Which crypto sectors could lead the next bull run: Kyle Reidhead on revenue

Transcript

GM good morning welcome to the milroad show The Daily crypto show where our crypto insights hit harder than the first round of shots at a bachelor party or Bachelorette I'm your host Jay Hamilton and today we're joined by Kyle reidhead the head of research at milro Pro in today's show we're going to discuss a few very important questions which can lead you to more profit how by understanding when is the banana Zone coming and when it comes which sectors are more likely to outperform before we jump in 56% of you are not subscribed to our Channel subscribe by the end of August and you could win our free investment masterclass worth $500 check the details

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than later uh but uh the best I can tell is look macro is heading our way we've talked a ton about this so macro is looking good uh and we know that we're going to a rate cutting cycle liquidity is picking up week over week um I think the main thing right now is we just got to like actually get into that we got to get out of the summer number one these summer draws are killing us there's no liquidity uh no one is putting on any trades right now you had the unwinding of risk from the Yen carry trade and so there no one's putting any money in the Market at the moment and so we got to kind of just get through that first and then the macro needs to tell us hey it's risk on and then people can start to actually allocate Capital again but

again they won't do that until the Summer's over August is like just the worst month for this September is usually not that great at least in crypto either but we'll see October tends to be the month where crypto really starts to take off that's what happened last year as well remember Q4 of 2023 was massive for crypto um and so maybe it's just going to be the same thing I don't know but potentially and then also you got to remember there's the election so that doesn't end until I think like November 6 or something and so there's obviously some concerns there because if Trump wins it looks like it's G be very bullish if Kamala wins it might be the opposite so I think a lot of people are just hesitant so could be October honestly it could even be November but um I think it depends on if

Trump's odds of winning continue to rise uh and go higher and higher then I think people will allocate earlier than uh than when the election ends so for me it's sometime a Q4 when exactly I don't know but if if we're not in the banana zone or at least if markets are not picking up by the end of Q4 then I think we're at a cost for concern but other than that I'm not worried at all until until Q4 is over all right so right now everything's still good we got some time things are looking up when the banana Zone does come and you'll notice that I say when not if because we manifesting it here at the milk Road show uh do you think two questions will everything pump all 14,000 tokens a million meme coins or will there be certain sectors that

outperform yeah it's a it's a really good question so to answer this I try to think of like okay what capital is going to come into the market right um there's there's different types of capital there's institutional Capital are they going to be buying Bowen and whatever other popat and all these other m coins like probably not there's retail Capital are they going to buy that stuff probably so let's think about like as we move into this banana Zone as we move into markets turning much Greener who's coming in I think there's a combination of all of them to be honest I think right now as I said summer draws a lot of Institutions are not allocating Capital right now uh there's also a lot of Institutions not allocating because they don't know what's going to happen with the election um and then there's also a lot of Institutions that have not

allocated because of Regulation right where they're just they're not allow to buy liquid tokens yet and so I think there's a lot of institutional Capital that's on the sidelines waiting to get in and that will come uh once the election's done and then of course if Trump wins I don't know how long it takes to get clear regulation it's going to take a while uh and so I don't think that necessarily comes right away but there's also a lot of Institutions that can allocate but aren't until they're like okay does Trump win are we going to get good uh regulation then they'll front run that right it's not like we have to wait until the regulation comes there's a lot of Institutions that still can do it um they just need to know that it's coming kind of thing so there's a lot of institutional Capital that will

come in we'll talk in a second about where that Capital probably goes so I think that comes in first right generally it's not retail coming in first it's going to be institutional Capital comes in it moves the price of tokens back up to all-time highs and Beyond when Bitcoin gets closer to 100K or eth is surpassing you know 5,000 whatever that is all of a sudden that turns light bulb on and Retail starts to come in and they go oh this crypto thing's back forgot all about this thing since 2021 like I want to get get rich too so I'm going to come in and throw my money in and so you got to think about that so there's the the institutions that come in with hundreds of millions of dollars or billions of dollars and then there's the retail which now when do they come back in one when prices are

