Bankless - ETH ETFs Begin Trading | Matt Hougan

Episode Date: July 24, 2024

The ETH ETFs have officially launched, but wen $ETH moon?  We saw $1.1B in volume and $100M in inflows yesterday. Is that good? When will this factor into price? Matt Hougan, CIO of Bitwise joins Ryan and David midway through the show to go over the above and also how the ETH ETF launch went, predictions going forward, and much more.  ------ 🍵MATCHA | NEW PRICING ENGINE https://go.0x.org/matcha-v2-pod   ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2    ⁠  🦄UNISWAP | BROWSER EXTENSION https://bankless.cc/uniswap  ⚡️ FUEL | EARN FUEL POINTS https://bankless.cc/fuel  🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle    ⚖️ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum  🗣️TOKU | CRYPTO EMPLOYMENT  https://bankless.cc/toku  ------ TIMESTAMPS & RESOURCES 0:00 Intro 2:35 ETH ETF Launch https://x.com/EricBalchunas/status/1815489137484722333  https://x.com/JSeyff/status/1815422061365305494  https://x.com/NateGeraci/status/1815487451726499864  https://x.com/Ashcryptoreal/status/1815677145810649151  https://x.com/JSeyff/status/1815737082129650047  https://x.com/RadarHits/status/1815674577726406748   https://x.com/JSeyff/status/1815737643948286104  https://x.com/BitwiseInvest/status/1815486131376370002  https://x.com/BitwiseInvest/status/1815716188447482341  https://x.com/QuintenFrancois/status/1815624631115460662  https://x.com/BitwiseInvest/status/1815486261337182504  https://x.com/VitalikButerin/status/1815697566614655158  6:44 Matt Hougan Interview https://x.com/JSeyff/status/1815958023317205232  https://x.com/NateGeraci/status/1815885624467210263  https://x.com/JSeyff/status/1815958023317205232  33:02 Grayscale & Grayscale Minitrust: Wen Moon?  https://x.com/JSeyff/status/1814347183522754773  https://x.com/Grayscale/status/1815688403381531021  https://x.com/NateGeraci/status/1815556927918600209  38:40 Hildobby Dune Board WIP https://dune.com/hildobby/eth-etfs  39:31 Bitcoin ETF Flows https://x.com/News_Of_Alpha/status/1815532026486776288  https://x.com/TrustlessState/status/1815713932453028059  41:16 Bullish Setup Going into the Rollup tomorrow https://x.com/TrustlessState/status/1815390176132186202  https://x.com/DeItaone/status/1815813380256719213  https://x.com/DavidFBailey/status/1815848521205178404  44:00 Closing & Disclaimers ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures ⁠ 

Bankless Nation, the Ethereum ETFs are here. I was out yesterday. So, David, I feel like I need to get fully up to speed. And there's a bunch of people listening who need to get up to speed on this absolutely historic event. Ethereum has never had an ETF. Now it does. There was $1.1 billion in volume on the first day of trading.

That was yesterday at the time of recording. A hundred million, over $100 million in inflows. My question to you, is that good? We got to talk about this. And most importantly, when moon? When will all of this factor into price, David? It hasn't yet. Well, last time we got an ETF, first everything went down because of Grayscale, and then it went back up.

And I think one of the big questions is, is that going to be the same? Is that the same path that we're about to take? Or is it different because we've already taken that path, and now the future is always different than the past. We got Matt Hogan later in this episode to talk to you all about some of these questions and these answers. Before we get there, a message from our friends and sponsors over at Macha. For all of you with vanilla ether on chain in your custodial hardware wallet, Masha is a place that I've been trading for a long time whenever I want to execute an on-chain trade and they have just released their V2 of their order routing engine, new pricing engine

that is multiplex and multi-hop, which are some big words for making sure that it goes through the entire possible permutations of ways to order and structure your trade, dropping it into pieces, sending it through different liquidity pools to make sure that you are absolutely get the best price. And I'm pretty sure Masha, if you are trading anywhere between like 1,000 and multi-millions of dollars on chain, Masha will give you the best price because of this new optimization engine. I've been a longtime user of Masha, and this is something that I think I personally hold as very dear to the space, which is can we get on-chain price discovery? And it's innovations like Masha's V2 that definitely allows for that to happen. If we get price discovery to happen on-chain, we can get out of the shadows of the sexes.

and Macho's V2 is making that happen, making sure that you have the best pricing possible for your on-chain trades. You don't got to go to SX, you don't got to go to BlackRock. David, that is a great shill for an on-chain decks. Now, the rest of this episode, we're not talking about decentralization. We're talking about ETFs, the Ethereum ETF. For all the people who haven't made it on-chain. Yeah, look, I got some Ethan a retirement account.

