The Wolf Of All Streets - Bitcoin ETF A Flop Or Success? Heated Debate!! | Crypto Town Hall

Episode Date: January 12, 2024

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You want me to speak first today, Mario? Can you hear me? Man, no. I don't want you to speak. I don't want Ran to speak. How the hell am I meant to understand how the ETF performed when your thumbnail says exactly what the thumbnail says? Where is it? Mine says ETF success. His says huge ETF failure. But one of us is right and one of us is wrong. Yeah.

So the ETF, for everyone listening, just for everyone listening, according to our two moderators, our two co-hosts, one of them, the ETF failed and succeeded. So for everyone listening, just so you know,

the ETF was a massive failure and a massive success. Congratulations and sorry for the bad news. Come on, come on, come on. No, no, no. You've got to be smart enough to be able to understand when crypto Twitter is creating a shit narrative and celebrating shit that they shouldn't be celebrating. I agree with the first part, but not with the second part. Okay, tell me why we have to... Oh, I see Eric's here, so we can all have this discussion

together. Well, 720 million in inflows yesterday. I know your argument is that there were no inflows. 2.3 billion in outflows. It was net selling pressure. I'm going to let Eric do it, because you've been arguing with him on Twitter, not me.

I've been arguing. I just posted something and everyone just started commenting on my post. They didn't like it. They didn't like the fact that I highlighted the truth. Eric, before we get into this, while we're waiting for everybody to arrive, I think your thumbnail game has really,

really, really improved on YouTube. youtube i think there's colors now and stuff like that i think what you're going to do a lot more is you're going to open your mouth more no i read that i i can't do it i did it one friday uh as a joke like the last friday of the year i opened my mouth and i just i i couldn't look at myself ever again i can't do it i cannot i i blocked you i i can't do it. I cannot. I blocked you. I can't see you opening. I blocked you when you did that for like three days.

Yeah, I can't do it. I look terrible that way. It's just that. No, it's not good. But I want you to kick it off, Ryan and Eric. Just because I was listening to Ryan just before the show, and Scott, I haven't had time to listen to yours, because Ryan caught my attention more than it's a flop.

I'm like, hold on. Of course. Yeah, it did. because Ryan caught my attention more than it's a flop. I'm like, hold on. Of course. Yeah, it did. It just caught my attention. But the GBP outflows, Ryan, it's the one-off. Why would that determine whether it's a success or failure? So I think let's just say this. I do believe that on many accounts,

the Bitcoin ETF was a great success. I think the fact that we got an ETF approved was a great success. I think the fact that we got an ETF approved was a great success. I think the fact that Larry Fink is now clearly on some kind of roadshow and telling people how important it is to own Bitcoin is a great success. And I even think that from an inflows point of view, it wasn't bad. Like, it was big, etc. But I think a couple of other things. Number one is people are comparing the launch of the Bitcoin ETFs, all 11 ETFs,

to situations where we've only actually launched one ETF. So if you want to compare the Bitcoin launch ETF to GLD, and you can't compare it because you're talking about so many different years. But I'm just giving you an example. You can't compare 11 ETFs to one ETF because that's just not a fair comparison. Number two, remember that the whole reason

why we wanted an ETF is because, and a spot ETF, not a futures ETF, because we wanted an ETF that actually buys physical Bitcoin off the market because Bitcoin is a scarce asset. And so yesterday, people were celebrating trading volume. Now, over 50% of that trading volume came from GBTC. And you can make the assumption, as we discussed yesterday, that GBTC is 95% sales because

no one in their right mind would buy something and pay 1.5% when they could pay 0.2%. So you can make an assumption that on day one, the $2.3 billion out of GBTC was outflows. And outflows in an ETF effectively mean that those Bitcoin have to be sold on the open market or have to be sold on the market. And then you look at the inflows. And then you say at the inflows. And then you say, okay, there was $4.6 billion worth of volume. Let's just be generous and say that the entire subtract GBTC, that's $2.3 billion.

We can say literally that 90% of that was actually inflows and not actually ETF shares trading hands. Net on the day, you've actually got a negative flow of Bitcoin. of that was actually inflows and not actually ETF shares trading hands. Net-net on the day, you've actually got a negative flow of Bitcoin. So yes, there's a lot to celebrate, but net-net for Bitcoin yesterday, we actually had a net sales event onto the market on the first day of the Bitcoin ETF. Now, do I think that this is bad? I think it's not bad, but I just want to put perspective as to what crypto Twitter is celebrating. And I also don't think that we should judge the ETFs at all on the first day, because these things are going to take months,

if not years, to go down the distribution network. Does that make sense? Yeah, Eric, you're up. Yeah, sure. Okay. I jotted down the points. And listen, I'm just an ETF guy. And so my perspective is relative to the history of ETFs. I've been covering it for 20 years, wrote a book on them.

