Animal Spirits Podcast - Talk Your Book: Bitcoin Flows

Episode Date: May 6, 2024

On today's show, Ben Carlson and Michael Batnick are joined by Christopher Jensen, Director of Digital Assets Research for Franklin's Digital Asset Investment Strategies Group to discuss, the resiliency of Bitcoin, the global casino vs global computer use-case theories, understanding the Bitcoin halving, and much more! Find complete show notes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Past performance is not indicative of future results. The material discussed has been provided for informational purposes only and is not intended as legal or investment advice or a recommendation of any particular security or strategy. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation. Information obtained from third-party sources is believed to be reliable though its accuracy is not guaranteed.   Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Learn more at: https://www.franklintempleton.com/ Read our glossary and important information here: https://t.co/Pv6CyIuqxW Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits Talk Your Book is brought to you by Franklin Templeton Digital Assets. Go to frankletopleton.com to learn more. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ridholt's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decision. clients of Bridholz wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben.

Michael, we were having some crypto conversations when I was visiting you, New York. And I feel like with traditional finance people, it always boils down to, especially people, anyone who's skeptical, is like, okay, fine, the prices have gone up. What's the use case? Give me the use case now. Everyone is just wanting it. And it does seem like people in crypto have kind of just at this point said, well, the liquidity and the speculation and the number go up, that, that is, that's going to keep people in until there is a use case. And we're fine with that. Is that fair? That is fair. It is a use. That is a use case. It's a global barometer for risk appetite. We saw that over the weekend. We're recording this on Friday, April 19th. I know this isn't coming out for a few weeks. and what I've said earlier is it works and what if what if that's it and now of course

it's probably not going to be enough for crypto dominance right or whatever sort of end state these people have in mind but for right now new blocks your own money portable self-suffering all that stuff that's what it does it is interesting that it is like the one 24-7 market that can be used to gauge things that happen off hours whether they're And sometimes that is helpful in determining how the market's going to react. And sometimes it's unhelpful because it's a big overreaction. And then calmerheads prevail eventually. But having that one market until maybe we have other stuff that trades 24-7, you know, with more liquidity.

But I think it is interesting as that risk sentiment gauge. It's like a, it's like the VIX for the weekend. Yeah, that's true. Yes, that's true. Bitcoin or crypto is a VIX, just on steroids. But, okay, so I don't think we solved the use case problem. We've heard some good theories recently. I think we talked about some of them on this actually episode.

So we had Christopher Jensen, who is the director of digital assets research for Franklin Templeton and their digital asset investment group. So we get into a lot of that. We define what store value is once and for all, which I guess we've never really talked about. So here's our talk with Chris Ver Jensen from Franklin's Digital Asset Investment Strategy's Group. We're joined today by Christopher Jensen. Christopher is the director of Digital Assets Research for Franklin's Digital Asset Investment Strategies Group and co-lead of the Digital Asset Investment Strategy Investment Committee.

Christopher, welcome to the show. Thanks. Thanks for having me. Whenever I speak with people like you, and I don't mean bald people because I'm one of those two, I'm always curious, how did you go from a traditional finance background into the world of digital assets? Sure. Sure. So I've always been kind of doing the funkier things within finance, almost two decades of experience on the by side, principal investing with a focus on alternatives and private credit. And when I came to Franklin in 2015, started doing credit, but immediately found and teamed up with a couple of gentlemen there who were, I think, doing some of the most innovative things at the firm. And that was kind of at that intersection of.

of technology and finance. And so originally we were using machine learning models to underwrite little units of risk coming off of fintech platforms. And this eventually kind of, I think if you keep falling the tip of the spear at technology and finance, it eventually takes you to crypto, right?

And I had dabbled in the space as early as, you know, January 2018, so it was on my radar personally. And then professionally as we started and get more and more into the esoteric sides investing in the innovative size at Franklin, we started to build out this digital assets group. So, you know, I think professionally speaking, been doing it since, you know, I think as a firm, you know, over the last five years or so, and even longer than that on the personal side. Does it, does it ever surprise you that we literally created a new asset class out of thin air?

