TFTC: A Bitcoin Podcast - #630: Bitcoin's Institutional Adoption Is Just Getting Started with Matthew Sigel

Episode Date: June 18, 2025

Marty sits down with Matthew Sigel, VanEck's Head of Digital Assets Research, to discuss Bitcoin ETF adoption dynamics, corporate treasury strategies, the evolving institutional landscape, and emerging opportunities in the intersection of Bitcoin with energy infrastructure and traditional finance. Matthew Sigel on Twitter: https://x.com/matthew_sigel VanEck digital assets insights: https://www.vaneck.com/us/en/insights/digital-assets/?p=1 STACK SATS hat: https://tftcmerch.io/ Our newsletter: https://www.tftc.io/bitcoin-brief/ TFTC Elite (Ad-free & Discord): https://www.tftc.io/#/portal/signup/ Discord: https://discord.gg/VJ2dABShBz Shoutout to our sponsors: Coinkite https://coinkite.com Unchained https://unchained.com/tftc/ Join the TFTC Movement: Main YT Channel https://www.youtube.com/c/TFTC21/videos Clips YT Channel https://www.youtube.com/channel/UCUQcW3jxfQfEUS8kqR5pJtQ Website https://tftc.io/ Newsletter tftc.io/bitcoin-brief/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Nostr https://primal.net/tftc Follow Marty Bent: Twitter https://twitter.com/martybent Nostr https://primal.net/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://www.tftc.io/tag/podcasts/ STACK SATS hat: https://tftcmerch.io/ Our newsletter: https://www.tftc.io/bitcoin-brief/ TFTC Elite (Ad-free & Discord): https://www.tftc.io/#/portal/signup/ Discord: https://discord.gg/VJ2dABShBz Shoutout to our sponsors: Coinkite https://coinkite.com Unchained https://unchained.com/tftc/ Join the TFTC Movement: Main YT Channel https://www.youtube.com/c/TFTC21/videos Clips YT Channel https://www.youtube.com/channel/UCUQcW3jxfQfEUS8kqR5pJtQ Website https://tftc.io/ Newsletter tftc.io/bitcoin-brief/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Nostr https://primal.net/tftc Follow Marty Bent: Twitter https://twitter.com/martybent Nostr https://primal.net/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://www.tftc.io/tag/podcasts/

you've had a dynamic where money's become freer than free if you talk about a fed just gone nuts all all the central banks going nuts so it's all acting like safe haven i believe that in a world where central bankers are tripping over themselves to devalue their currency bitcoin wins in the world of fiat currencies bitcoin is the victor i mean And that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be. Matthew, welcome to the show. Thank you for joining me. Thanks, Marty. First time, long time.

Like I was saying, we've met twice this year in D.C. We shared an elevator and then in Vegas a few weeks ago, we were in line waiting to get our passes into the event. and i've been a big fan of all the research you've been doing at van neck and your commentary on x for a couple years now so i figured it's it's time to get matthew on the podcast to discuss everything going on um and like i said right before we hit record considering what you guys are doing at van neck and in your position there starting with the bitcoin etfs um they've been extremely hot since they launched the fastest growing etf segment ever i'm pretty sure but what

are you seeing on your end and how would you describe what's going on uh with the bitcoin etfs especially compared to other the prominent etfs that are out there and that have been launched in the past yeah it still feels very early from my perspective on the adoption of these etfs for the advisor community folks who are running money just for kind of regular high net worth investors a lot of those platforms still can't put the bitcoin etfs into their client portfolios without a reverse inquiry and we're starting to see that change so the zero to one moment uh is ahead of many advisors and what's been so interesting about the recent price action of bitcoin since kind of the april tariff announcements is volatility has plummeted

bitcoin didn't have the same drawdown as the nasdaq and so for the allocators who work on kind of 60-40 type portfolios and look a lot at volatility as a way of determining sizing of the position. This downdraft in Bitcoin vol is giving them an excuse to maybe take a larger initial position than they otherwise might have. So the reaction to the ETFs from the self-custody crowd is, you know, sometimes rather polarizing. But what I think that crowd misses a bit is when you're a fiduciary and managing money for a client, the temptation to steal the money is just too high if you're self-custodying it, you know, for them. So there's this like separation of powers, which, you know,

you see at the government with the three branches of government, but it also happens in regulated finance where you have to entrust those assets to a custodian to hold on to. And the Bitcoin ETFs made that process much more efficient, fit into the normal workflow of a money manager. So yeah, the flows have been good. I guess they're being overshadowed by the corporate adoption. So in the last year, corporates have actually added more Bitcoin than the ETFs have. That's a big change. So we can get into whether or not that's sustainable or not. But if I think about several legs to the stool for Bitcoin demand, there's individuals, there's institutions, corporates, and then governments. And now with the corporates, we've got another pretty strong

