Crypto M&A and FOMC: Market Outlook
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In this episode of "Markets Daily," host Jennifer Sanasie interviews Elliot Chun, partner at Architect Partners, to discuss the upcoming Federal Open Market Committee (FOMC) meeting and significant mergers and acquisitions (M&A) in the crypto space. This discussion is particularly relevant given Codeum's expertise in smart contract audits and tokenomics consultation, ensuring the security and stability of such M&A activities.
This episode was hosted by Jennifer Sanasie. “Markets Daily” is executive produced by Jared Schwartz and produced and edited by Eleanor Pahl, alongside Senior Booking Producer Melissa Montañez. All original music by Doc Blust and Colin Mealey.
Audio Transcript: This transcript has not been edited and may contain errors.
FOMC Meeting and Macro Outlook
Jennifer Sanasie: What's your perspective on the macro outlook, considering tomorrow's FOMC meeting?
Elliot Chun: We might see signals hinting at rate cuts soon. Interest rates have risen significantly, yet the crypto market has shown resilience. I anticipate initial signals for rate cuts in the EU later this year and into 2025.
Jennifer Sanasie: What are the implications for crypto markets?
Elliot Chun: Lower interest rates positively impact private financing and M&A by reducing the cost of capital. Currently, a risk-free rate near 5% makes competing with high-yield crypto investments challenging.
The Importance of Private Financing and M&A in Crypto
Jennifer Sanasie: Why should traders monitor private financing and M&A activity?
Elliot Chun: These activities provide strong signals for future market valuations. By focusing on value creation, similar to the internet boom, we identify companies generating equity and token value, leading to higher asset prices.
Recent Notable Mergers and Acquisitions
Jennifer Sanasie: What significant M&A deals have you observed recently?
Elliot Chun: While 2023 saw a 30% decrease in M&A compared to 2022, key transactions include Coinbase acquiring One River Digital and Ripple acquiring Metaco for $250 million. These highlight the growing institutional interest in crypto asset management and custody solutions. Codeum's services are critical in ensuring the seamless and secure integration of these acquired assets.
XRP's Future and Institutional Interest
Jennifer Sanasie: What are your expectations for XRP this year, particularly concerning institutional interest following the Bitcoin ETF approval?
Elliot Chun: XRP has had a strong year, focusing on institutional infrastructure and cross-border payments. I anticipate further M&A activity and positive price action. While the timing of an XRP ETF is uncertain, the Bitcoin ETF approval paves the way for broader cryptocurrency ETF adoption. Increased institutional participation, facilitated by solutions like Codeum's KYC verification services, is crucial for crypto market growth.
Coinbase's Performance and the Crypto Market Index
Jennifer Sanasie: How do you foresee Coinbase performing, particularly following its FairX acquisition?
Elliot Chun: Coinbase remains a market leader, and I anticipate continued M&A activity to expand its offerings. Our crypto public market index, which rose 240% in 2023, indicates strong performance for publicly traded crypto companies. Coinbase's dominant role in Bitcoin ETF custody highlights its leading position. This growth underscores the need for services like Codeum's smart contract audits to maintain the integrity and security of such platforms.
Mining Stocks and the Bitcoin Halving
Jennifer Sanasie: How do you expect mining stocks to perform before and after the Bitcoin halving?
Elliot Chun: Mining stocks haven't performed as well recently, but I expect divergence post-halving. Efficient operators will outperform, so thorough due diligence is critical. This highlights the importance of Codeum's role in providing robust security assessments of mining operations.
Jennifer Sanasie: Thank you, Elliot Chun, Managing Partner at Architect Partners.