Matthieu Jobbe-Duval, head of financial products at CoinList, joined Coinscrum host Teana Baker-Taylor to discuss the crypto markets with a focus on the Flow blockchain, DeFi, ETH and institutional investors.
Flow is a well-known project in crypto and it was built by the folks who created Crypto Kitties a few years back. They went back to the drawing board to design the Flow blockchain, which is going to be the blockchain for NFTs. They got a license from the NBA a few months ago allowing them to essentially issue NFTs based on NBA moments. You can buy short clips of all-star NBA action, which are NFTs, and you can exchange them with your friends the way you would do with baseball cards.
(1:33) “It sounds odd but it’s a roaring success. They are selling out those moments every time that they put them on the market,” said Matthieu.
The Flow blockchain, which is going to be the layer upon which the NFTs will be exchanged for the NBA but also other projects, did an option on CoinList about three months ago where FLOW, the token, was sold for USD 0.38. The token launched last week on Kraken in this hot market. It opened at USD 6, rallied to USD 12 and is currently hovering at USD 9.
(2:11) “It’s a phenomenal story of great returns like we’re used to in crypto, although it’s not 2017 because now you really have a real working product and people using them and exchanging them and insane stories of people really making great investments through these NBA moments,” said Matthieu, adding that there is much more to come for the FLOW token.
ETH’s New All-Time High
The ETH price has been breaking to new all-time highs after lagging on last year’s rally. Last year, the ETH to BTC ratio spent most of the time under 3% compared to 2017, when it was in the high 5-6% range on a regular basis.
(3:42) “So ETH struggled to rally while bitcoin was getting its fun in the sun, going from USD 20,000 to USD 40,000. So this is long overdue in a sense for ETH to start coming back,” said Matthieu.
It’s hard to say what the drivers are. But in a sense, you could point to the institutions that started putting money on bitcoin, which by most metrics fueled the strength in the bitcoin price over the last six months. ETH didn’t see that money at first but now that money has started to come into the space. That’s the first driver, and the price was long overdue to bounce.
Secondly is the recent launch of Eth2, which takes the ETH token and locks it inside the blockchain. For now, it’s tucked away and the supply is reduced. It’s earning staking and rewards but it’s not there to be traded yet, though it will go live at some point. Third is the CME launching ETH futures on Monday.
(5:00) “The fact that the CME is now getting the green light to ship the futures is also reasonably bullish,” said Matthieu.
DeFi Leaders and Laggards
In the current DeFi market, a token that is a laggard is only up 100% in the last couple of weeks. Chainlink, which was a market favorite in 2019 and 2020, has only gone from USD 11 back at the lows of the summer to USD 24, which is an amazing return but still disappointing. For instance, Sushi went from USD 0.80 to USD 14 today. Curve, which was trading at USD 3 during their launch and farming project back in October/November, is currently hovering at USD 30.
(6:29) “So you see those returns and you’re like, go, what is going on exactly? DEXs are trading and you know the volume is there; the liquidity is on those platforms, but nothing really has changed — no major features, no big bugs fixed, nothing really new to justify 3, 4, 5x return,” said Matthieu.
For such a rally to happen, he added, his belief is that you don’t need that much money because these are very liquid tokens. The market cap is high but the number of tokens in circulation isn’t that high. Investors are still locked, by and large, and the tradeable tokens are tokens that are obtained by farming. So it’s a slow trickle, Matthieu said, and you don’t really need that much buying power to drive the prices up higher.
Perhaps the institutional involvement in bitcoin that we saw last year has now started to diversify and a little bit of money moving from bitcoin into DeFi would be a game-changer for DeFi prices, which we have seen. The bitcoin price, meanwhile, has remained stable.
(7:38) “So this is a likely theory and at least nothing else that I could see that could explain such a dramatic multiplier on valuations,” said Matthieu.
The bitcoin market since last summer has been the start of the bitcoin legitimization, said Matthieu. The story has become if you are not in this market, why not? Large asset managers including the likes of BlackRock have said that bitcoin is for real. It changes everything.
(11:04) “That changes the view that we had on the bitcoin price. You can put that in the bin and restart because once you have that legitimization of the space, now we have a real asset class. And that changes the whole rule book. It’s a 10x, maybe 100x on the price and bitcoin really starts to attract investment across the board,” said Matthieu.
Trading infrastructure is not yet where it needs to be for institutional investors in terms of latency. But from a custody standpoint, which is really the crux here, the market is ready. So trading itself is still a pain point, but custody and being able to safeguard the BTC and ETH and guarantee to clients that this will show up in your Goldman Sachs or JPMorgan interest statement at the end of the month, that is possible.