I remember having a conversation very early in my career before Bitcoin was even a thing, and people, someone asked a question at a conference or something like, is it possible to have, you know, additional asset classes? and the guy in state said, no, everything is basically just going to be a derivative of what already exists. And crypto in a lot of ways is something new, and it's still relatively new, obviously. But to me, thinking through that from a trad-fi lens, it is kind of bizarre that we literally created an asset class. Yeah, definitely. And I think that's one of the reasons why Franklin initially got evolved, right? I think there's two things happening here. You have the technology,

right, a blockchain technology and everything that's happening there and the way it's evolving, things like the internet or our financial system. And so, you know, from almost a defensive reason, I think Franklin was interested in, hey, this looks like a disruptive piece of technology. You can probably, you know, disrupt the asset management industry. Let's understand it. Let's get out in front of it. And that's why, you know, to this day, we're builders in this space. But then at the same time, on the other end of the spectrum, we realized it's not just a technology. it's creating a new asset class and clients are going to be interested and what does that asset class do to a diversified portfolio and then so we need a view on that. And so it's kind of

always this two-pronged approach, you know, building in the space, investing in the space, realizing it's both a technology and an asset class. That's kind of how we've approached it from the beginning. A two-part question. Were you surprised in November of 2022 when the F-12, when the FTX fraud came to light and Bitcoin didn't go down further than it did. I think it bottomed out at around 15,000, whereas in the previous cycle low, like in March 2020, it got under 4,000. And the second part of this way too long of a question is, are you surprised that not even, man, not even two years later. We made an all-time high when it seemed like this thing was just totally left for dead.

Yeah, I think with respect to the drawdown, you know, I think as the asset class matures and as Bitcoin, you know, kind of the leader of this asset class matures, you know, I think we will see volatility come down a little bit. You know, if you look at, say, the drawdown of Amazon each time since, you know, it's, you know, IPO and then, you know, each time was a little less, right? And so I think you see that with Bitcoin and as the entire asset class matures, I think the volatility will come down and the drawdowns will be less severe. You know, the fact that we're making new all-time highs just, you know, a couple of years later is pretty remarkable, but at the same time, you know, you do have kind of some shifts

in the market structure. Obviously with the, you know, the ETPs and new ways to access the asset class, the democratization of the asset class, new flows, new entrants is a big deal. you know, on the innovation side, you know, we're seeing, you know, the innovation pipeline for digital assets for crypto and blockchain technology is as robust as it's ever been, right? So, and I think, you know, this asset class tends to track global liquidity. And as you're starting to see, you know, liquidity bottom and liquidity start to now, you know, kind of tick up, I think, you know, we're well poised to kind of come back around. But the fact that, you know, all time

highs within, you know, two years of all of that, uh, it is pretty remarkable. And, you know, the fact that it didn't die, I think is, is, is great in a real testament to, you know, the fact that it does seem hard to kill at this point, which is, which is great. I think the existential risk for the asset class, that's one of the risks that's been kind of taken off the table this time around. So, yeah, I would agree with that. The existential risk is off the table, which theoretically should put like, not, definitely not a ceiling on returns, but should, should, perhaps damper some of the asymmetric upside. Like, if that risk is off the table, then that risk premium does not exist anymore.

And I want to push back respectfully a little bit. In the previous cycle, Bitcoin had an 83% drawdown in the most recent one. And I'm talking about the peak from 2017 to the bottom in 2019. In the most recent drawdown, it was 76%. So the drawdown terms were, you know, it was barely a little bit less harsh. Although there was a big difference between 80, 86 and 73, whatever numbers I just said, 83 and 76. But the difference is the levels, the levels were different. So whereas in the previous cycle, this bottomed out at like 2000, recently, the bottom was way, way, way higher, like 15,000.

