The Crypto Interview You Can’t Miss! ⚠️

There’s no shortage of opinionated people in crypto and, to be frank, most of them aren’t worth paying much attention to. Two that are, however, are Arthur Hayes and Raoul Pal.

For those unfamiliar, Arthur is the co-founder and former CEO of Bitmex, while Raoul is the man behind Real Vision, one of the best financial education and information platforms around. Between them, these two know a heck of a lot about the crypto and TradFi markets, and what they have to say is worth hearing.

For today’s video, Jessica sat down with both of them to get their thoughts on the state of the markets and what could lie ahead. She had some pressing questions for them about their investment strategies, their take on 2024 so far, meme coins and much else besides. As you can imagine, neither was short of things to say.

Getting two such heavyweights together wasn’t easy, but, as you’ll see, the juice was definitely worth the squeeze. You can watch that video here.

📈 Crypto Market Forecast 📈

It’s going to be a big week for the markets, and that’s because there are lots of very big macro factors to be aware of. For starters, the Fed will be announcing its interest rate decision this Tuesday. This announcement will be particularly important, as it will include updated projections on where Fed officials see interest rates headed next.

The Fed’s interest rate decision and its projections will depend on the CPI print for May, which comes out the same day - Tuesday. This is likely to create lots of volatility in the markets, as they will first respond to the CPI print, to the Fed’s interest rate decision and projections, and then its forward guidance per Jerome Powell’s speech.

If you read last week’s newsletter, you’ll know that deflation appears to be setting in, and it could even surprise to the downside i.e., become something bearish rather than bullish. This is consistent with real-time inflation data from Truflation, which suggests that inflation has been falling off a cliff. Of course, geopolitics could change this.

This ties into the other two geopolitical flies in the ointment: Ukraine and Israel. As you may have heard, Ukraine has begun striking targets within Russia using US weapons after getting approval from President Biden to do so. Russia had warned that it would see this as serious escalation, even threatening to use nuclear weapons in retaliation.

President Putin noted in a recent speech that another way Russia may retaliate is by sending long range weapons to countries and groups that are enemies of the West. Logically, this could cause other geopolitical conflicts to escalate, or even new ones to emerge. It’s safe to say though that any use of nuclear weapons in Ukraine would be much worse.

This relates to Israel. US officials are urging Israel not to escalate its ongoing conflict with Hezbollah on its border with Lebanon. Obviously, there are concerns that escalation on Israel’s northern front could risk destabilising the region. As we saw back in April, escalation risks can cause oil prices to spike, which could feed into inflation.

Another geopolitical wildcard is Taiwan, where China recently surrounded the island in what appears to have been its largest act of intimidation to date. The idea that China could invade Taiwan seems unthinkable, namely because it could risk destabilising China itself. Even so, if there’s escalation elsewhere, China could use the chaos to its advantage.

In terms of crypto-specific factors meanwhile, there don’t seem to be many on the menu. The main course is the spot Ethereum ETFs, which SEC chairman Gary Gensler recently said would take some time to finalise. It’s possible that the SEC will still go after Ethereum and Consensys, but if the ETFs are anything to go by, the regulator will probably take its sweet time.

This pertains to the primary crypto specific-factor that’s been moving the markets, and that’s politics. Some of you may have heard about the bombshell Wall Street Journal article alleging that President Biden is incapable of running for a second term. It’s interesting that this news comes after the Democratic primaries have already finished.

Regardless, the fact that Biden was the one who recently vetoed the pro-crypto resolution passed along bipartisan lines, the news that he would not be running for a second term could turn out to be a bullish catalyst. That’s simply because it would be assumed that the Democrat candidate for president would be more pro-crypto, and perhaps they will be explicit about it.

As with the spot Ethereum ETF approvals, predictions markets seem to be underpricing the possibility that Biden will bow out of the upcoming election. Probably nothing…

💲 The Node Sale Era 💲

Over the past few months, we’ve seen a steady rise in the number of projects raising funds through the ‘node sale’ model.

If you’re not sure what a node sale is, it refers to a fundraising model that involves selling the right to ‘run’ a blockchain node directly to the community.

Typically, running blockchain nodes requires technical knowledge. However, new projects looking to fundraise via this model offer node licences/keys in the form of NFTs that can be delegated to others. This allows purchasers to delegate node operations to more technically adept operators. Different projects have implemented different strategies for their node sales, but the model mentioned above seems to be the most common one.

That said, this concept of selling nodes is not new to crypto - one of the more prominent examples from the last cycle is Gala Games. However, what’s interesting is that the interest in node sales has surged recently. In fact, almost every new project now seems to be featuring a node sale.

