How digital asset treasuries are fueling Ethereum demand

Transcript

Let's touch on DATs. If you guys are listening and not watching, this chart shows how DATs have been purchasing ETH and the amount of ETH held by DATs. And if you look at June, I don't know the exact date, June 13th, June 12th, it's basically zero. And then you fast forward to two months later and it's over 2 million ETH. Like the This is insane. The level of buying that has happened. I don't think anybody saw this coming this quickly. Can this continue? Will this sustain?

>> Maybe first give us your thoughts on stats currently. But I think the main question everyone has like where where is this going? >> Yeah, this chart pairs very well with the earlier chart you showed on trading volumes because if you think about ETH, first of all, ETH's volume is I mean historically been a multiple less than Bitcoin. I want to say something like 5x although you'd have to look at the data to kind of verely verify that. Like we've seen that volume pretty much pull in line with Bitcoin at least spot probably over the last month or so. And I bring that up because effectively when you're talking about adding 2 million 3 million ETH like in terms of buying power, the effect on price is a magnitude more than when your volumes

are around the same as like Bitcoin. I mean Bitcoin just has so much more traded volume around it. So I think this is kind of what's contributing to the price move up in ETH and the ETH BDC cross. But can this be sustained? Are we going to see more? It seems for now many of the larger entities are able to still raise money in order to to make these purchases. Probably on the smaller side of things that's not the case. So if you're an entity that's 100 million for example and you're trying to do a capital raise, I think it's a lot harder in the current environment than if you had gone back six months ago or 3 months ago. And what that kind of tells me is that for the large entities, they're probably going to stay here and they can sustain the momentum of buying that they

have. Smaller entities, I would imagine that there's going to be a fair bit of consolidation and that could start at any point in the future, but I think that uh it's it's probably more likely to start in the near term. >> Okay, let's zoom out beyond uh Bitcoin and ETH. you made a report recently that said altcoin season cometh, which I know my audience will love to hear uh for two reasons. One, a lot of altcoins are still down compared to when a lot of people bought them unfortunately. Uh so even when uh we have many altcoin seasons like we had this past month basically where a lot of a lot of tokens are up if you got them at their low

around the uh the tariff drop but they're still down. You know ETH is still not at those all-time highs. Salana nowhere near it alltime highs, right? A lot of them are still not at their all-time highs. So, everybody wants to know like when when are are we going to still see everything go into new all-time highs? When's that going to happen? And like what are the signals to watch? I know there's a lot of questions in there. Sorry, David. Uh but I'll let you take what your thoughts are on altcoin season. >> Sure. So this was a big change for us because most of what we've uh kind of published in that report is still founded in what we argued earlier in the year. So back in March, our thesis for

the year was we're going to see new lows in the first half of the year, but we're going to make new all-time highs in the second half of the year. We said that a lot of that would be centered on Bitcoin, ETH, probably some of the large cap names, but we thought that only select alts could actually do well. We thought that it was still going to be difficult because so much of this cycle was going to be driven by institutions. But in this report, we basically take a different approach. Uh we think that that has now changed and a big part of it has to do with how liquidity dynamics look to us at the moment. And we kind of already talked about global M2. We talked about how money market funds actually could see a rotation. So I think that that's a big part of what

could drive a new altcoin season. I want to be very careful here because we never publish anything that we don't believe in. I think that some people say like, "Oh, it's it's Coinbase." Like, of course, you have a lot of alts. This is kind of important to your business. Yeah, Coinbase doesn't make me say anything I don't want to have to say. So, like, I I do not I I do not I'm not here trying to shill things. I say things based on the analysis that I see. A lot of this is predicated on my macro view. A lot of it's based on what I see in terms of liquidity entering entering the system and how it's going to drive things. But also when I'm thinking about what's going to happen on the regulatory side, I think that there are still a lot of catalysts waiting to be unlocked

here. I think the Clarity Act could be done by the end of September, for example, and that's going to accelerate things. You're already seeing that people are not waiting for that. A lot of institutions, not just ourselves, uh not just Coinbase, but other places as well, are trying to kind of capitalize on the momentum by trying to figure out how to issue tokenized securities or or other things. And maybe that's not available in the US, but certainly I think that those kind of dynamics do drive what's happening on our side of things as well. So if you're looking at alt for example, people are looking for innovations in DeFi. What is new out there? For example, oh, you're telling me I can swap fixed uh uh perpetual futures funding rates for for floating?