So just sort of, I just remember at the time, Ben and I were talking, like, why is this thing still catching some sort of bid? Like, why is there some sort of floor underneath this? That's not a question. It's just sort of a comment. I'm curious how you think about the overall ecosystem of crypto, because it's not just Bitcoin and Ethereum anymore. And then you have these other projects where people are trying to build some use cases and Defi maybe like try to build the, you know, the rails of the financial system kind of thing. And then you have the meme coins over here. So how do you reconcile that?

Is it just because, hey, this is the Internet and it's technology and this is the kind of stuff that happens on the Internet? because you see some of the extraordinary moves in some of these things that are, you know, more or less a joke. So how do you, how do you like reconcile that with the actual building over here of a new technology? And then this other stuff that's just kind of fun and entertaining for people, but it also makes some people money. Yeah, for sure. I mean, one of the beauties of crypto and digital assets is its open, permissionless nature, right? So you can, anybody can go interact with these protocols and create new tokens. And that lends itself to things like meme coins. And gambling is a use case in the world. And it's one that people, especially when they're lacking

for other things to do, we'll take to it on chain. And meme coins is just an easy, I think, fun way that people have engaged in protocols and tokens. And it's quick, right? The feedback loop is short. People do like to kind of take those risks. And arguably the risk return on some of those bets might be better than what they'd be doing with lottery tickets or whatnot, which is a pretty sizable tam in the real world. But I think on the actual innovation side, the teams and projects that are building things that are really going to shape the internet, shape the financial system, that stuff obviously takes a lot more time. But it's kind of an amazing thing that these can coexist in the same kind of, you know, crypto world. And you can kind of

have, you know, Chris Dixon talks about the global computer and the global casino. And obviously, you know, I think the investors that are really digging in and playing, you know, the long game here, we're really focused in what the global computer can do. But the global casino use case is there. And it's attracting, you know, people and dollars. But it also, it provides a good, you know, kind of resiliency check on these networks. it drives a lot of traffic. It identifies certain shortcomings with congestion or whatnot. And so there is some value into even that type of use case creating a lot of volume to stress test these networks. I've heard people say that, like, listen, speculation and gambling in a way is a way

to get people's foot in the door. And then you build on top that because, as you said, it provides the liquidity that you need for a system like this to function. Yeah, exactly. I mean, you know, here in my little neighborhood, you know, people have jumped online and engaged it. And that was their first interaction with say, you know, Solana and, you know, the Jupiter protocol. But once you go on there and you realize, you know, wow, there's no kind of company or person, you know, I can just go on there and I can buy a token and flip it on the weekend, you know, when markets generally aren't open, it does open their eyes to, okay, what would be possible, you know, doing other things? And it's that first experience. And it's hard to unsee, right? I guess a little more pushback. And I do agree

or I do, I believe that there will be future benefits to crypto in terms of use cases beyond speculating and investing. The however is venture capital has poured many, many, many billions of dollars into this ecosystem. And you know better than I. I don't think I have enough information to say that there's nothing to show for it. But as what these people would call the normie, I haven't, I haven't seen it. And most people haven't seen it. So do you think that there's going to require another wave of venture capital investments? Or do you think that the last wave is going to be sufficient for building something that, whether it's a consumer, killer app, or, or something that, you know, more behind the scenes. And it's like the financial rails that we don't even know

that we're interacting with. Where do you stand on on what I just said? Yeah. And I think what you're really getting at is the large VC dollar specifically into crypto infrastructure. And I think there still needs to be some build out and improvements there. I mean, we can't tokenize all the world's assets yet and put them on chain. The existing blockchain, the existing infrastructure can't handle that volume yet. And so I think there is still more work to be done there. But obviously, people are interested. for, you know, the kind of end user facing the killer apps, right? I mean, with AI, you have chat to BT. It's very obvious, right? That kind of zero to one moment. And so I think

people are looking for that in crypto. But, you know, you're starting to see some of that. I mean, you know, we're a good example. We're able to run a fund on chain, not a 10% cheaper, but, you know, a fraction of the cost. It really is a game changer for us. And that's just, you know, one fund and obviously we're a huge fund complex and there's a lot more to do there. But it really is a step function change for us to be able to run a fund on chain. I think an area that I'm super excited in is known as DPA, which is decentralized physical infrastructure networks. And what's cool about that is you're using token incentives to actually bootstrap networks that touch the real world, that touch the physical world. And so there's protocols out there.