much higher but two when rates go down the idea of rates going down brings institutions into markets again because we want to front run it but that doesn't bring retail in because retail still doesn't have money because their mortgages are too high their car payments are too high but as rates start to come down all of a sudden every month they've got an extra hundred bucks from their mortgage because the rate went down 25 basis points and the next month another 100 bucks right and then their car payments went down and so you think about it at some point next year probably you have the 40-year-olds who have mortgages that are saving a few hundred dollars every month from their mortgage being lower that go oh I'm going to start to put these savings these extra bit of cash that they have into markets where are they going to go

probably into your dog tokens right and then you have the 25-year-old who has a car payment that's getting lower and lower because rates going down where's that going to go into the even shittier tokens right and so to answer your question in the in the like quickest way possible it's like probably everything pumps that's what happened last cycle 2 uh and again last cycle everyone was getting money the government was giving out you know paychecks to everyone uh on a monthly basis rates were at zero so like everyone had extra money and so it was like institutions kids like you know parents like everyone was buying this stuff at the time and I don't know that we're going to have that craziness in this banana Zone um but I think there's still a ton of capital that comes comes

in from institutions and then there is the 40-year-olds with with you know mortgages and the 25y olds that are saving some money because rates are lower like there is all that real Capital that is going to come in and so if I'm to predict where everyone actually puts their money yes probably everything pumps which means like you could just go on coin gecko look at the top 100 close your eyes throw a 100 bucks in each of them and whatever 10 you want or 20 you want and you're probably going to win on most of them over the next six to nine months but like which ones are going to do the best that's not the best exactly I was going to say that's not the best strategy that's not what you teach at mro Pro you know you've got much more insight than that so no that is my recommendation

blindfold yourself if you're G to invest in meme coins yeah if you're gonna invest in mem coins that's probably the way to do it like meme coins will have its moment again I think which ones I have no clue and I don't think anyone has a clue and it's because it literally is just that random it's whatever 20-year-old comes in and goes hey I'm going to put some money in and they buy some random thing because I don't know it was a Tik Tok video that they saw before you know like those things absolutely no idea but when the institutions come in that's not what they're buying when they come in and they bring trafi money back into crypto whether that happens this month or next month or next year like I don't know exactly but when trafi money comes in what do they do they want to Value

tokens right they want to make sure that they understand how does this thing make revenue does it have product Market fit what are the users coming in it's looking for fun fundamentals now institutions don't always do that there's obviously a bunch of head funds that you know bought dog with hat and whatever but that's because like that was kind of the only opportunity last year or this year I guess but most of the time when they're going to put in large sums of capital they're going to look for where are the fundamentals right and so um there's sort of a few thesis that I have right now I think as macro gives us the green light and regulation gives the green light more institutions will come in the other thing I think that I think a lot of people are sleeping on right now is in

the private Equity market for crypto so meaning people buying you know Unis swap Labs or buying the like salana Labs or investing in you know the the business before it as a token that is getting very overcrowded there's so much money in there it's really hard to get a good deal on uh a crypto company at this point and what they're hoping to do is they buy the equity They Don't Really Care much about the equity they know that a token's coming and then eventually they can sell that token but the problem is because of these low float high ftvs is so many of these people that are or companies that are investing in these they end up getting the tokens but it doesn't you know vest and they can't actually get them until a year or two years or three years and the tokens are down like 10x or whatever at

this point right and so because it's so expensive to get into that private Equity there's not a lot of money to be made in there at the moment there is still some but it's getting pretty crowded and so I think what we're seeing anyway what I'm hearing from a lot of these uh bigger funds that are in crypto is uh liquid tokens is actually now where we want to start investing our Capital so we're moving into liquid funds instead and so that's going to be really cool because when they come in what are they going to be looking for again fundamentals all these kind of things so they're going to be looking for probably revenue or users or all these kind of things and so when I look at where is the institutional money going to come in it's in things that have uh let's say strong fundamentals

but their valuations are very very low at the moment and the best thing I can say for that right now is probably defi there is not a lot of things in crypto that has like product Market fit but defi being around really the first sector to launch in crypto since let's say they launched more like 2018 2019 they've been they've been through the ringer they've been through multiple Cycles at this point they aren't really giving incentives anymore they just have real product Market fit and they are kind of the foundational layer for the new you know financial sector right uh the decentralized financial sector and they are beginning to do extremely well if you look at maker you look at a you look at L these guys are making millions and millions of dollars every single month and yet tokens have not moved