leg to the stool. So that seems to be setting a floor here. And so it's funny you mentioned the sort of wealth managers not being able to market the funds they can only put their clients in if their clients come to them and say hey i want to buy the bitcoin etf my neighbor back in austin was a wealth manager or is a wealth manager at morgan stanley was describing this to me over the course of the last two years and we were pretty tight so i'd catch up with him at least once or twice a week on the front lawn in the mornings and he was telling me a couple months ago that internally even at morgan stanley they're beginning to sort of prep the managers for okay here's how you market it here's what you're marketing and getting them prepped to do outbound

instead of waiting for inbound and so i mean you said it's still very early days i imagine um once you get the the managers out there hitting the pavement actually marketing these these funds uh you're going to see significant more significant inflows from here on out who's been driving the inflows up until this point is it people that have bit had bitcoin self-costy decided to sell a portion of that move uh move it to the utf because they just felt more comfortable with sort of diversified exposure that way is it large family offices that have been interested in Bitcoin, but never felt comfortable buying spot and we're looking for something like the ETF? What has the mix been like to date?

I think it's mostly been the individuals diversifying, like you say, independent advisors who aren't owned by these bank holding companies like Morgan Stanley, who kind of hold themselves to maybe what they perceive to be a higher level of caution. Hedge funds was a huge driver because the Bitcoin ETFs made it much easier for hedge funds to play the cash and carry trade, the basis trade, use the futures market to try to earn an arbitrage. In the first couple quarters after the launch of the ETFs, hedge funds, holdings of the Bitcoin ETFs outnumbered the advisors by more than two to one, even though advisors managed 10 times the money. So it was really this kind of early, fast-moving hedge fund community that drove the institutional

adoption. But year to date, we've seen that reverse. And the latest data shows that advisors actually own more of the Bitcoin ETFs than hedge funds do. So that should be stickier buyers who don't kind of de-risk when funding rates come down. And I think that's been really encouraging. I'm hopeful that these wire houses, Morgan Stanley's, UBS's, Merrill Lynch's, who have basically been providing these

on a reverse inquiry basis. As you say, they're starting to do the prep. Minimums are coming down. They're either soliciting or beginning to solicit. But when you read sell-side research, what the strategists put out and their 60-40 models and model portfolios at these larger bank-owned wealth managers, they're still not including Bitcoin in those model portfolios. So I just wonder if adoption by those advisors is going to be a lagging indicator. And we at VanEck, traditionally, we sponsor ETFs and mutual funds, but a growing part of our business is just the delivery of these model portfolios. So we've noticed that the traditional providers are not being innovative enough in our view, not including Bitcoin. So we've started a number of model portfolios that are highly diversified,

but include Bitcoin at the appropriate weight, conservative, aggressive, different models. And that's one of the faster growing parts of our business. So there's a huge innovator's dilemma here. As you know, Bitcoin is kind of the anti-bank asset. It's really hard for them uh, culturally, I think to get very aggressive, uh, in this space. And maybe that's gonna, uh, turbocharge, you know, our market share gains and others like us. Well, staying on the model portfolio and how, I mean, I've, I've seen the data and we've talked about it on the show before, but I think it bears reminding people just like, what is the impact of adding a Bitcoin allocation to these model portfolios at, at different sort of weightings?

It's very additive. Now, of course, we're dealing with historical performance. And as we like to say, that's not a promise of future performance. But for every conceivable position size up to, say, 20%, Bitcoin increases the Sharpe ratio. So that's a fancy way of saying that it's better risk-adjusted returns. So yes, it introduces some additional volatility. Bitcoin volatility is, depending on the day, kind of three to five times that of the S&P 500, but the performance more than makes up for it.

So you do notice over history that the drawdowns tend to be larger, of course, when you have Bitcoin, but not enough to make up for the additional returns that you get. So most of these advisors are looking at it in the kind of 50 basis points to 3% weighting. The math, at least the history of it, shows that up to 20%, you know, it's positive, but most folks are more conservative than that. And I like to compare it to a stock like Facebook, which fell 80 percent peak to trough in the 2021 2022 bear market um facebook is you know roughly three percent of the s&p 500 so whether you liked it or not you were wearing that three percent drawdown do you want to do you want that in something which is correlated with the s&p 500

being a major weight in it or do you want you know an uncorrelated asset and uh i think that argument is resonating yeah and i think that's a big question on everybody's mind is is this time different and you never want to say that it is um however if you i'm sure you've seen the chart that was going semi-viral this week of um the sort of price movement in cycles past where you had foma retail and then the price movement over the last year or two where it seems like a very structured and sort of uh how would i describe it sort of just small step up and to the right pretty consistently as you mentioned volatility's down but it seems like we have massive bids and more importantly a wider diversity of massive bids that are typically stickier coming from