A hype mapper is a great example. They've mapped 17% of the entire world's roads using token incentives to kind of bootstrap that network, something that wouldn't have been possible without using kind of crypto, blockchain rails and these token incentives. So I think you're starting to see those real world applications, but people, I totally amade. People are looking for that chat GPT moment, that aha, where you can ramp 100 million users basically overnight, right? Do you think that the lower fees in the financial system is as good as any use case?

Michael and I had a conversation with a friend of ours who's in crypto in New York this week, and he said the big game changer that he's looking for is upsetting the MasterCard's visas, American Expresses of the world who are taking 2 and 3% from every merchant when you swipe your credit card, and he's saying eventually you'll be do that for a penny or a fraction of a penny or something on chain. Does that seem realistic to you? Yeah, I think, yeah, I do. But I think, you know, those players that you mentioned, they're also looking to get involved too. But, you know, the theme here is that that Bezos quo, you know, your margins by opportunity, you know, one of the benefits of crypto is that it reduces the cost of trust. It takes out intermediaries. So that that margin that's captured by the kind of Web 2.0 platform economy can now be captured, you know, by the users that own the network in the protocol. economy. So this kind of this shift from Web 2 to Web 3, you know, where platforms own everything to, you know, users own everything via this protocol. I think that's a game changer because once

you own your data, once you own your economics, once you have skin in the game, it does kind of change the landscape. But I think you're going to see, you know, V7 MasterCard. You're going to see all these players play in that Web 3 space as well. And, you know, with the hope is it'll just, it'll force them to reduce fees, right? Or be able to reduce fees. And I think the value proposition is not just a cost reduction, but it's, you know, what new revenues can be added and what new functionality can be added. So in payments, you can bring the cost way down, but you can also do things that like, you know, make them program over, streaming, or micropayments or so you can add new functionality. I think that's where we get most interested when it's not

just a cost reduction exercise, but how do you expand the design space, expand what you can do because of the technology? All right. Let's talk about the investment case and what's going on with the prices. So the story of 2024 with digital assets is obviously the ETF. There's nine new entrants and it's just been a wildly successful new ETF launch. So we're recording on April 19th by the time this comes out. I'm sure prices will look different for better or for worse. We'll see. But without GBT, so even without the incumbent, there's near nearly $33 billion in ETFs. I'm curious with the benefit of hindsight,

is this something that you thought was going to happen just in terms of, I mean, that's a large number. So love to hear your thoughts on how this happened. Yeah, it is a large number. And I was one of the many people that were tasked with trying to estimate, like, look, how big could this be in year one, what's the ramp? going to look like. And, you know, you're, you're kind of doing the best you can't analysis, sensitize it around the different ways it could play out. And the way it's actually played out,

you know, year to date, you know, has exceeded those expectations. You know, I think from a net flow basis to be at, you know, 12.3 billion right now, it is, it's quite remarkable. And what it does for the space, I think, is huge. You know, I think, and we're not, it's still early innings, I mean, there's so many platforms that are still in the education phase that are waiting for a certain amount of months to elapse, you know, with respect to kind of track record before they get comfortable with it. And so even though the flows have been quite strong so far, I think, you know, we're still kind of early days in the adoption through this door that's been opened. I know it's really hard to tell with ETF. It's a little easier to tell with mutual funds for flows. Do you have any sense

of the breakdown of money coming from like retail versus institutional? in terms of like advisors and such. Is it impossible to know? Because that's something Michael I've been trying to figure out is like, is this all just being driven by advisors putting, you know, 2% of their client portfolios into Bitcoin or is this more retail driven? Yeah. So I don't sit, you know, directly close, close that information.