since like 2021 right like it's insane how undervalued they are in terms of their valuations in terms of like price to revenue price to earnings ratios they haven't moved at all you can see it up in this chart here is the revenues have skyrocketed since 2023 just up and up and up non-stop month over month and you got to understand like this is real revenues this is real users coming in buying up this stuff using these things and it just works and they're making a ton of money and yet their valuations aren't showing for that and I think this is happening because we're not in the banana Zone not a lot of people are allocating Capital into liquid tokens yet and crypto's just been in a lull for a while and so I think when that lull stops when institutions and tradice starts to make these moves into crypto

again I think they're going to be looking for these things because they can value them right now if you look at defi in their valuations which we were just showing on the chart there the price to earnings is something like 24 whereas the S&P is like 30 right now so defi is actually cheaper than the S&P 500 at the moment which is why and so I think that these guys will catch the bid first um unless maybe they got to wait for regulation I'm not quite sure that goes but I think this is where the trii money is goingon to go is the ones with fundamentals that would explain why you and the rest of the milro pro team decided to add a recently and did a full report on a this past weekend we'll link to that in the show

notes so you guys can check it out but when you guys looked at that one of the key takeaways that you had was that this is real Revenue as you said this is not incentivized revenue and not all revenue is equal in web 3 or on chain and I think that's something that's very difficult to understand because you just you look at revenue and you say hey they got revenue but where did that Revenue come from how did they get that Revenue can you explain to us this difference between what I would call real revenue and incentivized revenue yeah absolutely so you could think of this for incentivized fundamentals or fundamentals you could also think of it as and it could be Revenue this also could be transactions

this could be users there are ways to incentivize these sort of metrics to make it look like you have product Market fit to make it look like you're doing well but you're actually not so if we look at this chart we have up on screen of a we're looking at token incentives versus Revenue token incentives in this case is green and then revenues is is pink and what's interesting if you look at last cycle when a had first launched there were tons of token incentives they were giving away like $ 53 million worth of their token every single month in last cycle and that was generating like $4 million in Revenue okay four $5 million a month in revenue and so they did this for most of 2021 and then just the beginning of 2022 and then they started to tail off and the incentives came to

basically an end but what happened is over the next couple years a actually became a staple in defi people actually started using it not without getting paid to use it and now you look and it's completely flipped and you see that token incentives are way way way lower than Revenue right so token incentives are near they're not zero but they're near zero and yet Revenue has grown and is even bigger than it was last cycle so now we're making five million plus a month on a in terms of Revenue and token incentives are sub one million right and so it's completely flipped in terms of fundamentals so back in 2021 it looked like they were making lots of money but in fact they were actually giving away a bunch of money just to make that so that's not real fundamentals and so that's why you need to actually look

under the hood and see what's going on are they paying to get this Revenue are they paying to get these users are they paying to get these transactions or is this real a lot of crypto is doing that they're paying to get this stuff but there are some parts of crypto like a lot of defi at least the defi on ethereum they are not paying to get these sort of bullish fundamental metrics uh and I think that's one of the things it's one of the reasons why a has done so well over the last few weeks it's one of the best performing tokens right now and that's because people are realizing like hey this thing is actually fundamentally strong maybe they're going to turn on BuyBacks for their token and they're not paying people to actually use this they have strong fundamentals and so I think that

is a a key thing to look at and something to understand of if you're going to look on token terminal or any of these um uh analytics tools you got to make sure that the the fundamentals or the metrics are actually real and they're not being paid for somewhere in the back end and so if you if we step back you like defi sector to outperform for the reason that institutional capital is going to come in institutional capital is going to look for fundamentally sound businesses and businesses they understand they likely understand defi because it has a similar a lot of similarities to trafi uh and defi has multip a is not the only one that has this strong revenue and these strong fundamentals am I summarizing that well

