on the main chain, I believe. Um, this to me sounds like a way that is going to reduce the moneyiness of ETH in favor of user experience. Am I wrong? >> I agree very much actually with David Hoffman's take on this, which is that he said this is a little bit of like small-minded thinking because I agree with you that in the short term, in a

myopic view, it does harm ETH's moneyiness, but only so far as in so far as ETH stays in the tiny little tide pool of crypton native uh investors. But allowing for people to pay in for gas in other things radically expands the addressable market that Ethereum can service and the moneyiness proposition of ETH as an asset by bringing in that capital those users that economic activity is far far outweighs um the the tiny benefit we get from forcing everybody to hold $300 of ETH in their wallet so that they can pay gas fees. Um so to me I think it's a a really much needed and uh great great thing to see a great change to see. Um, it'll bring a lot more adoption to Ethereum to a lot of more users to ETH Ethereum.

It's good. I think it's it's a bullish thing and it's going to totally increase uh the the addressable market for ETH and the value drivers for ETH the asset. Love it.