Bits + Bips: Why ETH Is Soaring and How Long The Rally Can Continue - Ep. 886

Unknown Source August 13, 2025 76 min

artificial-intelligence investment startup generative-ai

99 Companies

111 Key Quotes

4 Topics

🎯 Summary

Bits + Bips: Why ETH Is Soaring and How Long The Rally Can Continue - Ep. 886 Summary

This 75-minute episode of BITS + BIPS, featuring host Steve Erlich and guests Alex Kruger, Ram Alwalia, and special guest Sid Pal (CEO of Maple Finance), dives deep into the current crypto market surge, focusing heavily on Ethereum’s recent performance, the impact of regulatory clarity, and the mechanics of on-chain institutional credit.

1. Focus Area

The discussion centers on the collision of crypto markets and macro/regulatory developments. Key areas include:

Ethereum’s Price Surge: Analyzing the drivers behind ETH’s rally, contrasting narrative-based explanations (Genius Act, stablecoins) with flow-based drivers (treasury accumulation).
Institutional On-Chain Finance: Exploring the growth of decentralized credit, lending, and yield generation, particularly through platforms like Maple Finance.
Regulatory Impact: Discussing how pending legislation (like the Clarity Act and the Genius Act) provides clarity that disproportionately benefits ETH over BTC.
Macro Environment: Brief mention of upcoming CPI data and its potential market impact.

2. Key Technical Insights

ETH as the Stablecoin Backbone: Ethereum is benefiting because it is the primary chain securing the vast majority of on-chain stablecoin value, making it a direct beneficiary of regulatory moves favoring stablecoins (like potential Treasury funding allocations).
MakerDAO’s Evolution to Sky: MakerDAO is repositioning as “Sky,” adopting a structure resembling a decentralized central bank with “pods” (similar to Millennium/Citadel) that act as asset managers allocating credit, addressing the principle-agent problem through risk retention.
Risk Retention in DeFi Credit: The structure of on-chain credit (like Maple’s partnerships with Sky pods) mirrors post-2008 Dodd-Frank requirements, where managers bear first-loss risk, aligning incentives.

3. Market/Investment Angle

Flows Over Narrative: Alex Kruger argues that ETH’s immediate price action is driven less by the Genius Act narrative and more by massive accumulation flows from major corporate treasuries (specifically naming S-Bet and Bitmain, who have accumulated billions since July).
Contrarian Buying Signal: Ram Alwalia suggests the best time to buy digital assets, especially ETH, is when funding costs and transaction gas fees are low, indicating low demand/activity.
Treasury Leverage: Institutional crypto treasuries are looking to utilize their holdings for leverage (borrowing) at competitive rates (7-9% via Maple) rather than expensive equity issuance (15-20%+ IRR).

4. Notable Companies/People

Maple Finance (Sid Pal): An on-chain asset manager specializing in over-collateralized credit, lending stablecoins and BTC to institutional borrowers. They manage $3.2B AUM.
MakerDAO/Sky: Discussed for its innovative structure acting as a decentralized central bank managing credit allocation pods.
Spark Team: An entity working with Maple Finance, acting as an intermediary/fund manager within the Sky ecosystem to solve the principle-agent problem for capital allocation.
Bitmain & S-Bet: Highlighted as major corporate entities accumulating significant ETH, driving current price flows.

5. Regulatory/Policy Discussion

Clarity for ETH: Unlike Bitcoin, which has long been viewed as a commodity, regulatory clarity emerging from discussions around the Genius Act and statements by SEC Chair Gensler specifically benefits Ethereum due to its high stablecoin activity.
Bank Value Proposition: Banks with OCC charters are exploring partnerships with DeFi credit providers like Maple to finance their crypto-holding customers without taking direct balance sheet risk against volatile assets, often through referral agreements or providing warehouse facilities (back leverage) to platforms like Maple.

6. Future Implications

The conversation suggests a continued strong period for ETH, driven by institutional flow dynamics that are expected to persist for “at least a few more months.” The industry is rapidly “speedrunning” traditional banking structures, with sophisticated credit mechanisms (like risk retention and warehouse facilities) being implemented on-chain, bridging TradFi capital structures with decentralized settlement. The trend points toward increasing institutional integration via regulated intermediaries that can bridge custody and on-chain lending.

7. Target Audience

This episode is highly valuable for Crypto/DeFi professionals, institutional investors, hedge fund managers, and macro analysts who need to understand the interplay between on-chain credit markets, corporate treasury management, and regulatory catalysts affecting major crypto assets.

🏢 Companies Mentioned

Accelerate ✅ Organization/Project

Ginkgo Bioworks ✅ Organization (Non-Crypto Example)

Metaplant ✅ Organization/Project

Backed ✅ project

WLF ✅ project

S&P ✅ institution

BigGo ✅ institution

Spark ✅ defi protocol

Letten ✅ institution

2 Prime ✅ institution

Galaxy ✅ investment firm

UnchainedCrypto.com ✅ Organization

Lumida ✅ Organization

House Asgard ✅ Organization

NG Kingdom ✅ Organization

💬 Key Insights

"if there's rate cuts in in TradFi, the crypto credit spreads will widen, and yield on-chain generally widens because it pushes up risk assets."

Impact Score: 10

"The big meta question is, I think the Wall Street Journal today had an article asking if this is like a new floor of state capitalism in the United States. And they were like taking that into account with the golden share that that the administration got from approving the the Nippon takeover of of US Steel. Industrial policy. That's it's industrial policy."

Impact Score: 10

"The big innovation they did was they took it out of private OTC funds and effectively found a way to tokenize it, package it, get economies of scale on the costs, and and distribute it to the masses [referring to Athena]."

Impact Score: 10

"Ethereum is kind of where debt capital markets live. So you think stablecoins, you think tokenized RWAs, you think crypto credit. Most of that's taking place on Ethereum."

Impact Score: 10

"BlackRock is all over the thesis. They see all assets going on-chain."

Impact Score: 10

"I think it'll be interesting when we hit the consolidation phase because I think right now we're seeing a lot of new ones being issued as the there are premiums. But once some of them start to turn to discounts, I could see, you know, Sailor or MicroStrategy, you can effectively buy Bitcoin's for less than a dollar, which is even more leverage on his model if you can pick up some of these at a discount."

Impact Score: 10

📊 Topics

#artificialintelligence 122 #investment 17 #startup 2 #generativeai 1