But in my conversations, you know, my sense is that it's coming from a diversified sort of channels. It's kind of coming from all over. But, you know, for one I see, also is that a lot of the big players, they're still doing work. I mean, what we've really found with this asset class is education is key and the kind of onboarding ramp to get comfortable with the asset class. And it's impacting a portfolio. It does take time. There's a lot of handholding. It's a process. So I would say, you know, from the people who have actually allocated dollars,

from what I can tell and what I've heard, it's coming from a diversified, you know, set of sources. And then equally so, there are the institutions, the people kind of doing work that are kind of in that process, but having it allocated. Yeah, I think that's probably right that there are, it's coming from advisors, it's coming from individual investors, it's coming from family offices and institutional investors and all that sort of stuff. From our lens, I've been talking with our advisors and we're not getting an overwhelming amount of questions. In fact, it's been pretty quiet from clients, which I think probably for the listeners would tend to say, it's probably more bullish, you know, all else equal than not. So in terms of

the price action, just very recently, one of the unique aspects of Bitcoin is that it is truly a 24-7 global asset. And over this weekend, when Iran attacked Israel, the SEP 500 wasn't trading, the U.S. market wasn't open, European markets weren't open, Japanese markets weren't open, crypto was open. And you saw digital assets take a nosedive. And so do you think that digital assets are still in this stage a proxy for risk appetite? Yeah, I think they are viewed as digital assets in general viewed as a risk asset kind of gets lumped into, you know, the alternative bucket. Certainly when you look at the asset class, also it's kind of referred to as, you know, liquid venture because it's early stage technology,

yet it's in this kind of liquid form. So I think all that is fair. Yeah, it is interesting. Some of the most volatile times, you have happened on weekends. And what other assets are traded and you can see it. I actually first heard about the attack, you know, by all the alerts happening on crypto. And I was like, something must have happened. And then, of course, I see, you know, five minutes ago the strike happened. So I think that's pretty interesting that you can get that that feedback loop through the markets on the weekend. And, you know, while it has pulled back, obviously, you know, geopolitical tensions higher. I think all, in addition to that, you have this kind of view that, hey, rates are going to be, you know, higher for longer. This also is happening

around, you know, kind of tax season and some selling there. And also, we've just had such gains coming into this, right? So I think a little bit of pullback, you know, isn't abnormal. I think when you look at past bull runs, you know, 10 to 30 percent, you know, pullbacks are very common within a bull cycle. So, but, you know, this time, obviously with, you know, what's happening on the geopolitical stage, you know, certainly it is different. It also happens to coincide with the halving. But, you know, last half in 2020, we were in the middle of a global pandemic.

So there is some precedent for, you know, a lot of uncertainty globally happening, you know, during these events. So you mentioned all of the dynamics that might be affecting crypto right now. Yes, it's had a hell of a run. It got as high as 74 and as low as 60, so around the 19% drawdown. But given that we face higher rates, right, interest rates are sure, should be competition of a risk asset, certainly Bitcoin, crypto is a risk asset, given the geopolitical tensions and given the run, you would expect, you know, maybe went a little bit lower.