corporates institutions hedge funds nation states individual states here in the united states family offices and i think that's the question on everybody's mind is have we made a phase transition into an era where bitcoin is accepted broadly as something that's here to stay something that makes sense to have at least a small allocation to and if those assumptions hold true Does that change the dynamic of cycles moving forward? I still lean towards the, this time is not different. What, you know, every cycle tends to end with a leverage driven blow off top. And last cycle, the folks who were providing leverage were rather naive from kind of

from a financial perspective, it was the kind of tech companies like Celsius and BlockFi that got into the balance sheet business, blew themselves up. And we like to use the funding rates in the futures market as an indication of how hot the animal spirits are. When funding rates are above 10% for Bitcoin for more than a month or so, the forward returns look really poor. We had a brief moment of that in December after the election. And then indeed, like the next couple of months were a correction for BTC. Maybe some of that was gold taking the lead and the two tend to take turns. And now in this most recent run up to all time highs, we're not seeing the type of leverage or overheated funding markets that would typically mark a top, I think that

instead it's being expressed via dilution in the equity capital markets. So yeah, the stock market has completely changed its attitude towards these companies. And the number of investment banks who are willing to underwrite capital formation in the space has increased dramatically. A big part of that is deregulation. So I think that gets to your point that something's a bit different here. Other parts of Wall Street are kind of acknowledging that the space is here to say they should get in the business of underwriting these deals. So it could be that, you know, the hangover comes from the equity shareholders of some of these newly formed treasury companies companies that have enormous paper gains. And then as their shares become unlocked and available

for sale, they take profits. And I'm just kind of painting a worst case scenario that a lot of these companies end up trading at a discount to their Bitcoin. And then the only way to kind of restore some shareholder value is to sell their BTC and buy back stock, right? That's kind of what everyone is worried about. That's a scenario that Saylor has kind of taken off the table, denied that he's going to do it, but it might only take one to do it before everyone else feels the pressure. So my gut is that that's ahead of us and that a lot of these treasury companies kind of won't sustain the MNAV premiums that they're trading at. But I also think that an 80% drawdown is probably too big. And each cycle gets smaller, both the rallies, but also the

drawdowns. That's kind of a wishy-washy answer, but directionally, that's where I am. Sup freaks. This rep of TFTC was brought to you by our good friends at CoinKite. They make the cold card queue, my favorite hardware wallet, the most secure hardware wallet on the market. As you can see, it's got the BlackBerry form factor, full keyboard. It's got two secure enclaves you create your private public keys offline the device never has to go online never does go online so you keep your bitcoin secure if you have your bitcoin on exchanges and you're looking to get it off secure it in the best way possible pick up a cold card queue go to coin kite.com find the cold card queue use the code tftc for five percent off

if you're a power user of bitcoin like i am if you're running a business on a bitcoin standard if you're just a bitcoin or wants to secure your bitcoin get the most secure hardware wallet on the market go get the cold card queue it's a beautiful thing no because i was discussing this yesterday um with some people as well and that's why i'm not going to claim that this time is different i mean there's definitely different dynamics at play but will i say that this is a super cycle or that we're not going to have massive material drawdowns in the future no we never do that bitcoin has humbled me many times over the last 12 years but like just one thing i'm really curious about like is there enough like the the corporate treasury play that we're

describing right now obviously it's massive i saw your tweeting the other day mstr plus cep plus asst plus similar plus naka plus djt is 76 billion dollars in capital raising ability to buy Bitcoin right now. 56% of the AU amount of the ETFs and 169% of the net inflows of the ETF complex has achieved over the last 16 months. That's an immense amount of capital that can come into that six companies relatively quickly, buy Bitcoin, keep it on their balance sheet, and they get over their skis. One thing I've been discussing with John Arnold at 1031 quite a bit too is like sailor i believe is during last year's shareholder meeting described what they're doing now as chapter one of strategies for the long-term goals which is accumulate as

much bitcoin as possible and then he alluded to strategy becoming like a quasi bitcoin bank and if you just look at the the book value of fiat banks that exist today they really trade around that book there's not not like a a big premium on there so like in the long term it makes sense to me that if this is the strategy of the strategy as a company name is a terrible name but the strategy of the the publicly traded bitcoin treasury complex in the long run at some point everything will have to compress to um basically one in terms of nav m nav um and it's What does the process between now and then look like? How high do the multiples blow out, and what does the compression back to one look like?