anything you would add to that no that's exactly it I think they're going to look for things that they can understand and things that are making money and it's not easy to find that in crypto right now yes pump. fun has some uh there's a few others but for the most part where there's actual tokens that are not these tokens where there's only 10% of it on the market like also trafi not probably not going to buy tokens where they know 90% of the supply is about to come on the market over the next two years like they're smarter than that now retail probably not smart than that they might go buy those tokens so they'll probably still pump and do well I don't know I just don't think trafi is going to do that knowing that there's a bunch of funds that are going to be selling this

every month over the next you know couple years they're going to look for ones like again a maker where most of their tokens are already on in in circulation right and they have revenues and they are buying back their own tokens through the protocol through BuyBacks and it's like to me when a trafi person sees that and understands that I think that's a really big deal when they look at something like a memec coin or a token like like here's the problem with with this banana Zone I think that everything is going to pump all the dog like cardano Ada is going to pump Litecoin is going to pump these things that have nothing they have no traction at all but they will still pump but that's not because of the institutions that's because of the retail that's going to come back when I talk to people all the time that haven't

been in crypto since 2021 they're like oh yeah I still hold Tom Ada should I buy more of that or should I still hold my EOS or whatever I'm like why is that what you're still talking about but it's like again retail is just kind of lost there's a lot of people on YouTube that talk about some of these tokens and so that's just that's where that Capital goes but maybe just maybe and probably not but just maybe we're at Farther Along we're mature enough in crypto that you know people will see that the ones with real fundamentals will will be the ones that pump but I think it's going to be everything because I just don't think retail is going to get that dumb money right unfortunately so that's why you listen to the show see you're not dumb money so you're smarter than the rest of

them okay so let's take a step back then what other sectors might perform well and maybe the way I can position this question is okay it's great to look at Revenue but as you said not many projects actually have real revenue and can prove that type of fundamentals yet and that's okay a lot of these businesses are very new a lot of these projects are very new they're just not there yet that's not a that doesn't mean that they're a bad investment what are the other metrics you're looking at what else are you looking at in order to figure out who might outperform in the banana Zone yeah I think so revenue is important but not always important like if you think of all the biggest like the Meg seven right now in stocks many of

them didn't have any profitability they had some Revenue but it wasn't massive they definitely didn't have any profit for like 10 15 years into their into their Journey right you think of Apple you think of um you know Google and Amazon especially uh you know they sort of subsidized it for many many many years and I think we'll probably see that like if you look at Poly Market they have no Revenue right now yet would you say that it's it's a bad company like no they're getting the users they're getting the volume they have a means to make Revenue if they want to but they just don't want to do that yet right um and so I think what you also want to look at is again fundamentals but in terms of like users and adopt option so you could think of I think the

thing that I'm most bullish on probably outside of defi would be deepin because deepin though not many of them have much revenue and they're still trying to figure out how's their token going to play and their ecosystem how's it all going to work the the thing they have is adoption right if you look at Helium you look at Hive mapper these are two really cool projects that are absolutely crushing it in terms of getting on users but more so getting on businesses that are not even in the crypto world you look at Hive mapper we have up on the screen here they have three of the top 10 digital map companies that are using their their protocol Hive mapper right that's incredible and there's just you don't have that basically any other sector in crypto really uh and so you have high M that's doing that now do

they have a ton of revenues do they have BuyBacks their tokens like do they have that fundamental stuff like something like makeer Nava have no absolutely not but they just have a better product than anything that non- crypto map companies can create so they have something the product Market fit and it's it's a 10x better than what every other map company has right that's outside of crypto so I think it has something real there same with helium helium is the one that uh they're a deepend company where they're basically um creating really cheap uh Mobile plans and data plans right and they now have two of the biggest um uh telecom companies in the US that are offloading some of their traffic onto helium right so they're starting to get real business being used on their platform and it's working and again it's

something that they can't no one not in crypto can can build what helium's doing you need tokens you need crypto to build this you need the blockchain and so again you have product Market fit you have a Moote somewhat at least it's very hard to create what they've done or recreate what they've done and so when I think of that they're going to get the users they're going to get the adoption because they're already seeing it and we're in a bare market and so I believe that they will also do really well one because retail can understand them because they actually use them right a lot of retail actually just uses helium and will use it because it's like 20 bucks for unlimited data like who's not going to use that you learn that you can do that and so if they're using it are