And there's people out there like that, and they want to buy more. That's allowed. Thank you, David. So let's talk about the launch. This was the tweet that I saw first to launch things. This is from Eric Balchunis. It's official. The spot ETH ETHs have been made effective by the SEC.

The day is finally here after being gaslit and plot twisted by the SEC for months. No, no, no, no. The ether ETS are here. James Seyfer put out this meme of the classic horse race with the nine ether ETFs. ETH, E, E, EZ, E, ETH, V, ETH, W, C-Eeth, F, Eth, Eth, Eth, Eth, Eth, Eth, Eth, Eth, Eth, Eth, Eth, Eth, Eth, Eth, that you can now get on the New York Stock Exchanges. We're also getting the website pages launches, because, of course, we were. Bitwise, opens up their website to focus on their ether E-T-F. BlackRock, it says, Meet Eth A, which is the Black Rock run.

BlackRock also drops this ETH-E-E-F investor video. which is the first words. Remember when we had this big game of like how will how will Tradfai pitch to their investors? Hey, I do remember that. Don't you still owe me an NFT, David? You know what? I'm into today, I promise. Okay, so now we can finally get settled. We have some material, some glimpse as to how BlackRock and other Tradfai people are selling ether since we have this video. So let's watch for like the first like 45 seconds of this video. Just so it kind of here how they sell it to Tradfine investors. It is from BlackRock.

Ethereum is the second largest cryptocurrency by Market Cap after Bitcoin and has key characteristics that make it distinct. While many see Bitcoin's key appeal in its scarcity, many find Ethereum's appeal in its utility. Ethereum is a highly programmable blockchain that provides infrastructure for a diverse range of assets and use cases. You can think of Ethereum as a global platform for applications. This platform enables applications referred to as smart contracts to run without a centralized intermediary. transactions on Ethereum require a transaction fee to be paid in the network's native token Ether.

Investor interest in Ether has been expanding as more people adopt digital assets. And that's why we're introducing Ether. The I shares Ethereum Trust ETF, which provides investors convenient exposure to Ether. Then he gets into the mechanics of it. What do you think of that pitch from BlackRock? Honestly, like, who am I to judge BlackRock's articulation of Ether to their client base. I think it left more to be desired.

I think other people can do it better. Vannock, of course, also launching their marketing material as well. Varnak, a little bit more crypto-native. They're into the ether campaign. There are ETHV. But then Bitwise, who we have Matt on the show today, Matt Hogan, we're about to

get into that conversation with him. Bitwise launches ETHW, the Bitwise ETIF with some standout properties about their ETH ETF. 2.2% management fees. So on the lower side of the fees, that's 20 BIPs for all you Bippers out there.

But 10% of this 0.2% management fee goes to Ethereum open source development. That is Protocol Guild and the Proposer Builder Separation Association as well, which is a new open source advocacy group, which is pretty cool. And Bitwise had an outsized showing with their ether ETF today.

Not only are they donating to Protocol Guild but also they have all of their addresses under bitwise.eath. So they have five

relevant Ethereum addresses that are that are associated with their Ethereum ETFs and it is 1.bitwise.

Dot bitwise.eath 2.bitwise. Dot bitwise. 8th, 3.bitwise. They are using their EMS subdomains to label their ETH

ETF addresses, which I think is really cool. Oh, they're dot-eats, aren't they? They are dot bit eats, that's right. Even Vitalik was excited about this. He always appreciates donations to public goods.

He said, I really support this, that he's talking about the Protocol Guild donations from Bitwise. Look forward to seeing more projects and organizations follow your lead and donate to this important ecosystem-wide public goods initiative. David, so let's get to Matt Hogan, because I think there's more analysis to do with respect to day one volumes, inflows, the letter grade for like how these. the Ethereum ETFs are performing?

How did we do? Yeah, A, B, C. Are we excited about nothing or are we excited about a very big day? And look, most importantly, I want to hear when moon? When is price going to go up? So let's bring in Matt right now. Bankless nature, we got Matt Hogan here, Chief Investment Officer over at Bitwise. Matt, how did yesterday go?

Better than expectations, met expectations, first impressions as to the ETF launch day. I would say better than expectations. You know, these new ETH ETFs traded over a billion dollars. We had positive inflows despite significant outflows from ETH. We saw over $200 million of inflows here at Bitwise. There's a chance that these things came into the market, no big response. That's what we saw with EIT's futures. That's not the world we're living in.

We learned yesterday that people want ETH exposure in an ETH. It was a great day. Matt, so I saw over a billion in trading volume, which a billion in inflows. Is it inflows or trading volume? Sorry. I was out yesterday. I'm still catching up. This would have been phenomenal.

