Research Summary
- The report discusses the investment theme of 2023, focusing on Bitcoin and regulation, with major catalysts being the regional banking crisis and Blackrock BTC spot ETF application. Regulatory clarity has emerged through court decisions and comments between the SEC and Ripple, Coinbase, and Grayscale.
- Coinbase launched its Ethereum layer-2 scaling solution called Base, in partnership with Optimism (OP). It’s designed to be a faster, lower-fee alternative to the Ethereum network, with transactions costing less than 10 cents USD. Over $163M has been bridged over to Base in the last two weeks.
- Fintech giant PayPal entered the stablecoin race with the launch of PayPal USD (PYUSD), issued by Paxos Trust Company. The stablecoin will be held in U.S. Treasuries and similar cash equivalents, and will allow users to transfer PYUSD between PayPal and compatible external wallets, send person-to-person payments, fund purchases, and convert supported cryptocurrencies to and from PYUSD.
- The report emphasizes the potential impact of PayPal and Coinbase on the market, highlighting the difficulty for the average person to digest new products like Base and PYUSD, and the tendency of financial markets to overlook building blocks in favor of “hockey stick growth.”
- It concludes with a reflection on the potential long-term impacts of these events, suggesting that they may be seen as catalysts that investors had time to digest before it was too late.
Actionable Insights
- Investment Opportunities: The report highlights the growth of Bitcoin and Ethereum, driven by significant events like Coinbase’s Base launch and PayPal’s PYUSD. Investors may consider these developments as potential investment opportunities.
- Impact on Ethereum: With two major companies, Coinbase and PayPal, building new protocols and tokens on the Ethereum network, there is a bullish sentiment around Ethereum. Investors should monitor the growth of Base and PYUSD as they may significantly impact the market.
- Stablecoin Growth: The launch of PayPal’s stablecoin, PYUSD, emphasizes the growing importance of stablecoins in the blockchain technology. Investors may explore opportunities in stablecoins, considering their increasing assets and potential to bring millions of people into DeFi.
- Consumer Adoption: Coinbase’s efforts to make blockchain products more user-friendly and its collaboration with companies like Coca-Cola, Atari, and OpenSea may signal the next wave of growth in blockchain consumer applications. Investors should watch for developments in usable blockchain consumer applications.
