Matthew Harcourt, an analyst with Australia’s leading cryptocurrency investment firm, Apollo Capital, shares the fund’s weekly take on what’s happening in the fast-changing and volatile cryptocurrency space.

Sentiment in the crypto space was at its best level in about two weeks when Matthew Harcourt talked to Stockhead on Friday afternoon, with Bitcoin trading at around US$32,500 and Ethereum back over US$2,000.

“We’re getting a really solid bounce — depending on how hard it runs, it could set us up for a good half two, but you don’t want to speak too early,” Harcourt said.

Still, there have been positive signs, including recent surveys indicating that high-net-worth and institutional clients of both Goldman Sachs and Fidelity are interested in buying crypto, Harcourt says.

Last week also saw a US$900m capital raising for the crypto exchange FTX at an US$18 billion valuation. Investors included Softbank, the Japanese multinational.

“We think that’s really positive for the crypto asset market,” Harcourt says. The massive valuation is groundbreaking for a company just two years old, and will serve to transform institutional attitudes towards crypto.

Also, the London hard fork for Ethereum is set to go into effect in just a week and a half, on August 5 (Australia time). London includes EIP-1559, an upgrade to the network that will reduce gas (transaction) fees and make Ether deflationary.

“I’m sure we’ll get a bit of a run-up (in the price of Ether) in the last week or two before that, just like we saw in the Coinbase IPO. The price action really only started right before  — I think a similar thing might happen with Ethereum.

“Hopefully this bounce is a trend reversal, but there’s still a lot of critical points to get past before we’re out of this bear market.”

Yummy Sushi

Apollo’s coin for the week is Sushi, the token that powers the decentralised cryptocurrency exchange of the same name.

The exchange was launched late last August as a controversial clone of UniSwap, and has recently undergone a soft rebrand from SushiSwap to Sushi.

The tokens is the No. 67 crypto with a market cap of US$1 billion. The exchange itself is handling around US$175 million in volume each day, with a total liquidity of US$2.7 billion.

Since launch it has handled US$93 billion in trades, compared to Uniswap’s US$298 billion.

“Over the past year, they’ve really come into their own, as a differentiated product,” Harcourt says.

Sushi tokenholders are rewarded with a portion of exchange fees, Harcourt said.

“A lot of projects can’t do that because of security, legal stuff, but because Sushi is a decentralised exchange, it has been doing that.”

Sushi controversy

The Sushi community has been embroiled in controversy in recent days over a proposal to raise US$60 million by selling Sushi tokens to venture capital firms at a 20 to 30 per cent discount, Harcourt notes.

“There was a bit of negative feedback from the community and in the forums,” he says.

It’s interesting to watch a tokenholder-governed decentralised autonomous organisation (DAO) like Sushi try to negotiate with VCs, Harcourt says.

“We’ll see how that plays out,” he said.

But that c0ntroversy – and the possibility of the institutional investors getting tokens at a discount — may be depressing the price.

“It’s a project we’ve had in the portfolio for a few months now. We really like the token and the fundamental protocol.”

Apollo also holds Uniswap’s UNI tokens, and actually holds a bigger position in that coin, Harcourt said.

“But we really like Sushi in terms of decentralisation, community ownership. Very similar, obviously, but we think they’re differentiated enough to hold in our portfolio.”

Uniswap has proven to be a long-term player, such as its plans to launch on Ethereum scaling solutions Optimism (currently in alpha!) and Arbitrum One, while Sushi has pursued a strategy of aggressively moving to meet market demand where it currently exists.

The exchange is on Polygon as well as Ethereum, plus a dozen other blockchains, and last week announced its Trident upgrade that it is calling a next-generation automated market maker.

“They just keep shipping, and keep being quite innovative, and have a good community,” Harcourt said.

The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.