In a recent Twitter thread, Chris Burniske, Partner at crypto-focused venture capital firm Placeholder, shared his thoughts on the impact of the current banking crisis, regulatory challenges, and Balaji Srinivasan’s bet on the future of cryptocurrency. Burniske expressed his bullish outlook on the long-term prospects of crypto, despite short-term volatility and uncertainty.
Burniske believes the current banking crisis has been induced by aggressive monetary policies and will be resolved similarly. He anticipates that the Federal Reserve and other central banks will drop interest rates, possibly even this year, allowing existing bonds to rally and struggling banks to regain healthy balance sheets. He also argues that the banking crisis is more likely to cause disinflation than hyperinflation as credit dries up.
The Placeholder partner goes on to address the ongoing regulatory challenges faced by the crypto industry, stating that the sector is currently in the “then they fight you stage.” Burniske believes that the intensity of this fight and its prominence on large stages reflect the massive opportunity and high stakes involved. He notes that crypto will be a significant issue for voters in the 2024 elections, which he sees as a sign that the industry is gaining ground.
Despite concerns about the US government’s increasingly draconian approach, Burniske retains faith in the balance of powers and the eventual triumph of crypto and open data systems. He emphasizes the importance of having a solid digital substrate for the future and advises crypto enthusiasts to keep a hardware wallet in case of a darker alternate reality.
Regarding Balaji Srinivasan’s bet, Burniske views it as a directional alert, grabbing people’s attention in a distracted world. While he sees disinflation as more likely than hyperinflation in the coming years, he agrees with Voltaire’s assertion that fiat currency will eventually return to its intrinsic value of zero.
Burniske remains long on crypto, asserting that blockchains are critical infrastructure providing solutions to societal problems, including AI. He remains optimistic about the human ability to navigate challenges and sees blue skies ahead for the crypto industry.
In a series of tweets on March 17, Burniskeshared his thoughts on the upcoming Ethereum network upgrade, dubbed initially “Shanghai” and more recently referred to as “Shapella.” Burniske anticipates that the upgrade will de-risk Ethereum staking and pave the way for increased staking percentages. Burniske stated that Ethereum staking percentages could see a 2-4x increase in the quarters following the Shapella upgrade. He believes this will result in bullish flows rather than bearish and advises market participants to expect volatility but not be misled by short-term price fluctuations.
The Placeholder partner also refuted that the Shapella upgrade could lead to a significant dump of ETH in the market. He argued that critics who hold this view have yet to consider the upgrade’s implications on market dynamics thoroughly.
Burniske says that 15% of ETH is currently staked, compared to 50-70% for its cryptocurrency peers. According to Burniske, the lower percentage of staked ETH is due to the previously undefined lock-up period, which has presented too much risk for many investors. However, the Shapella upgrade will introduce a more defined lock-up period, which Burniske believes will encourage more people to stake their ETH.
In addition, he expects the Ether-Bitcoin (ETHBTC) ratio to exhibit temporary weakness before breaking out to the upside following the Shapella upgrade in April. Burniske also commented on the broader crypto market, noting that Bitcoin (BTC) rallying while traditional banks falter is pivotal for the industry. He suggested that when Bitcoin’s momentum slows, it could align with Ethereum’s push for increased staking post-Shapella.
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