The Biggest Re-Pricing Event Is Happening

Managing Editor’s Note: Before we turn to today’s issue from Brownstone senior crypto analyst Ben Lilly, we have a quick notice from our colleagues over at The Opportunistic Trader…

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Then read on for today’s issue from Ben…

The disconnect has never been as extreme as it is right now.

Prices of cryptocurrency assets outside of Bitcoin, for the most part, are trading below the all-time highs they set in the digital assets bull market of 2021.

Ethereum, for instance, is at $4,400 per token, below its 2021 peak. Solana is trading at $225 per token, also below its 2021 high of $260.

Meanwhile, Bitcoin is near $120,000 per token, well above its $70,000 high of 2021.

The response to this lack of movement in prices has led some of the most long-time digital asset advocates to lament that perhaps we’ll never see higher highs materialize for cryptocurrencies outside of Bitcoin.

But this is shortsighted.

It completely ignores the activity boiling under the surface… and every critic is missing what is arguably the largest catalyst that will ever come to public blockchains.

One that is gaining momentum like a freight train.

I can’t stress it enough that this catalyst will push demand for these blockchain networks to never-before-imagined levels and launch their native digital tokens far beyond their prior highs.

I’m not talking about stablecoins or tokenized stocks. While those are both massive trends, this will supercharge the adoption of those assets.

It’s a catalyst that will shatter one of the biggest barriers to entry for crypto markets – complexity.

But before I get to what will push these networks to their limits, let’s look at the metrics that are showing us that something big is gaining momentum.

The Data

Public blockchains are ledgers. They record transactions and act as a source of truth for the state of everything at any given time.

This means that if you receive $100 in a U.S. dollar stablecoin like USDC, you can see when it was received, that you still hold it, and even who sent it to you, for as long as a blockchain exists.

It even tracks more sophisticated types of transactions, like creating a new contract or creating a loan. This is why we often hear people call public blockchains trustless state machines.

It records the state of everything across time without you needing to trust it. This goes against how banks and other intermediaries work… We place a level of trust that the dollars displayed on our screen when viewing our checking account are, in fact, there at the bank.

There is no way to verify that the bank truly holds the dollars displayed on your screen.

These public blockchains are constantly processing transactions, swaps, loans, and a host of other activities. They are the future rails of finance.

And because they are state machines, we can view how much activity they have over time.

Similar to how railways move cargo from one destination to another, blockchains are doing the same with assets. And as more and more cargo is getting transported, we know that economic activity is rising as well.

This means more trade, more growth, and likely more opportunities are springing up in the areas surrounding these railways.

We can view public blockchains in a similar fashion. As transaction activity begins to rise, it indicates that economic activity is rising.

Which is to say, if a network like Ethereum or Solana is experiencing a growth in activity, then the importance of that network is rising. That’s because the network is catering to more opportunities, more users, and a higher trade volume.

And if the underlying price of the asset used to pay for these transactions were not rising along with this growth in activity, we can say that prices have not caught up to the fundamentals (i.e., the economic activity on that blockchain).

If we look at transaction activity, we not only see this is the case… But also realize that this moment in time has happened several times before.

And each time, the activity preceded meteoric runs in the price of the underlying asset.

Here is a chart showing daily transactions over time for Ethereum. We highlighted two prior moments where transaction activity was surging well above its historic amounts.

In August 2017, activity was surging.

This was mostly due to new tokens being created and issued on Ethereum.

The price of ETH two months later went ahead and broke through its prior high and ran from around $240 per token to more than $1,440.

July 2020 saw something similar…

The price of ETH was again, at $240 per token, well below its previous all-time high… And even its 2019 and 2020 highs.

A month later, ETH rose above its 2019 and 2020 highs… And shortly after, it went above $4,000 per token.

These are gigantic moves that come on the heels of increased activity on the Ethereum blockchain. This activity tends to foreshadow massive re-pricing events.

And today, we see transaction activity is surging once again.

A massive re-pricing event is nearing.

But what’s driving all this activity? And does this activity hint at where some of the biggest opportunities will sit?

The Intersection

The biggest barrier to entry to crypto is a knowledge gap.

There is confusion on what a wallet is, how to transact assets using a wallet, or even how to interact with an application that swaps or creates loans.

This barrier limits the number of users.

But that’s not the only barrier…

Humans are the main users of public blockchains. We’re awake for about 16 hours each day with many responsibilities across our jobs, home life, friends, and family.

The ability to manage complex transactions on a blockchain is simply too time-consuming to be part of our everyday lives. Many of us tend to sit down in the evening or weekend to do a single transaction.

We’re in no position to move assets around to earn market-leading rates or even take advantage of clear opportunities that would better our financial situation.

To do so would require each of us to play a constant game of cat and mouse.

This might seem rather abstract or infrequent, but the truth is, the rates we can earn on public blockchains can even change block by block or every few seconds.

Users cannot turn their idle assets into productive capital that finds the best yields while they go about their lives.

Which is to say…

The way we interact with these new financial systems is changing.

Finance on public blockchains runs 24/7/365. The lights never get turned off. Opportunities arise every second.

We not only want but need a new way of engaging in finance if we are to make the most of this shifting financial system.

And in this glaring need, we find the catalyst that’s generating momentum.

We’ve written about it before in issues like The Permissionless Agentic Economy and A New Asset Class Is Coming…

AI agents are here, and the tipping point is coming…

The Agentic AI Catalyst

Google unveiled in April an Agent2Agent (A2A) Protocol to allow AI agents to communicate, exchange, and coordinate actions with one another.

Even the Ethereum Foundation, the group of developers helping to better the Ethereum network, announced a new dAI (decentralized AI) team focused on making Ethereum the preferred settlement and coordination layer for AI agents.

There is a realization that AI agents will be the way we engage in finance. In fact, it’s already happening.

Our latest recommendation in Permissionless Investor has an AI agent that manages stablecoins to generate the highest possible yield at any given time.

The group behind the agent has limited the amount of capital that’s allowed to use their solutions, but the activity shows us why activity is suddenly surging.

In the last month alone, even with capital restrictions in place using this strategy, the agents did 72,000 transactions. This activity led to $700 million in volume created by agents… not humans… managing a blockchain wallet.

This is just a glimpse at what’s coming.

Activity is beginning to rise like an unstoppable flood. These AI agents are coming online. And they’ll act like a swarm that generates an unprecedented amount of activity.

The result will create one of the largest re-pricing events of the next six months.

And in the process, we’ll realize a flurry of opportunities behind this trend.

This is happening just as Congress is looking to pass the CLARITY Act – a piece of legislation that’s poised to bring a regulatory framework to digital assets. A literal first, and once the president signs it into law, it’ll spur unprecedented innovation and progress in the industry.

We are, of course, monitoring CLARITY’s progress. Like all other legislation, it’s temporarily on pause in light of the recent government shutdown.

We still firmly believe CLARITY will be the second major crypto legislation passed this year – not far behind the GENIUS Act, passed this summer – and we’ll know more in the weeks ahead.

But whether it’s next week or next month, ultimately, what matters is that CLARITY is coming to the digital assets industry. And that regulatory backing timed alongside the rise of these AI agents has created a truly incredible opportunity for those who are ready before the moment everyone else catches on.

We’re witnessing the Web3 agentic economy coming to life right now, and it’ll create a tsunami of wealth that only those positioned for it will realize.

Your Pulse on Crypto,

Ben Lilly
Senior Crypto Analyst, The Bleeding Edge