Trading volume. Right. And on the podcast, Eric Balchunas gave this an A. He said it's not an A plus, but a solid A for the first day. What would you letter grade the first day for the Ethereum ETF? I mean, that's a harsh grade. You know, let me put on my ETF hat. You think an A is a harsh grade?

Well, let me explain why. A is the best you can get. There's A plus. There's A plus. We live in an era of grade inflation. You know, we're talking A pluses here. Let me put on my ETF hat and then I'll put on my crypto hat because it depends which perspective you're looking at. So just to level set for the non-etef experts, the average ETF trades about a million dollars in its first day.

So this is the thousand. We got over a billion. Yeah. This is a thousandfold better, right? That is, that's pretty phenomenal. I think it's the second biggest debut of any ETF in history. There have been 5,500 ETFs that have launched covering stocks, bonds, countries, sectors, etc. No, ETH was the second best of all time.

That sounds pretty good. It's only from the lens of the Bitcoin ETF, which was absolutely historic for this class, $4.6 billion in volume, that it's maybe only an A. But this was a great debut. It says a lot of good things about where this is going on time. I feel that that's always Ethereum's case. It's always like the middle child, Sandra. It's always like the little brother trying to catch up to Big Brother.

And maybe that's just like destiny for. a very long time. It seems to be the case. That is right. And graded on a curve, adjusted for its market cap, it's right in line. It was a great, it was a great first day. What would have been like, if you had said like this met expectations, it didn't blow anyone away, it didn't disappoint, it was just par for the course. What kind of trading volume number might that be in the range of? Yeah, $400, $500 million. Okay, and we're over double that. We're over double expectations. We're over double expectations. And also, I can't stress how important this is.

Even for someone inside the industry, there was a chance. You get to the starting line and it just fizzles. There's $50 million. There's $100 million in trading volume. You don't know for sure. And so we completely removed that negative case. And we ended up on a very good case. You know, we did 86% of the inflows that Bitcoin ETFs did on day one on a net basis.

That's way bigger. Wait, wait, wait, wait. So trading volume was about 23%. But inflows, give me that again? It was, I think, in the mid-80s versus Bitcoin for day one inflows. We had a very good day. Percentage-wise, like mid-80s percentage-wise? 85%, like 85%, something like this?

Yeah, I mean, I should say this is probably obvious to everyone out there, but there's a big difference between trading volume and inflows. Our product launches, people can trade it back and forth, but that doesn't mean money is coming in. we had, you know, what was it, $590 million come into the new ETFs. That's a very, very lot. And even if you adjust out for the money that came out of ETH, it was north of $100 million, that's a great day.

I mean, that's, that's, that's, that's, that's, that's, that's, that's, $100 million that didn't own ETH yesterday and owns it today. Let's, let's extrapolate that out for, you know, a year. Not that we'll continue at that pace, but extrapolate, like, net new buyers coming into the market, it's really significant. So I think this is some of the things that we're processing on Twitter is that in comparison to the total trading volume, the net inflows into Ethereum have surprised into the ETH-E-T-Fs, have surprised to the upside.

Have we understood as to why we are getting more net inflows than what would be indicated by the trading volumes? You know, I think we're still figuring that out. You could have firms that had, you know, sort of pre-wired expectations. Sometimes you get inflows that aren't tied to trading volume. Or you could have just, you know, maybe it's a more onable asset and a less tradable asset. Maybe there were more traders in the Bitcoin product on day one because they expected high volatility, whereas maybe the people positioning here just are buying ETH for the long run.

We don't know for sure. You won't, it's hard to tease that out with public products on day one. So Matt, Nate Gerrsi put out a tweet. Hopefully I'm pronouncing his last name, I think you know. He says, look at Bitwise putting on yet another masterclass on how to launch an ETF. You love to see it. And then it has a tweet saying that Bitwise had $203 million of flows, just your guys as ETF. What did you guys do?

What is a master class in an ETF launch and how did you guys go on executing one? I love Nate's commentary. He's covered EFTS for a long time, so that means a lot. And it is great to see us, you know, ranked in flows right behind BlackRock and ahead of fidelity on day one. You know, Bitwise is 65 crypto-native people. Those companies are tens of thousands of people. Wait, but while we pause there, I'm going to get you to finish. But let's just go over the benchmark. So I shares, that is BlackRock, 266 million. in inflows after the first day. That's the number one. Number two is EW. That is the bitwise Ethereum ETF. 204 within striking distance to Larry Fing's Black Rock,

pretty impressive. And then number three is Fidelity with 71 million. I gotta say that's a distant third. That's a bronze medal, very, very bronze. And then like after that, no one is even close. So you guys got the silver for this, Matt. And, like, closing in on the gold, of course, that's just day one, you know. It's a, you know, a longer race than one day.