So right now, Bitcoin is at $65,000. And do you think that part of the strength is because the having is coming and maybe for listeners that aren't quite familiar with the having, please describe from them what it is and what that might be doing to put a bid on the prices? Yeah. So I'll start with that and I can touch on, you know, what I think, how much impact it's having. So the having, you know, pretty important and recurring event, you know, in the Bitcoin ecosystem

and basically what's happening here is that roughly every four years, the, you know, the The reward for mining a new Bitcoin gets cut in half. So that's why we call it the halving. The first one was in 2012. The current one is happening later on today, you know, for those in the States or tomorrow, Saturday, the 20th, you know, in Asia, it would be the fourth halving in Bitcoin's history. And this time around that, that per block mining rewards going from six and a quarter

Bitcoin to three and an eighth. And this will continue happening every roughly four years until the full 21 million are out in circulation. But it's kind of an asymptotic line, basically, right? So this isn't actually going to happen until 2140 where all the Bitcoin are out. And, you know, why does this happen? Well, you know, it was kind of built into the code base from the onset. And it's designed to ensure that Bitcoin remains this kind of scarce deflationary,

you know, digital monetary asset. which is pretty unique, right, to have a trillion-dollar-plus asset that, you know, whose supply is not a function of demand, but it's actually programmed in. And so, you know, it only happens once every four years and it's happening, you know, today, tomorrow. So that does happen to coincide with a lot of other things that are going on, including, you know, on the demand side. You talked about, you know, the ETB complex. So it is pretty interesting that you're getting the supply cut at the same time, you've seen, you know, demand through a new source and flow is happening. Well, how do you view the efficiency of this market? Because if this market was relatively

efficient, this stuff is on schedule. It's not like this is a surprise to anyone. And Michael and I were talking about this with the ETF. It's like the ETF was this huge groundbreaking event that people were talking about for months and months leading up to it. And then it still seemed like the market almost underestimated it. Maybe it's just because it did better than expected. But how do you think of that in terms of this being a more getting becoming a more efficient or you think it's still relatively inefficient in pricing some of those things in? Definitely. And so with the ETF, you know, it wasn't 100% certainty, you know, that Jan 10th, but, you know,

leading into that, right? The market was certainly believing the base case was that it would get approved then. And you had a little bit of a sell the news, you know, right when it happened, right? I mean, obviously, a lot of price action going into it, a little bit of sell the news. is when it actually happened. And then the actual flow surprise of the upside and then just actual the fundamentals of what those flows do to price, you know, I think is what has driven a lot of the price action.

With respect to the habit, I mean, you're absolutely right. We not only know when it's going to happen, we know exactly how much that per block reward will decrease. I mean, everything's known and it's known by the market. And this is the fourth one. So we have three to kind of look back on. And what we generally find is that while price does tend to go up going into the having, most of the price appreciation actually happens after the having, but it's not all at once.

I mean, I think what we've learned from history is that it's really over six to 12 months. That's where you see the more outsized gains in price. This time might be different in the sense that, you know, to Michael's earlier point, you know, we had the high before the having, which usually the new all-time high doesn't happen. until after. So maybe some of this price action has been pulled forward because of the strong flows on the ETB side. But I think, you know, zooming out a little bit, you know, we're quite constructive because, you know, looking at history and kind of looking at where we are in the cycle, you know, we still kind of think that the outlook, call it the six to 12 month outlook for

Bitcoin and for digital assets, more broadly speaking, you know, is pretty favorable. Well, I think one of the one of the things, yeah, you're right. So the, the, the, traditional financial-minded person would say, well, this just doesn't make any sense, okay? If you're telling me that it's on schedule, like literally everybody knows about it, then surely markets or price us in. The unique thing or what's different maybe about Bitcoin than the way that traditional, like a stock would work, for example, where it would traditionally be or typically be a buy the news, sell the rumor type of thing, or buy the rumor, sell the news, excuse me, is that this is, it's just supply and demand. That's it. That is what drives prices. And the demand

isn't changing, but the supply is. Yeah, it was right to the having. But the fact that it's coinciding with this new source of flows is pretty interesting. So to kind of put things in context here, the ETB complex so far has bought on average 2,400 new Bitcoin a day, right? So a new source of flows in demand, 2,400 Bitcoin a day. The new Bitcoin supply via the new is coming from these block rewards has been, you know, 900 Bitcoin a day. And so, you know, kind of, you know, two and a half times the demand over the supply, right? And that's why price has been going up. Post-having, you know, your 900 Bitcoin a day of new supply, it's cut in half, 450 a day. Now, if that, if that ETP complex alone kind of keeps buying at,