Like awesome. Like tell me how to do that. That seems like an actual creative innovation. Who's doing that? I I think people are looking at this and kind of saying like what sectors kind of make sense maybe what's tied to real world assets what's tied to stable coins what's the thinking behind some of these newer L1s for example what do they compete against so I think that this is absolutely going to factor in when we're thinking about September because so far we've kind of ignored some of those idiosyncratic stories but I think those narratives are going to start uh featuring more prominently >> the stable coin narrative is is so obvious the challenge that I think a lot of investors have is knowing where to get exposure to stable coins. You know, it it feels, you know, sure, you could

you could go invest in Circle, but Circle had such a big pop that it's hard to know if that's still a good investment. And it's it's also it's so new that valuing these these stable co coin companies is difficult to do. And and even you could go you could go to the the decentralized stable coins and you could get into like an Athena which has had an incredible run recently. You could look at like a Maker or or Sky as it's now called. But it feels the stable coin side feels like it's like obvious to all investors. We're all like yeah like let's go. Stable coins are here.

They're the future. Everybody's saying it. You got Stripe. You've got all these players acknowledging that we're all going to use stable coin rails to move money. Even banks acknowledging it. But it's not clear who the who the winners are. Who the like and it's even not clear maybe actually let's talk a little bit about this. Is Ethereum going to be the stable coin winner? It's the dominant chain for stable coins right now. Will that continue? Do you have any thoughts on that? I think that a lot of people are starting to question that premise in part because we saw the announcement last week from Circle and Stripe suggesting that they create create their own L1s. And I think it makes sense for them to want to do so because they don't want to be beholden

to the transaction control on Ethereum or any chain really. I mean like right now I mean it's the blessing and the curse of blockchains, right? like you cannot undo transactions. And this is great for most of us who actually are worried about, you know, the ability to kind of undo transactions. But from Circle's point of view or maybe Stripe's point of view, they want to say like, well, sometimes people make mistakes and if people make a payment and they want to retract it, they can't do so. They could do it if they were running their own chain. Now, what's important to note is that the proposals from Circle and Stripe are actually for EVM compatible L1s. And I think they did that in part because they still realize that liquidity exists onchain in places like

the Ethereum ecosystem for example, not just the Ethereum ecosystem, but that's been a big one. Uh you can see the breakdown of it and Ethereum still takes a lot of the pie. Um there's also Tron, there's other L1s, but I think that they're thinking about, hey, maybe if this is going to be the case, then we need to be able to kind of slot ourselves so we don't fragment liquidity too much. Now to the question, what does this mean for Ethereum? I think that so far what we've seen is that for at least Circle and Stripe and Stripe also uses USDC. It's it's not as much tether like actually it's interesting because Ethereum actually is is weighted more heavily towards tether transactions than they are uh USD uh USD transactions or

rather around I think if you break down the the level of supply I think it's 7030 tether more than USDC it's actually places like Salana that might get disrupted early on because Salana is actually the reverse Salana's around 8020 uh USDC to to tether and given that these L1s that are being proposed by Circle and Stripe basically compete on the basis of high throughput low fees which is Salana's advantage. I think that this is where things could be potentially disrupted in the first instance i.e. in the very short term medium longterm I think it's hard to say. I think that probably Ethereum uh will see some of that activity kind of

taken up by these L1s, but we don't know at this point, especially since so much of already has already migrated to those L2s in its ecosystem. So, I think that there's a pretty good chance that Ethereum is going to maintain its mo for stable coins and real world assets. And definitely in the short term, I don't think that's going to be the case. I think probably it's going to be other L1s that are going to be right for that disruption. >> Thanks for watching. Make sure you subscribe to the Milkro Daily YouTube channel. And if you enjoyed this clip, you can watch the full episode here.

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