Is it aggressive? Is it steady? Is it wholly dependent on Bitcoin's market cap reaching a certain threshold and certain Bitcoin-related financial services coming to market? Yeah, I think that's a fair analogy. You know, right now there's a very wide dispersion of what these companies trade at. You know, MetaPlanet is like seven times the value of its stack, MicroStrategy closer to two times. And then you've got kind of some of the smaller names like Assembler, which is basically trading

at 1x. So the banks that reliably trade at a premium to book are diversified. they're earning spread income and fee income. They've got consumer franchises and institutional franchises. And, you know, how many really of those are there going to be on the Bitcoin side? Strategy is the most evolved because they have products that are diversified. Fixed income investors can access the preferreds. Arbitrators can use the converts. There is significant volatility in the stock that has sustained. And I think that he's done a great job of establishing relationships with some of the convertible bond traders so that the biggest hedge funds in the

world all have dedicated people that are involved in that capital stack. You know, that's not the same for some of the smaller names, and it may be hard to develop that same ecosystem. And then there's just going to be the digestion of all of this paper that's coming to market, right? These are a lot of private investments in public equities, where the shares are locked up for some period of time. And then over the next few months, those unlocks are going to hit kind of like the altcoin market. And a lot of folks will be selling out. I saw that there was a filing from one of the Solana treasury companies last night. And they disclosed that as a result of some of these convertibles being exercised, the share count is going to grow by 50%. And they listed

like 30 different VCs who all they assume are going to sell to zero, right? Not holding even one share, uh, once the lockup occurs that, you know, that's going to be a lot of paper to digest for, for the market. Um, I think a lot of the stocks will be lower in three months. Yeah, that's, that's fascinating. And I think that's a big question going back to what I was saying earlier, like this, uh, corporate treasury plays just one theme of many that are beginning to materialize. Obviously we mentioned the ETFs. I've, you've written a research paper on bit bonds obviously they're not to market yet but they're being discussed not only at the federal level um mayor adams would like to do one whether or not his comptroller will play ball with

him is another question but you have to imagine that somewhere in the world a product like this will materialize materialize at some point in the next five years and then one thing we're really interested in a 1031 is this intersection of credit, particularly traditional financeable credit and Bitcoin as collateral. So commercial real estate, residential real estate, eventually being able to refinance commercial real estate loans, residential real estate loans and introduce Bitcoin as collateral and put them, stuff them in these longer duration products. That could be very interesting in terms of if those strategies reach scale in size being able to have like a forward-looking duration curve of look here's all the bitcoin locked up in these 10-year duration

products these 30-year duration products um the corporate treasuries can say we're going to hold forever but there's uh they're beholden to the whims of of their stock price at any given point in time and that decision could be forced to change um whereas these credit products seem a bit stickier obviously they come with bankruptcy risk but i i'm sure that's limited compared to well what could happen with the corporate treasury strategies and then obviously the nation state race that seems to be incited in terms of these nations trying to accumulate bitcoin strategic reserves too and i don't have an answer but it's just like trying to think like okay is the corporate treasury strategy isolated enough in the forest of all these different themes

that are materializing that a company or multiple companies getting over their skis and being for sellers of Bitcoin is sort of that that supply is easily soaked up by those other demand factors. Yeah, it may be that one of these treasury companies, if they can manage to sustain the premium will acquire some of these kind of you know lenders that we've seen emerge who want to use bitcoin as as collateral like one of the funky things about bitcoin doesn't have a yield so um it's kind of tough to grok like how it fits in a fixed income portfolio the way that folks are using it right now is like the lender a lender with particular conviction in bitcoin says hey

I'd feel a lot better if part of my collateral for this loan were in Bitcoin, not only in the commercial real estate that I'm lending against. The tricky part about that is the sophisticated lender can just structure that product himself. He doesn't need to necessarily combine the Bitcoin with the real estate. Sometimes it's cheaper just to strip it out. So the same thing is true of Bitbonds. The way that it's been floated is that instead of the government selling the 10-year bond at 4%, they'd be able to sell it cheaper because part of the proceeds are going into Bitcoin, which has higher upside. But then the end buyer of the bond has to split the upside above a certain cap. So if you're the lender to the government, why wouldn't you just

you know, lend in a straight treasury bond and then just buy Bitcoin yourself and keep 100% of the upside. So like there's a certain cuteness to it that might be too cute by half. I think what would really legitimize it, this is an obvious statement, is if the strategic Bitcoin reserve were actually a law. Because if the government is, or the central bank actually holds Bitcoin in reserve, then they can kind of combine them into one combo asset. So, yeah, that's kind of my thought on it. I am captivated by what's going on around the world and the number of countries that are mining Bitcoin with some of their spare energy or kind of negotiating against the

IMF by either threatening or enacting like Bitcoin reserves. and that may be a more a bigger driver for the price than these kind of bit bond products which you know they may be like a next cycle story i think yeah that would be fascinating do you are you hopeful that a strategic reserve will get signed into law or is that a pipe dream in your opinion i think the pretty low quite low probability uh and i also think that a lot of people have hatched onto this revenue neutral condition for acquiring Bitcoin in the strategic reserve. But just because something is revenue neutral doesn't mean that you can do it without legislation, right? Like I could say, hey, let's raise taxes to 100% on everyone making a million dollars a

year, but then cut it for everyone else. It might end up revenue neutral, but it's still a material change to people's lives that needs legislation and the same thing is true for for bitcoin so i think there could be some type of experimental purchase very small you know just small number of zeros that they can kind of sneak through in existing structures like the exchange stabilization fund of the treasury where there is some leeway to get creative but i think the numbers will be very small. So whether like a polymarket counts a $10 million purchase as a Bitcoin reserve, I'm not sure. Is Bitcoin's next parabolic move already starting? Two of the strongest historical indicators, global M2 liquidity and the copper to gold ratio are flashing green again.