But, like, punch it above your weight class here. I appreciate it. Thank you. It feels good. I think there are two big factors at work. You know, one is bitwise. I think we executed well. We've been in this market for seven years building relationships.

We had good media and advertising campaign. We did an extensive amount of media yesterday. We did things like the public donation program. to ETH developers. We published our ETH addresses. We gave them E&S domain names. The other piece of it, though, really goes to the community because the lane that Bitwise is in

is we are the crypto-native ETF issue in this space, right? BlackRock is a big traditional asset manager with a huge brand, so is Fidelity. We're crypto-native. I think what we learned yesterday was that resonates with a lot of people, right? People want someone who's going to embrace what crypto can do from a transparency perspective. It's going to donate back to the ecosystem.

So it's a victory for Bitwise, but it's also a victory, I think, for the crypto community, showing that it recognizes and wants there to be a crypto-native asset manager. We happen to be that horse. Yeah, so I asked this question on Twitter because I do have some, you know, full confession for everyone who didn't know. Both David and I do have some like bank accounts here somewhere, okay, not completely bankless. So one of those. One of those is some IRA accounts that I have, like Roth IRAs, 401Ks, that sort of thing. And so I have some gray scale ether inside of those, some ETHE. And I was asking crypto-Twitter, hey, if I'm considering, you know, swapping for a, like, lower fee ETF, which one should I do?

And the resounding answer was ETHW was the bit-wise Ethereum. And the reason for that was because Protocol Guild donation. because is it 10% of the management fees are going back to Protocol Guild. And so there is this niche, and apparently it's not kind of like a small niche of crypto-native capital. That's like tied up in retirement ETFs, and that is just like glad to participate with Bitwise. So that's got to be a big source of the inflows, at least, I mean, from my small bubble of the world it was.

Yeah, it is a big source of the inflows. And we just, we love to see it. It makes us feel very good. maybe less transparent is also on the, you know, family office, RAA professional investor side, there's often a crypto champion at those firms who is crypto native himself, even though he exists in a larger firm. And the same things that resonate, you know,

with you resonate with them as well. They care. They are one of us, right? They are one of us. Well, we also can't ignore the impact on the marketing material that you guys have been putting out, right? Like, that's got to have something to do with it. The marketing team's incredible.

We got a lot of credit for our ETH ads. Thanks for calling out my Twitter profile picture. I appreciated that. That was an oversight. But the team's incredibly creative and we've gotten great resonance. You know, ETH is decentralized. Doesn't have a, you know, a team that puts together those ads. So we're able to do our little piece of that.

And there are plenty of other people doing their piece of that as well. Matt, as we move forward with the story of the story arc of the Ethereum ETF, I think we're really looking for the differences between the Bitcoin ETF to really allow Ether the asset to stand out. The fact that ether, the asset is materially different is what attracts a specific investor to Ether the asset. And so, well, it's great to have another ETF shoulder to shoulder with the Bitcoin ETF. Now I think people on Wall Street in Tradfye are looking at two crypto. asset ETFs. I mean like, well, now there's two of them. What do I do about this?

How do I think about the differences here? Bitcoin, I think I understand Bitcoin and now there's this Ethereum thing. And everyone in crypto understands that the Ethereum story is a little bit hard to tell. So I'm kind of looking for like as we move forward, the differences between these two story arcs of these ETFs. There's a headline from an article that was citing you and your some analysis that you gave at Bitwise saying that the Heath ETFs will have a larger price impact upon ether than the Bitcoin ETFs had on Bitcoin.

And you cited three main reasons. Ether's inflation right effectively amounts to zero. ETH does not have proof of work cell pressure. And ETH is locked up on staking. Now, I would call all of these reasons more like you kind of need to be in the know in the world of crypto. But one thing you don't need to be in the know about is that it can impact the price, faster, better, quicker. Maybe you can unpack this and how these narratives, these ideas might permeate through Wall Street. and as well as your job of just educating Wall Street on like what is what is ether yeah i think this

idea of price impact on flows is really important people ask questions about that all the time some of them are obvious right net inflation rate of eth is zero uh so the same amount of flows is going to have a larger impact than it did uh on bitcoin a significant portion of the eth market is locked up and therefore not available for sale. It's like not in the public float. It's staked. It's used in defy assets. It's bridge to layer twos.

That's, you know, you get to 40, 45% of the market that's just not available. The thing that I think is really powerful, which isn't poorly, isn't well understood is that middle one, which is this difference between proof of work and proof of stake. The way I think of the market is there are two types of people. There are people who are forced to sell and people who sell if they want. And in Bitcoin, you have miners that are forced to sell because they have hard costs. And so every day you have to buy a certain amount of Bitcoin to keep it here. In ETH, you don't have any forced sellers.