you know, a similar rate, you're talking about, you know, 5x as much incremental demand just from that set of buyers versus the structural supply pressure coming from these miners. Right. So if Bitcoin is at 50,000 by the time this episode comes out, forget everything I just said. But that's whole supply, this is what Michael's been harping on for a long time, is the demand exceeding the supply. And that obviously hasn't meant that prices can't go down because they can. But if there's a certain subset who has been shown to just, it seems like they're just never going to sell, right? People either lost their keys early on or these certain group of people who got into Bitcoin really early, just the big whales just seem to never are going to sell it for whatever reason. And there isn't as much supply in terms of mining anymore.

And now more demand comes from the ETF, the whole supply demand and balance. That's the simplest story to tell, correct? Yeah. And obviously, you know, is it appropriate to take, you know, the average, you know, buy pressure from that comp, the 24-10 today, like, you know, what should we be assuming going forward? When these ETPs launched, there was probably a lot of tickets lined up. There's probably, you know, you could argue there's probably going to be some summer lull. But, you know, I think, you know, given what we talked about, the education, the learning curve, the amount of institutions doing work, the amount of new dollars that are probably on the com,

but, you know, kind of timing those. So it's all a range of these distributions that you're trying to, you know, kind of put together. And what we've seen, the beauty of all the Bitcoin being tracked on chain is the amount of Bitcoin kind of held for long periods of time. You, it has come down. We are seeing Bitcoin move from older hands to newer hands. And again, that information can be tracked, which is kind of exciting. But like you said, there are still plenty of holders that, you know, they're holding for the long run. They're never going to be selling. So you have to take, you have to take the good with the bad. And the good with the ETF is there's been, it's opened it up to people just beyond,

beyond people that were like hardcore crypto-native people that, I'm not even talking about coin-based people, but like, you know, self-storage people. And now you could, now it's been opened up to anyone. And with that comes easy in, potentially easy out. Do you think that if there is a bare market in risk assets, can we see Bitcoin diverge? Because I feel like, and you could correct me if I'm wrong, historically, when stocks have tanked, Bitcoin has tanked more. Do you see a world in which those two can diverge that Bitcoin can become a safe haven? Or is that perhaps wishful thinking? You could see more divergence there as one of the nice things about the having, right, is that structural cell pressure comes down. And I think with these new buyers,

these new flows, it's in addition to kind of new demand, it's a mix shift, right? It's a new type of buyer. Institutions, right? As you guys know, I mean, they do buy dips. And, you know, when it's in that kind of traditional wrapper and it's in the rest of your portfolio, there's almost a cycle. That's part of my investment portfolio now, right? It's not part of my whatever on my phone where I might be doing more trading and more short term minded. I mean, I'm hearing about people, you know, doing back to her IRAs and putting that into, you know, Bitcoin ETFs and and thinking about that really for long term. I'm going to part this money away. way because as we were talking about earlier, I think the existential risk is gone, right? And so people

are like, okay, it's totally going to be cyclical, but I'm just going to put it aside and I'm going to let it ride. So I think you will see more of that. All right, Christopher Jensen. We appreciate your time. This is really excellent. If people want to learn more about Franklin and what you all are doing with digital assets, where can we send them? Yeah, Franklin Templeton, digital assets. We're also active on Twitter through our main or X, you know, through our main account and FTDA on the digital asset side. We put out lots of research on a regular basis and then more, you know, your social media manager is doing some cute stuff. Yeah, we definitely have fun with that account. And so, yeah, you can follow us there.

All right. Appreciate the time. Thanks, guys. Appreciate it. Thank you, Christopher. Thank you, Franklin, digital assets. animal spirits at the compound news.com. We will see you next time.