Unchained and TechDev break it all down in the new report, Bitcoin's next parabolic move. Could liquidity lead the way? If you care about the macro forces shaping Bitcoin's trajectory, now's the time to pay attention. Visit unchained.com slash TFTC to read the full report. That's unchained.com slash TFTC. What are your thoughts on the headline that came out of JP Morgan last week about them basically saying, all right, we will allow our customers to use the Bitcoin ETFs as collateral to take out loans against. Not only that, we will recognize crypto holdings as assets that play into how we underwrite credit for mortgages, whatever that may be, any other type of loan you want to take out. I mean, considering how Jamie Dimon has

postured toward Bitcoin over the last 10 plus years, I thought that was fascinating. And correct me if I'm wrong, but it was a signal to me that despite Jamie Dimon's personal beliefs or view on bitcoin at the end of the day jp morgan has a fiduciary responsibility to their shareholders as the largest bank in the world and publicly traded company and the sort of bitcoin force their hand and they're sort of forced to bend the knee to bitcoin's will because if they didn't you could make a an argument they were making a lapse in fiduciary duties yeah uh jp Morgan has been making markets in the ETFs since they launched. So they've been an authorized participant for some of these ETFs. Now the ETFs are right now, they're all created in cash. You

can't deliver Bitcoin and receive shares of the ETF without first going through cash. So that means that a lot of US broker dealers didn't actually have to touch the Bitcoin directly. They were having their kind of offshore affiliates touch the Bitcoin. That goes to some of the lack of clarity around custody for institutions. That's all being solved. And many of these products will now be able to be created and redeemed in kind. That means that the broker dealers will be touching Bitcoin. That means it's integrated into their balance sheet. So it was kind of, I think that JP Morgan probably had a special policy to exclude the ETF, the Bitcoin ETFs from customer balances, because think about a prime broker, like they have a look through to

your holdings of securities. And those securities can include all types of things that would get different leverage levels from treasuries to corporate bonds, to equities, to super risky equities and the amount you can get in margin depends on the volatility of the product, et cetera. So those ETFs, presumably they've been looking through and seeing that, you know, for the last two years and they had, they made an active decision to not count it. And now with these products going in kind and every broker dealer touching them directly, like they would just lose market share if they didn't offer some type of leverage on

them. So not, not surprised, but it's great to see it. I think it's a positive headline. Yeah, and a lot of people are focused on the sort of collateralization of the ETF shares. But I think just as importantly is the recognition of crypto as assets that can be accounted in somebody's net worth. Because for the longest time, if you've had Bitcoin, you've gone to get a mortgage, you go to the mortgage broker and you say, we recognize this bitcoin as assets some will do it but most don't they typically want you to sell a portion of the bitcoin put the cash in a bank account have it sit there for

a period of time before it's recognized as assets that count towards your net worth and i think being able to recognize bitcoin without having to sell it as an asset on your personal balance sheet is massive too. Yeah. The next step will be hopefully changing some of these Basel rules that assigned a huge risk weighting to any type of crypto held on bank balance sheets. So it's still very difficult for banks to hold it directly, but that could be something to look forward to. And does SAB-122 sort of set the stage for that? It's like, okay, you can... Maybe. Maybe. It's a little different because SAB 122 is even about holding client Bitcoin. So under that law, a rule rather from the SEC, even if someone like a State Street, which is a custody bank, held client Bitcoin, they would have to count it as an asset and corresponding liability on their balance sheet, which is very rare. They don't have to do that when they're holding customer securities.

I'm referring to if a bank wanted to hold it for their own account on their balance sheet under current kind of global banking framework. Crypto's assigned a hugely punitive risk weighting that makes it impossible to hold. yeah so it'd have to be because gold i believe next month is it is officially recognized as tier one asset on balance sheets so right so to be something like that is needed for for bitcoin as well yeah and who is it the czech republic the uh governor of the central bank is assigned his staff to do a study on possibly holding bitcoin as a reserve on the czech central bank balance I think those are the types of moves that if we see them say yes, then the BIS standards could maybe get discussed. There's so much going on.

It's incredibly bullish all around. And I mean, going back to what we were discussing earlier about a lot of these wealth managers being able to market these funds, corporate treasury strategy. I think we're still in the early innings of that. So I think they're going to go tap the capital markets and shovel tens of billions of dollars in the Bitcoin. How do you see this cycle playing moving forward? Because that's one thing I think a lot of longtime Bitcoiners sort of haven't intuited yet is as we're sitting at a $2.1, $2.2 trillion market, they'll look at these billion dollar

buys, $10 billion buys, and they'll look at the price and say, why isn't it going up? But I think it's important to also recognize as the market cap of Bitcoin grows, it gets harder and harder to push, push that up. The amount of inflows necessary to do another 10 X from here are pretty significant. And so how do you could you explain the dynamics of that and whether or not you see those type of flows coming to the market over the next year or few years? Sure. My base case is that the four-year cycle holds enough so that second half of this year

could be very positive as long as the inflation continues to come in light as it did this week When we just got PPI this morning, deceleration lower than expectations. Once and if the Fed commits to that rate cutting cycle, my expectations would be Bitcoin would react very favorably to that. The previous smallest cycle ever for Bitcoin was 20x from the trough to the peak. so a 10x would put us around 180k um and that seems feasible to me right the volatility has fallen it hasn't fallen by 50 so it doesn't seem crazy to haircut the rally by 50 and say 10x to 180 uh you know that's the blow off top and then re-evaluate for next year whether um you know maybe inflation is re-accelerated by then, maybe something in the macro has changed.

But that's kind of my base case. I mentioned that we use the funding rates as a kind of a tactical gauge for when things are overheated or really washed out. We also use the unrealized profit ratio. So although nearly everyone in Bitcoin is profitable, they're not profitable enough to spark kind of widespread selling. So there's that net unrealized profit ratio above 0.7. You really start to let the forward returns really deteriorate. We got close to that in December. Indeed, like Jan, Feb, we're tough, but we're not back in a range that says oh there's a whole bunch of like uh unrealized profits that are likely to to be unloaded it feels like what you said there's more new buyers uh especially the

corporates so um i'll look out for that to change but that's my that's my base case and since you alluded to like what are your thoughts on just the broader macro geopolitical landscape as it stands today obviously it's been somewhat chaotic start first half of the year trump to um taking taking the reins again and obviously with liberation day and all the saber rattling that's going on around the world a lot of pressure on jerome powell to lower rates the tenure in the 30 year staying relatively elevated what's the macro backdrop looking like in your perspective yeah um i think that the uh the policy changes not just in crypto but just the generally a kind of pro-growth policy with regards to energy energy infrastructure ai um those are

big tailwinds uh for bitcoin as well uh you know like to the extent we have cheap abundant energy whose infrastructure doesn't require a ton of red tape to set up, that should be positive for the investment cycle for Bitcoin. When you hear President Trump talk about Bitcoin, he usually mentions AI and energy in the same breath. And I'm tracking these Bitcoin miners pretty carefully because we have a new ETF that owns the equities in the space. And they've all, Well, not all. Many of them have stopped buying ASICs, have paused their Bitcoin mining expansion plans, pivoting over to AI, in the process bringing down their cost of capital, but also maybe putting a little bit of a lid on hash rate growth and reallocating some of that market share to smaller, more nimble companies. the US share of hash rate, which grew so dramatically in the last two years, has leveled off and started falling a little bit. I'm not directly answering your question, except to just

say that the pro-growth policy is having a lot of impacts beyond just Bitcoin. We've got some exposure to nuclear stocks. We've got exposure to these data center companies. They're feeling the tailwinds as well. And I think that's part of what has catalyzed this equity rally. When you look at some of the miners like the Core Scientifics or Applied Digital, which is a Bitcoin mining hosting company that hosts a lot of marathons infrastructure, and they've been looking for an AI deal, looking for an AI deal, running out of cash, and then boom, they just got one with CoreWeave and the stock basically doubled. That's positive for the ecosystem.

So I'm pretty, yeah, I feel decent about the next half of this year. the weaker dollar would would help uh sentiment on that feels uh you know quite one-sided uh so that that would be a risk um but uh yeah let's let's see how it plays out what do you think i uh i'm pretty bullish well like i think uh i've been playing around with ai a lot just here at tftc and doing research for 1031 and it is abundantly clear to me that it is increasing productivity at least for my business like the things that i've been able to do with ai to increase the productivity at tftc is incredible we just launched a browser extension opportunity cost yesterday or two days ago now at this point that two years ago probably would not have been built

because i wouldn't have been able to build the prototype i built it with ai tools and then was like able to validate myself so like oh this is something worth building and should get traction and it's been a very successful um launch the first two days like over a thousand users and which is to me a great success and that has increased the exposure of our company and increased the top of funnel we've seen a bunch of newsletter signups and this is just a small media company leveraging this. When you think about these tools applied to many of the larger companies and everything that's going on across the FANG companies, particularly Meta, Tesla, Apple, Apple may be a little bit of a laggard here, but it seems clear to me that AI is being

implemented by the people who are on the cutting edge. It is creating these productivity gains. And And I am bought in to the AI story in the sense that it's going to increase productivity and hopefully increase profit margins for companies, which should allow them to stomach higher rates for longer. What that does for the job market is another question, but I think there's incredible product to be there. Obviously, like you mentioned, it's also pushing us to to expand our energy infrastructure quickly and at a at a scale that we haven't seen in decades, which is bullish, I think. And then obviously Bitcoin benefits from all of this because I think it's going to be an integral part of energy expansion. But not only that, I think the government's going to continue to go into more debt. And obviously Trump is berating Jerome Powell to lower rates. And so if inflation stays, it begins to pick up again.

But Bitcoin is going to benefit. But I'm overall optimistic. I think the conditions to for anybody, any individual or company to sort of bring value and productivity to the economy has never been stronger than they are today. And then you pair those productivity gains with the hardest money the world has ever seen. Those that take advantage of that combination, I think, are going to be very well off. Yeah, it's like for those that there are AI bears out there. And to those bears, I would just say, imagine what's going to happen once chat GBT introduces an ad supported, like delayed response, free version. they're going to take so much market share from google and they're going to make a lot of these remote data centers a lot more economic right if you if you're on a budget and you're willing to wait half an hour or eight hours for your response or watch a two-minute ad reel it's going to

dramatically change the return on capital equation for some of these heavy investors and so that's one of the catalysts that i'm looking forward to yeah i don't know if i buy into agi being around the corner but i think as it stands today the tools are good enough to to increase productivity um and then i mean you just you just look at what's happening around the world things seem pretty tense geopolitically but my again idealist eternal optimist i hope all these productivity gains and i i'd like to think that trump certainly has his flaws but i think even bringing trump out of the equation like in america that is reinvigorated to grow expand and become extremely productive and lead in terms of innovation and

leaning into the continued transition of the digital age is hopefully inspiring for others and around the world and leads to competition at the market level and not at the kinetic warfare level agree with that take maybe maybe too optimistic there what are um what are some things we haven't touched on that are on your mind that you think the audience should be aware of as it pertains to bitcoin capital markets these trends in corporate treasury strategies etf flows um structure credit and bitcoin any anything else that you think um is being underreported or underappreciated right now in the world of bitcoin um i mean the the questions that i'm getting in recent weeks i guess um are about quantum uh you know it's just it's hard to avoid

I guess when BlackRock updated the risk disclosures to include quantum threat and those equities have done really well. So in some of our equity strategies, we're we're digging into that as a possible hedge on Bitcoin volatility. You know, if you just kind of put one or two percent of your Bitcoin stack into maybe some of these quantum leaders and, you know, you could, they're kind of, they're correlated for the moment in terms of like, oh, these are leading edge tech type of assets. But it's the capital markets have accelerated so much. Now you get these ETFs right away, you get these 2x single stock ETFs, and it can entrench the early leaders because it runs up their stock price to such a level that now they have this really expensive currency to do deals. And they can maybe, you know, cement an early market share

lead that for a company like MySpace, for example, like they didn't have that. So they lost even though they were the early leader. So it'll just be really interesting to watch that market develop and to what extent the Bitcoin community can come together and suggest and implement you know signature schemes for the wallets that could be uh quantum resistant um so that's something that we're noodling around i don't think there's like a near-term impact except on the equities themselves um let's see yeah just focused i guess luckily uh we got focused on equities here a bit early when we saw the token run-ups in December and some of our tactical indicators flashing. We took some risk off in some of the kind of altcoin and leverage part

of the markets and looked for opportunities in stocks. And we've launched this new ETF that buys uh equities across the um ecosystem so not just the leveraged players but also complementing that exposure with some of the lower volatility kind of data center energy energy infrastructure nuclear names uh and it's an interesting like barbell approach i think that can appeal to the advisors who are still freaked by uh like bitcoin's volatility and by if you look at some of the crypto equity indices, they're really leveraged. You know, it's like just a lot of beta, a lot of exposure to leverage names and the performance since inception of these indices has not been good. So institutions are kind of spooked by the pure play equities, I think, and

maybe we can find some interest in this more diversified approach. So that strategy includes like some utilities, some midstream energy and MLPs, REITs, data centers. There's all types of companies that are now mentioning Bitcoin and blockchain in their SEC filings, in their investor relations materials, where the stock right now exhibits very low sensitivity to the Bitcoin price. But over time, if we're right and Bitcoin can grow, you know, continue to grow, that beta and vol to Bitcoin might increase and we could end up with some excess returns from stocks that don't seem to be crypto stocks. So that's, I guess, the new bets, some of the new bets that we're making. We're also, we've brought a tokenized money market fund to market to try to

find some liquidity there, you know, yield bearing money market fund in tokenized form across a bunch blockchains and you'll see some early customer announcements for that product uh over the next couple quarters so um still wonder about the end market there uh it's very very fragmented uh it may be that bitcoin has to do another you know 10x before uh that really there's a consolidation of the liquidity that drives activity uh on chain instead of just doing doing the same thing in TradFi, but we have really, after the election, Jan Van Ack, who owns the firm, kind of clapped his hands and said, hey, product development team, like, get back to work. The pipeline's open. You know, the regulatory path is clearing. Let's be more aggressive in

bringing products to market. And we're doing that. You may have seen we're going slower on the single token ETF side. We've only filed for two kind of new single token products this year because we're just seeing better performance out of our active strategies, our hedge funds, hopefully this new active ETF that just launched. So we're kind of doubling down our venture fund. We have a new early stage venture fund, which just had its first close. So active is, we're mostly a passive shop in the traditional ETF market, but for crypto, we found the active performance has been a lot better. No one's really cracked the passive nut except for the simple Bitcoin ETF. Yeah. Many comments there. First, for all of you institutional investors

who came to the show, because Matthew is our guest, the quantum stuff, definitely something to be on your radar. But I will say that having been to a couple of Bitcoin developer meetups over the last couple of months across the country, the devs have it top of mind. They're working on I actually like Ethan Heilman. He had a really interesting post on the Bitcoin dev mailing list a couple months ago. I will say there's a lot of creative solutions being talked about. Obviously, none have been picked, but something to be aware of. And I'm confident in the vigilance and competence of the developers focused on this problem

to make sure it isn't an existential threat to Bitcoin in in the long run. Likewise, or not likewise, but building on that, just commenting on what you were some of the things you were just saying, like the energy play like that was somebody who started a Bitcoin mining company in 2018 doing flare gas mitigation. It became very clear to me in 2019, 2020, like once these oil and gas producers whereas midstream upstream producers um become privy to it like they are best positioned to mine bitcoin because they own the infrastructure and they own minerals most importantly and so

vertically integrating um their operations to take advantage of their wasted resources makes a lot of sense and it seems like they're opening up to it and i think stone ridge's annual letter from Ross last year really, really signaled, obviously, Stone Ridge and NIDIG are ahead of the curve in terms of institutions playing in these intersections of Bitcoin debt markets and energy markets. But I think what they're doing with the stranded gas play and signaling at the end of last year that they would like to monetize these stranded gas assets with Bitcoin is something that will be picked up by mid majors, majors and will become a growing trend in the United States and getting proxy exposure to Bitcoin via energy companies

is extremely exciting to me as well. It just makes a lot of sense. Yeah, like right now, at least in the strategy that I'm involved in, there's kind of only one upstream energy company, YPF in Argentina, the state-owned energy company. And after Malay won, they hired the CEO from the largest private oil and gas company Argentina Tech Patrol, which had been mining Bitcoin, and now YPF is reportedly mining some Bitcoin as well. In the US, more of the exposure is midstream and downstream. There were reportedly

some pilots with Exxon and Chevron. Those haven't materialized into anything larger, but I'm definitely on the lookout for that. Right now, it's more at the utility level and at the pipeline level. And I think that makes them interesting stocks to hold in an equity strategy because the volatility profile of those downstream utilities and pipelines is much, much lower than the upstream explorers. And so when you combine that with Bitcoin miners, it's kind of a barbell approach that leaves you very well prepared to buy Bitcoin washouts because these utilities is really outperforming the down markets yeah the that was the other thing like upstream flare gas mitigation or mining on the well pad it's like logistically hard and there's a lot of

sort of operational execution risks that come with that and it always made sense to us at great american mining like ultimately at scale or when the market really figures this out it makes sense just to put a large mining operation at the midstream and you essentially suck the flare in from midstream so you take advantage of the economy as a scale of the supply of the gas at the midstream and you allow the producer to keep drilling for more oil and just creating pipeline capacity by mining at midstream as like a pressure release valve for pipeline capacity and the other place the stranded well play in america particularly is a massive opportunity which as i mentioned earlier seems like stone ridge and i dig are going after

yeah it's so it's like reading these conference calls you're you're having pipeline companies talk about data center deals like that is a brand new dynamic uh new end market for those companies so some execution risk but it's a growth driver for what has historically been a very sleepy sector yeah it's a beautiful thing i'm optimistic there's a lot of doomerism out there right now Matthew, incredible opportunities. It's never been easier to get on the internet, build a brand, leverage tools that can enable you to build a product, do something productive, get some profits, shovel them into the hardest money that's ever existed and keep going about your way. So I'm very optimistic. This was an absolute pleasure, Matthew. Where can anybody who's

listening find out more about the research that you're doing, what you guys are doing VanEck more broadly? So on our website, VanEck.com, there's a digital assets section where we publish monthly on Bitcoin and then a separate piece on the rest of the digital assets ecosystem. So you can subscribe there for email updates or just follow me on Twitter, Matthew underscore Siegel, and we put out all our work there as well. Awesome. Well, thank you for your time. Hopefully this is the first of many conversations we should do this every once in a while yeah look forward to it Marty

alright peace and love freaks freaks thank you for listening to the show I hope you liked it if you did like it please make sure you subscribe rate, review the show it helps us out a lot and also if you like these conversations I've come to realize that many people listen to the podcast they don't know we have another

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