No one has to sell ETH. And the result is flows, you just don't start in a hole. You start level. So $100 million had to buy ETH yesterday from people who didn't have to sell, who would only sell if they want to. And that just means, particularly if we get a bullish market, if the market is going up and people are disinclined to sell their eth, it's going to be hard for ETFs to find eth to buy.

I mean, we will, of course. I don't mean they're illiquid. Of course you can. But you're going to have to chase up price. And I think that's, I think it's a really big deal. I think it's going to become apparent if we see strong inflows. Okay. So I have maybe a dumb question at this point,

but I think some listeners are asking. So we had $1.1 billion in volume. we had 100 million in inflows. Let's focus on that inflows number, 100 million in net new buying activity. And yet, Matt, the price is kind of where I left things at the opening of the day. I checked at the beginning of the day

and I checked at the end and it really hadn't moved. If what you're saying is true, wouldn't 100 million in net increase inflows buying activity that's effectively like there's like not a lot of supply out there, wouldn't that affect price? and how come it hasn't? Yeah, great question.

I would just say, patience. It hasn't because we knew these ETS were launching, trading desks build up inventory in the run-up to this period and they're ready to sell it. You know, it's not one-for-one. Money doesn't come in and price goes up the next day. But I can guarantee you. If there's three, not guarantee, compliance says I can't guarantee anything.

I believe that if we see, you know, billions of dollars of inflows, it's going to push the price of ETH up to new all-time highs. It eventually overwhelms. Give us a number. So I saw you quoted recently 5K. And then I was looking at by end of year maybe, I was looking at where that prediction was. I couldn't quite find it. Is that a true source?

Did you really say that? What are your current price predictions? Yeah. So I have a above new all-time highs price prediction by the end of the year. The reason it's that vague is in short-term price. I think what matters is supply and demand. And I think there's significant sale pressure at any all-time high, right? When we get to an all-time high, there will just be people who want to sell.

We've seen that in Bitcoin, we'll see that in ETH. I think there'll be enough demand for these ETH ETFs to push it up to all-time highs and then get through that sale wall. I think that's how much demand there is. If that happens, I don't know where it goes above that. So the thing I'm confident or feel confident about is we'll get, you know, 5,000 or so this year. see strong inflows. And who knows above that? Above all time high is my favorite, like, chapter in any crypto bull cycle.

I mean, is that obvious? Is that everyone's pick too? It's that everyone's favorite movie. It is. It's like price discovery because you just don't know apart from that because we've never been here. You're forging into new territory, right? And to your point, that reflexivity loop is now investors see, oh, eth is making a run. I better like sell something. some Nvidia stock and get in on this crypto thing and to like maybe that's my fantasy. But like, who knows where it could go from there now that we have this pipe open to traditional investors that we didn't have in previous cycles. That is right.

I want to stop on that invidia thing because I know it's a fantasy, but I think it's actually true. I've been telling professional investors every time I meet with them that if you're investing in technology and you don't have ETH, you're missing a portion of the market. Look at the smartest tech investors in the world. Look at venture capitalists. They invest in AI, they invest in chips, they invest in biotech, and they invest in crypto and blockchain.

If you only have the cues and you don't have ETH, you're missing what some of the smartest investors in the world say is one of the most important areas of technology. So I don't think it's a pipe dream. I think you are going to see people sell some Nvidia and buy some ETH just so they have tech covered. Well, how about this from a narrative perspective, Matt? Because I want to ask you around narratives, but how? How about Ether is money for AI?

It's money for the robots. I mean, the most, the least banked class of entities on the internet, it got to be bots. I mean, they can't go to Wells Fargo and go apply for a bank account, can they? And so maybe that's something that can take hold, but not yet. We've got some other narratives to work on first. And so I know last time you came on, Matt, you gave this like a brilliant elevator pitch for Ethereum that I thought was like one of the best I had ever heard. And I've noticed that now that we're getting into kind of like TradFi and some of these issuers, they're trying, they're testing out ways to talk to their investors about Ethereum. I saw a BlackRock video. It was pretty good where their main thing is, if Bitcoin is about scarcity, Ethereum is about utility. And so they focus in on this utility. I got to say, though, this word utility. I'm like, what does that mean? I don't really know what that means. I've seen Bitwise really double down on like a lot of different things, but almost like a more bankless theme.