Our analysis of the trend shows that it started around six months ago.

To be precise, it seems to have started with the sale of XAI Games’ ‘Sentry’ nodes back in December 2023. At the time, XAI’s node sales raised over $40 million but only managed to sell around 35,000 of the 50,000 nodes originally offered.

While the start was slow, the demand for XAI nodes skyrocketed after the XAI team decided to reward early node adopters by announcing an airdrop that put over $150 million worth of tokens (at peak value) into users’ wallets. Unsurprisingly, this resulted in more demand for other node sales.

Since then, several other projects have taken the same approach, including Hytopia, Aethir, Gunzilla, Sophon and most recently CARV. The teams of most of these projects have managed to raise hundreds of millions through their node sales.

This may seem like a huge number to the average retail investor, but the truth is that most new projects have been able to raise similar figures through private market token sales to VCs.

So, why are all these projects suddenly pivoting to a node sale model instead of the good ole ICO or private token sale?

If you asked the projects, they’d tell you it’s to improve decentralisation, prevent Sybil attacks, and align community incentives with network security. Some would even say it’s an attempt to fight against the recent trend of high FDV low float tokens.

For what it’s worth, there’s some truth to that logic. However, we believe there is a much simpler logic at play. That is, node sales serve as a ‘proof of demand.’

You see, in bull markets, the number of new projects being launched increases exponentially. This means that CEXs and VCs become more stringent in their listing and investment decisions. Many of the top-tier CEXs and VCs want to see some form of proof that shows these projects have genuine, long-term demand.

This is especially relevant given that the recent trend of airdrop farming has resulted in most users dumping the tokens and migrating to other projects once the airdrop is issued. This has resulted in bad optics for new project launches overall.

We believe this is the primary reason why the node sale model is gaining more popularity among project founders. You see, in addition to serving as a proof of demand, teams have realised that they can use the node sale model to create various incentives and mechanisms that control sell pressure for their token. One example is requiring the staking of more tokens to boost rewards for node operators.

Now clearly, this is good for the project’s long-term demand. But, is the same true for the investors?

Well… not really. In fact, it’s sort of like a Ponzi – which brings us to our next point.

Many investors, looking at the early success of XAI node purchasers, have been blindly buying into other node sales. Often with no due diligence or research on how long it takes to break even or earn back rewards.

Most of these projects will present a spreadsheet, projecting an expected breakeven schedule for each tier. Most investors appear to be taking these projections at face value. However, as X user Kiet shows in his recent analysis, these projections are not accurate.

There are unaccounted factors that impact the actual rate of return for these node operators. This includes node operating expenses, withdrawal penalties, withdrawal queues, and node key transferability. To put it simply, if the project’s projected break-even shows six months, in reality, these factors push your break-even schedule to around ten months or higher.

As the node sale meta picks up, it becomes ever more important for investors to model out the numbers themselves instead of blindly believing the project’s marketed schedule.

In truth, the real winners in most of these node sales appear to be the projects running the node sales and the referrers who receive a percentage of the amount raised by said projects.

So, be sure to do the maths before getting too excited.

🔥 Hot Deal of The Week 🔥

There is a famous saying in crypto “not your keys, not your crypto”. Sadly, it seems that most people only learn this when things go wrong.

This is why it is so important to take custody of your own crypto and to keep it as safe and as secure as possible. To do that you’ll need a hardware wallet!

We’ve gone through and tested over a dozen different types of device over the years and the one that is most used amongst our team has got to be Trezor. Our team has summarised all the pros and cons of this device and its features in our dedicated review.

👉 Get your Trezor

Need help getting your Trezor setup? Watch our ultimate setup guide!

🔮 Video Pipeline 🔮

* Why is it so hard to get a job?
* Mainstream economic data is a lie: why are they manipulating you?
* Hottest Crypto Narratives of Q3: Watch These Coins!
* Ethereum |Governance: Who Controls it & What It Means

🏆 What's New at CoinBureau.com This Week? 🏆

* Puffer Finance Review 2024: ETH Liquid Restaking Protocol
* Top NEAR Wallets 2024: Best NEAR Wallets for Safe Storage!
* Ankr Staking Review: Unlocking the Potential of Liquid Staking
* Safest Crypto Exchanges: A Beginner's Guide to Secure Trading

📖 Quote of the Week 📖

Always remember, past performance can’t be seen as a predictor of future returns.  

“In the business world, the rearview mirror is always clearer than the windshield” - Warren Buffet

Team Coin Bureau
 

Disclosure: Authors may own cryptoassets named in this newsletter. These are unqualified opinions, and a Coin Bureau newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor.