The Pomp Podcast - #1366 Solo Episode | Is The ETH ETF Bad For Bitcoin?

Episode Date: May 29, 2024

With the ETH ETF getting approved, is that a distraction to bitcoin? Anthony Pompliano shores this thoughts on the BTC/ETH relationship, regulatory process, the token density theory, and what the future will look like.  ======================= Introducing Espresso - the world’s most interactive portable display. They have a portable screen that is incredibly light, comes with a nice stand, and the user interface is very easy. Anyone who listens to this podcast can go to ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠us.espres.so/pomp⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. They have a brand new offer waiting for you.  ======================= Meanwhile is the world’s first licensed and regulated life insurance company built for the Bitcoin economy. Protect your loved ones with sound money built to manage life’s uncertainty and a broken financial system. Their BTC-denominated Whole Life Insurance policies allow HODLers to pass more BTC on to their loved ones and a tax-advantaged way to access BTC for liquidity during their lifetime. Visit their website at ⁠https://meanwhile.bm/⁠ to join the waitlist for a policy and to learn more. ======================= Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/ ======================= View 10k+ open startup jobs: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. What's up, guys? Today's episode is a short one. I'm traveling, but I just wanted to make sure that I answered an easy question for you all. With the Ether ETF application getting

approved, is that a distraction to Bitcoin? Will it hurt capital flows to Bitcoin? I don't think so, but I took this episode, again, very short one, to explain exactly what's going on. I hope it's helpful. I would love to hear your feedback. Once you get done listening to this, please jump on Twitter. Tell me what you agreed with. Where am I wrong? What did I miss? What do you think I don't understand about whether it's the ETF application, the relationship between Bitcoin or Ether, or something going on in the regulatory process. This podcast is my attempt to try to learn as much as I possibly can. And a huge part of that learning is getting feedback from all of you. So listen to my answer to the question, and then let me know what you think. And I'd love to

hear from every single one of you. Here is today's episode on the Ether ETF and its relationship with the Bitcoin ETF. Today's episode is brought to you by Espresso, the maker of the world's thinnest portable display. Now, listen up. If you're like me, you feel like you are at a command center when you sit down at your desk. I got a gazillion tabs open

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a Bitcoin whole life policy could make sense for your wealth plan. Visit their website, meanwhile.bm, to join the waitlist and to learn more about the world's first Bitcoin life insurer. Again, that's meanwhile.bm. Go check them out today. What's up, guys? Bang, bang. One of the questions I've been getting recently is whether the Ether ETF is good for Bitcoin or not. On one hand, it could be a distraction. On the other hand, all boats could rise together. Thankfully, I am here to answer your question. Now, I wrote about this about five years ago in something called the token density theory. Now, forget about crypto for

a second. It's much better to explain it with a regular business. Let's call it restaurants. If you sit at an intersection in a restaurant, let's say in a small town somewhere in America, and there's one single restaurant there, some of the people who live nearby, they come to the restaurant every once in a while. And if all of a sudden across the street, a second restaurant gets built, a lot of people would say, wait a minute, that's competition. That's bad for business in the original restaurant. You went from one restaurant at that intersection to now two. But let's say that a third and a fourth restaurant all get built at that same intersection.

Many people would believe that that's actually bad for the first business. But what studies show is that the density at that intersection of having more than one restaurant leads to all of the restaurants seeing more foot traffic and more revenue. So what happens is that people then begin to understand that this is the restaurant intersection.

If I'm hungry, ah, let's just go down there and we'll figure out where we're gonna eat. That's the beauty of building density in a certain area all around the same exact type of business. Now, let's go back to the crypto world. That's exactly what we're seeing here. When Bitcoin got approved with the ETF, that was great. We saw over $13 billion of assets flow into these ETFs.

And of course, Wall Street, they love Bitcoin. Bitcoin goes up a lot compared to most of the assets that they have in their portfolio over a long period of time. And they now have a way to make money. They can have an ETF, they can charge fees, and it's bringing even more customers to them. So it's a great thing for Wall Street. But when the Ether ETF gets approved,

I actually don't think that Ether's ETF is going to be a distraction to Bitcoin. Bitcoin's story is very clear. People know exactly why you buy it. It's a store of value. It protects your purchasing power. And it's this decentralized asset that's competing against gold.

No other crypto asset is really trying to beat Bitcoin. Instead, all of the other crypto assets are competing from a technology standpoint. They're all trying to be smart contract platforms or various other types of platforms. And so if you think about in the legacy world, Bitcoin is akin to gold and then Ethereum, Solana and many other coins. Those are more like Facebook, Google, Apple, etc. Now, the reason why this becomes really interesting is because what we are watching is the

legitimization of the crypto industry. Wall Street loves Bitcoin. Wall Street is going to love Ether. Wall Street is going to love Solana and everything else because now they see activity coming in. They understand that if we can get these young investors to go and start buying these assets, we establish a relationship with them. And then we're going to go right back to all of our existing clients. And we're going to say, hey, we now have these new assets that seem to perform better than our traditional assets. Would you like to buy some? And that's what I think

you're going to see when the Ether ETF gets approved. Now, I don't think the Ether ETF is going to get more inflows than the Bitcoin ETF got because again, Bitcoin story is unique. It's clear. It's different. It's something that people can wrap their heads around very easily. But I do think that the Ether ETFs are going to see inflows. And I think that you're going to continue to see people start to pick which of the technology platforms do they want to bet on. No different than what they do in the legacy world when they're trying to pick stocks or try to figure out which sectors are going to outperform others. That's what we're going to see when it's Ether, Solana, and many other ETFs. But ultimately, we are going to see more capital flow into the

overall crypto ecosystem on Wall Street. Because now what you're seeing is not only are investors interested in it, not only are the regulators going to approve this stuff, but also the banks are getting up to speed. You have people inside these organizations that understand the assets, they understand the market, they understand portfolio theory, and they're going out and their sales teams are going to start talking to their clients. They want more people allocating more dollars to these assets, and therefore that's what they're going to get. Wall Street is incredibly good at distribution. They are way better at it than the crypto industry. And I think that we're going to continue to see capital flow into all of these assets. But don't get confused.

Don't believe that because there's going to be an Ether ETF, that it is going to hurt Bitcoin. I actually think Bitcoin is going to help Ether and Ether is going to help Bitcoin. Same with every other ETF that gets approved. And so ultimately, we're on the same team. There's a lot of people that are tribal or maximals in the crypto ecosystem. But you have to understand that every single one of these assets is a net positive in terms of marketing, awareness, capital flows, user acquisition, and continuing to see this asset class seared into the brains of investors. There's this thing called the Lindy effect. The longer something exists, the more likely it is to persist in the future. Well, many of the assets that people are buying,

the S&P, QQQ, et cetera, they've been around for a while. Investors have confidence that they're going to be around in the future. What we are going to see is over the coming years and maybe even decades, that the longer these assets have been in the market, the more people have held them, the more comfortable folks are going to get. There's a familiarity that comes with holding these assets. And so the banks will get more comfortable, the investors will get more comfortable, the regulators will get more comfortable. And so to see more assets flow should not be shocking. And I also don't think seeing many more assets being approved for ETFs over time is going to be shocking either. So now we understand Wall Street can make money.

We understand regulators are going to approve this stuff and they are not competitive with each other. Instead, all boats will rise together. And that's exactly what you should want. You should want to play a game where you can win when other people are successful. Playing a zero-sum game where you have to win at the expense of somebody else or at the expense of another asset is not a game that's usually worth playing. And so it's very good to see that that token density theory, that same thing like the restaurant density at that intersection, the more tokens we have approved in the regulated market, the better it will be for Bitcoin and the better it will be for the overall

crypto industry. Thank you.