It's just like, yeah, you know, TradFi takes weekends off. They take bank holidays. Ethereum's always going, right? Or Tradfai, deep platforms like the pickleball player is sort of like the joke, but, you know, they pick and choose who the winners are in this game. So Bitwise has taken a bit more of a crypto-native type take. Anyway, what's your theory of narrative? Because it is true that Bitcoin has had this like single cohesive, coordinated narrative

of digital gold and everyone just like repeats. that and parrots it. Whereas Ethereum, we don't have consensus yet from traditional investors on what the one big narrative to invest in really is. And maybe that's just the nature of Ethereum. But it would be nice to have some cohesion here and some coordination to really figure out what works. What are you thinking at this stage in the game as far as what narrative is working? Yeah, I love it. And I note that Bitcoin went through a number of narratives, right? It's cycled through as well. So this is part of the process. What we find that's working best is it's a technology platform that most of the interesting applications in crypto are built

on. If you're interested in tokenization, it's built on Ethereum. If you're interested in stablecoins issued on Ethereum, if you're interested in defy, most of that is built on Ethereum, Dpin, NFTs, etc. It is the fundamental platform for sort of rewiring the internet. And if you want to invest in tokenization or stable coins or the growth of defy or the growth of NFTs, you need to own some Ethereum. And I think that really resonates with investors. The other thing that really resonates with investors is you just want to be diversified, right? You just want to own crypto, own some Bitcoin and own some eth. And I recognize their flaws with both of those analyses. The tech platform doesn't talk about east moneyness, which I think is very real. And

a very big part of the story. But that's probably a second or third meeting. The first meeting is, you know, Bitcoin, Digital Gold, ETH technology platform. For what? For all these things that you read about in the news. And I think that resonates with a lot of people. So, Matt, now that the opening day of the Ethereum ETFs are behind us,

what does work look like at Bitwise? Are you guys on the just the ETH campaign trail? Like, what's going on? Like, what are the next steps? What are you guys all heads down doing? Yeah, 100%. I use this stat all the time. We do 20,000 meetings a year with professional.

I'm sorry. Thank you also. Yes. So, you know, today I'll speak to, I don't know, three, four, five hundred investors that manage north of $100 million, talking them about Ethereum and ETHW. And the team, the sales and distribution team, 20 plus, will do all the same things.

And we'll be doing that for the next few months and we'll be writing about ETH, and, you know, other firms will be doing the same thing. You don't see all that. People get very excited when they see Larry Fink on TV talking about ETH or, you know, less excited when they see Matt Hogan on TV talking about ETH. We get excited. But behind the scenes, there are literally tens of thousands of meetings. There's a huge education platform now moving forward, and you're going to see that in the flows.

What number should we be looking at do you think in the coming? let's just give it a month in terms of like flows. Like what would maintain our A to A plus grade with respect to this ETF? Man, if we did a billion dollars in the first month, that would be outrageous. Even if we did half of that, it would be really significant. So 500 million to a billion in inflows, in net inflows, would be the A to A plus rate. That is right. Yeah, because you got to remember money's going to come out of ETH.

So it has to be net flows. But yeah, if we can do that, it's a hundred, home run. It's a home run. Well, Matt, thank you so much for your time. This has been really cool. Congrats to everyone. Ten years after the Ethereum ICOs are like same week. And here we are. And you are going to be gonging the bell on the New York Stock Exchange for this Ethereum Ethereum on Friday. Is that correct? That is right. Imagine that ringing the bell at the New York Stock Exchange for Ethereum. So weird. What a day. Bell ringing. The juxtaposition is I think the word oxymoron is there. But like, hey, we're here for it. We'll take it. We'll take it.

We'll take it. Well, best of luck, Matt, with the Bitwise EW asset, and thanks for coming on. Thanks for having me. Man, I'm really glad that we have Matt Hogan and Bitwise on our side. That was really helpful. That was really educational. Every time I talk to Matt, I feel like I get educated. I feel like there's just a lot left, though, Ryan, in this conversation.

We got the Grayscale and the Grayscale mini trust that is getting in the way of us and the moon. So when does it get out of the way is like one, we have some tweets to pull up and some things to talk about. We got Hill Dobby's work in progress. dune board for the Ethereum ETFs, which is just so glad to see it, like a dune board for the Ethereum ETFs. And then amidst all of this, Bitcoin has had some record inflows for the last like two months.

So the Bitcoin ETFs is also awakening at the same time that the ETH ETFs are launching. You got to love it when things line up. And then also, since it's politics season, we have to invoke some modicum of political content because that is also bullish. So bear with me as we get through all of that and more. But first a moment to talk about some of these fantastic sponsors that make this show possible, especially Cracken, where I buy my vanilla on-chain raw Ethereum. And perhaps you should too.

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Does that like automatically convert over or does a portion? Like, how does all of this work and what do we need to get out of the way in order to have this pure price discovery moment that we're just talking about with Matt? So say you have 1,000 shares of ETH, the Grayscale Trust, which is now an ETF. If you had 1,000 shares, you now also have 1,000 shares of the ETHE mini trust. And so you doubled your shares. Congratulations. Oh, yeah, that's great. Yeah.

Now, but also the Grayscale ETHE trust has also devalued by 10%. So because 10% of the AUM of the Grayscale trust has been transferred by Grayscale to the mini trust. And so this is why in the order of AUM, it goes, Grayscale ETHE, number one. number two, grayscale mini trust, number two, because it took 10% of the gray scale trust, followed by BlackRock, followed by Bitwise. Okay, well, but that's a confusing way to say, I think, what happened, which is for my ETHE position, now I have 90% of that position, my total value in ETHEE with the higher management fees and 10% in the mini trust, right?

Which means I'm still paying the high management fees on like 90% of, like, the assets that I held there, yeah? That is correct. Okay. So now if you had $1,000 of ETHI, you have $900 of ETH now and $100 of ETH. Interestingly, the Grayscale Minitrust ticker is ETH, ETH. Oh, nice. Somehow they won that one.

Kind of like lucky for them. When I was talking to Eric Bautrunez yesterday, he was saying that the brand damage of Grayscale by kind of cornering their ETHI holders and not letting them out due to either they don't want to pay a very high capital gains tax or I can't remember the other reason but like there are people who are just cornered in a way you said away from keyboard it is what you said you know like away from keyboard capital yeah yeah but like so yeah the people yeah the people who are just like dormant and just like aren't aware that they're paying a very high management fee to ethie will be the people who hold ethie then the other people who hold ethie are the people who don't want to pay the capital gains tax

so of your capital gains tax 10% that got rolled into the mini trust you don't have to pay capital gains tax on that because that happened automatically. But if you want any more to roll into it, then you're going to have to pay capital gains tax on that, which is why people are like with Grayscale now and ETH now. And they might buy non-gracegale and ETTF. Maybe they go to bitwise and pay five more bips and fees because I think according to Eric Paltude, it's just like an FU to Grayscale. It's like, yeah, we don't like you, you guys are intentionally cornering us. I'm just not going to buy your cheaper fund. I'm going to trade mine out. But like, One thing, of course, is if you're in the U.S.,

and this is in a retirement account, you don't have to pay capital gains on any of it. So you could trade whatever you want, and it doesn't even matter. So you just bypass the capital gains because it's in that 401K or IRA-type shield. So not applicable. So I can't wait to swap mine out for lower management fees.

I was away from keyboard yesterday, so I didn't get to do that yesterday, day. You've paid one whole days of FISA. Man, all those gains. So now the big question is we needed for the Bitcoin price to go up last eth at the bitcoin etif we needed the gray scale uh gbTC to clear out

uh and we're watching this happen so when the eith ETFs launched yesterday we went from two thousand five hundred dollar ether to three thousand four hundred dollar ether like we went down in price yeah didn't meaningfully dump uh but now like everyone is the traders are looking at is this to sell the news event like now the gray scale is going to unload um no one really knows because we've seen this movie play before and so now this movie is different but we did see

5% leave gray scale in just one day, which was a larger outflow out of the gray scale ETH E trust on day one than was an outflow out of the gray scale GPCT trust on the Bitcoin ETF. So we're seeing a faster flushing so far, just off day one of trading, which is good. So we need to clear these Eth Eth skies and they're clearing faster. And it's only gone down like a little bit of price. And so that's optimistic. We don't really know what flows are going to be like.

we need like a week of trading activity to really see. But like we have some kernels of positive indication that this is going better than the Greyscale GBTC trust, mainly because we did not have the Greyscale mini trust for Bitcoin as fast as we do have it for Ethereum. Well, but isn't isn't that what I heard? Like the inflows, day one, net inflows were actually like 80% of Bitcoin? Which is crazy. Like, that's something I just learned from our Mapphoken conversation.

So 80%. And again, when we say net inflows, that is already taking into account the gray scale outflows, right? And then we're just saying it was already net. The gray scale larger is were larger than expected compared to the Bitcoin ETFs. And the ether inflows into the ETFs were also larger than expected. Yeah, it does seem to me like gray scale is going to be less of a factor on this than Bitcoin. But we'll have to see what the net inflows look like. that is the number to watch.

And what Matt said is, if you're looking for that like A plus grade, 500 million in a month's time, by the end of August, let's say, of net inflows would be like a plus grade. A billion would be absolutely like phenomenal. That would be S tier, S tier. Hill Dobby, who is something that we use to watch many, many doom boards, he's putting his Ethereum, ETF's doom boards together. This is very much a work in progress. But the fact that we have an Ethereum, ETF Duneboard, is something to celebrate, I think. but Hildopi, I'm going to need you to finish that up by the time. If you can roll up tomorrow, please.

Yeah, you know, this is like the ETFs are like a tradfai's version of an ERC 20, isn't it? And that's why when you ask Balchunis yesterday in your conversation with him, whether he was like how he felt about the tokenization narrative, he was like, nah, we have ETFs, right? He's like, that already is token. That's how it is tokenization, dude. That's what that is. Yeah. So he's like, he's doing tokenization via ETF, and that's why he's more bullish on that. It's tokenization via fax machine.

Well, let's talk about this convergence of things that might happen as we close this episode out. So the Bitcoin flows have been impressive, particularly lately. Well, we've had the summer doldrums, right, where price hasn't been at all-time high in crypto. We've taken a bit of a hit. Bitcoin was down 25%. Yet the inflows into the Bitcoin ETF have kept coming. Give us an update on this and how this might affect. Ethereum ETF.

So this was Monday. Just BlackRock on Monday had $523 million of net flows. Not trading volume, net flows, just Black Rock. And so that's one of the bigger days in Bitcoin ETF flows history. And it's coming after like a very long era of just like nothing. We had, they were like ignoring this June 5th and 4th big days, respectively. 880 million dollars of inflows and then 600, 480 million dollars of inflows. We have been flat on inflows ever since like middle of April. And so we are now waking up. We have consistent inflows

into the Bitcoin ETFs since July. July has been inflows only. So we're like approaching 30 days of inflows only and it's been crescendoing throughout July. Maybe this has to do with the election season, because now people are just like kind of pricing in a more favorable outcome to crypto no matter what. But we're seeing bullish flows into the Bitcoin ETFs at the same time that we are now also seeing the opening gate for the ether ETFs. So you really just got to appreciate when like stars line up because that's how a bull market happens is when we get enough stars to line up like bull markets just happen. And so I'm just noticing these very two big stars like line up perfectly with each other. Well, let's end it there on the bullish setup that we have going into this week, the last. week of July and the roll up tomorrow, which we're going to record, this insanely bullish setup.

This is what you tweeted. The Trump election locked in. He's, of course, pro-crypto in addition to J.D. Vance, the most pro-crypto VP possible. David, you didn't include it here. But now, Kamala Harris, I saw yesterday, is talking about going to a Bitcoin conference? Considering talking at the Bitcoin conference in Nashville, which starts tomorrow. So maybe that's a pivot on the Democrats kind of anti-cryptopost. they see crypto as an election issue.

Anyway, crypto is an election issue, the prospect of a pro-crypto president. Also, Jamie Diamond is turning bullish because of Trump and because of this political influence. Gary Gensler, resignation, this rumor is in the air. It's nothing confirmed yet. The ETH ETFs have just been approved. Trump wants Bitcoin on the balance sheet. Talk about a central bank buying crypto. That would be absolutely crazy.

particularly the U.S., the Fed. And the Fed rate cut cycle also looming, all of this points to an incredibly bullish setup as we move into the second half of this year. There needs to be some asterisks on most of these. Like, is the Trump election locked in? No, actually. Like, Polly Market has them at 63% odds, which is, like, pretty good, but it's not locked in. JD Vance, the most pro-Crypto VP possible. I think that's right.

I think that's a very fair statement. Jamie Diamond bullish Bitcoin because of Trump. That actually might be just a rumor that got circulated. And so this one actually might need to be stricken from the record. Sorry about that. Gary Gensler resignation. This is under the assumption of a Trump victory. I think if it's a Trump victory, it's a very safe assumption that Gary Gensler

will not be the SEC chairperson. And understanding that Kamala Harris is poking her head up, just two days after getting the Democrat nomination by Biden, and within two, within two, days, she's now considering crypto and she's considering going to Bitcoin conference in Nashville. The fact that that's in her brain space so quickly after receiving the Biden nomination, I think, is very indicative of she needs to write some wrongs that the Biden administration accidentally stumbled into, regardless of whether she is a pro-cryptop president. The fact that she's considering crypto so quickly into her candidacy, I think is very telling. Meet ETFs. That just happened.

speculation that Trump wants Bitcoin on the Fed balance sheet, definitely speculation. But you can see it. You could definitely see it. And then the Fed rate cut cycle looming. Don't hold your breath for that one, but it's definitely coming. I think this is a fantastic setup of catalysts. Well, let's end it there. Of course, none of this has been financial advice.

We have no idea what crypto is going to do in the future. We have no idea what the future volumes for the Ethereum ETF look like. You know that crypto is risky. You could lose what you put in. But we're headed west. This is the frontier. Not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.

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