they probably then going to invest in it makees sense right so I can see fundamentals there from institutions wanting to buy it but I can also see retail actually wanting to buy that because when is retail ever going to see a or they're going to see maker like if they're not using decentralized Finance which most of retail is not like they might not buy that token but they're going to see helium because it's a product for them and so they might also then buy the token so you get kind of a combination of the two so I'm actually quite excited about deepin now there's a ton of projects on there most of them are not going to do well but you do have some that are beginning to do well and that to me is is really exciting so I think Defi and dpin are the two that I'm

the most bullish on right now and if we pull up a chart here just to show that you're really ahead of the game here K what you're talking about I've got a chart showing the uh different sectors in crypto and the change in their market cap over the last 30 days and you can see everybody is down Bitcoin down 6% ethereum down 21% obviously those aren't sectors but then every single sector from RD gaming to nfts and onwards are all down except for one which is deepend which is up 3.7% not nothing and most of that comes yeah most of that becomes because of helium which has announced

those big Partnerships right and I think that that doesn't stop it probably continues right and so when helium can show that they've got the fundamentals they've got real users being onboarded into their Network and real companies that are using their Network I I see no reason why that slows down anytime soon so and and plus they're so undervalued versus what helium used to be uh when it launched I think it was last cycle uh and so there's lots of room for deep into to to move I'm gonna throw in a bonus question Kai this wasn't in the brief so uh apologies but I think I think you're gonna like this one I want to ask about AI because that's the other sector that a lot of people are it's very strong narrative so I don't know about the fundamentals but it's definitely got the

pumpamentals what are your thoughts on AI yeah so we actually did a nice Pro report on AI last week I believe it was so Pro members you've probably already seen it if you're not pro yet I'd recommend go checking out but the I guess the tldr on it is I don't think there's anything fundamental with AI and crypto right now I think there's a lot that crypto or blockchain can do for AI in the future but we're a long ways from it we still don't even really have good fundamental stuff for like AI in general not even AI plus crypto um but AI is still a long ways off not a long but years off and so for what blockchain can do like you're not going to have any blockchain company that competes with like open AI right or competes with like Google or grock or any of these because

to create a good llm to create the the the app that people need to use uh to use AI you need a ton of data and you need a ton of processing power and the only companies that have this are the meg7 companies like the big tech companies right no crypto company has even remotely close they will never compete here I don't care what marketing they do or what they tell you there is zero 0.00 crypto companies that will ever compete not ever but at least anytime soon will compete with the llms of big tech companies because we don't have the data don't have the processing power what blockchain can do and what they can support with AI is being some form of like underlying infrastructure to make AI more efficient whether that's like a Marketplace for uh reusing unused or sorry using unused like gpus and

processing power and finding a way to find buyers and sellers and match them like like aash is doing or uh others are doing like there's an opportunity there right um and so like there is infrastructure plays for AI and crypto but those only really matter when everyone is using Ai and we're not there yet uh and so I think we are probably next cycle is when we actually have real fundamentals for AI and crypto this cycle we do not at all but like you said there is the narrative and as long as open AI continues to do well and and Nvidia continues to pump I think there will be some plays in crypto that will do some plays in AI crypto that will do well um but it's all based off pumpamentals and so when the bare Market comes I think those are going to do

really really bad now probably every token ises really bad but I think those will do much worse and I don't know that trafi will be putting their Capital into that I mean maybe they do like even trafi makes mistakes when it comes to like Banana's own bull markets so like maybe they still do but I just I I I don't know I question that I think um trfy is probably smarter but who knows everybody listening I want to know uh of the three sectors we talked about today Defi dpin and AI which one are you most invested in which one do you want to hear us talk more about and as I mentioned at the beginning of the show if you're not already subscribed make sure you subscribe if you subscribed by the end of the month you could win thousands of dollars in prizes that we

are giving away so make sure you do that remember none of this is Financial advice investing in crypto or any asset or any meme coin is risky and you should only invest what you can afford to lose thanks so much for listening in everybody have a wicked awesome day [Music]