And this was a phenomenal launch by any metric available. So let's address the points here. Why compare all of them versus Biddo? Well, let's just say only BlackRock launched. The volume would be probably two or three fold. There just happened to be a group. It's never happened before. It's not their fault they launched in a group. So you absolutely have to compare it to bido second bido launched in the october 2021 mania where everybody's aunt edna was asking about bitcoin that's over so to produce anything near bido volume on day one is excellent given we've this is a post ftx era where a lot of people have been turned off frankly so I think that's excellent.

Also, if you look at iBit alone or Fidelity plus iBit, iBit doing a billion is insane. Again, we're talking once a decade, do you get an ETF that does a billion on the first day? So I don't know how to, it's hard to entertain that. I'm going to tell you. It's hard to even entertain that. I'm going to tell you. But listen, hold on. Can I – you spoke for like 10 minutes. Can I go?

Go ahead. Okay. Go ahead. All right. Second, GBTC is half of the volume. Well, if you looked at my tweets, I was separating GBTC of numbers. I agree. GBTC was like a grown adult. The rest were newborns. A newborn ETF is like sending a baby into the Amazon. It is so hard. I call it the pterodome. So the fact that those nine got

2.3 billion is extraordinary. I'm not as shocked by GBTC. The GBTC volume was probably outflows. But to your point, the volume of the newborns was all inflows. Because who in the hell selling on day one, it's only people buying it because there's nothing else to do. There are no shares. So those are all by order. So I would say it was probably more of a flat event, which I acknowledged in my quote tweet of you. You had that right. But let's forget, let's not forget that for ETFs, their whole point in life was this trading tools. That's how the American Stock Exchange set them up. They wanted people to be able to trade something like an equity that did something else, right? It hold the whole S&P. It holds bonds. So now everybody can trade Bitcoin like equity. Volume is the cornerstone to the whole deal.

If you don't get volume, you fail. That's why I like some of the most biggest ETF launches are ESG because BlackRock stuck two billion in there and they didn't trade ever again. They were total loser ETFs, but they happen to have a two billion dollar injection. The fact that the volume included 700,000 individual trades and was cascaded across all of the products is again, a home run. Even the least traded one, the wisdom tree, 6 million would be a banner success for any other launch, right?

So again, I'm only telling you this relative to the history of ETFs. And then the whole idea of the first day too soon. I guess I agree with you there. But this is an exciting day. We have to compare this to other things. And remember, Ether Futures launched and that was a flop. They traded, wait for it, 1.5 million. So these traded 4,000 times that. So look,

I don't know what your MO is though. Are you trying to say that ETFs suck or this is bad? I mean, you're barking up the wrong tree, dude. This is the greatest thing. These advisors love ETFs. You put it, this is the most popular investment vehicle of this century. You know, you guys are lucky that they approve them. I can't imagine crapping on this. It's so weird to me, unless you're short Bitcoin that day. No, no, no. Hold on a second. I'm very bullish Bitcoin and I'm very, very, very bullish ETFs.

But I also want to put things into perspective because when people come out and say that this was a very, very, very successful launch and that they cite the numbers of $4.6 billion and they don't read that the $4.6 billion actually on a net-net is probably an outflow and at best case even, then I think that people aren't painting the whole picture. Don't get me wrong. I've been rooting for the ETF all along. I love ETFs. I'm very, very, very happy that we've got a Bitcoin ETF. I think it's a game changer. But I also think that we need

to keep our wits about us and not just celebrate something that is not necessarily worth celebrating. Well, isn't there an argument, though? Sorry, Eric. Go ahead. I have a quick rebuttal. I get all that. And I said, I was saying that in tweets all day that, hey, look, because people are like, what's going on with the price?

Shouldn't it go up? And I'm like, well, first of all, there was a lot baked in. Okay, there was a lot of buying of the rumor, so who knows? Second, I was like, well, GBTC is probably all outflows. So these 2 billion numbers on each side are probably canceling out. But again, the volume is like fish feed for big fish. You have to have volume before any advisor or institution gets interested. So again, I think we agree. Look at the long game here. You want to see high volume. But to your point, I think it's the way you worded it. All caps, a total giant dump on the whole situation. I think

maybe a little nuance might have been better. I don't know. Because I only responded because everybody started tagging me. Aren't they not necessarily comparing apples to apples anyways? We've known for literally years that the second GBTC converted or allowed redemption, that we would see massive outflows because it was back to trading right at NAV. I think to your point, Eric, you can just take GBTC out of it and view the rest of it completely separately. Like the people exiting GBTC almost have nothing to do with the ETF launch itself or the inflows. I mean, you posted, Eric, obviously, BITB, which I was very surprised and pleasantly surprised, I would say, Bitwise winning at 237, right?

FBTC, 227. BlackRock at 111, actually coming in quite far behind. But those have nothing to do with GBTC. Those are actual inflows, correct? Yeah, so all of the volume on day one for any ETF is inflows. But the flows take a day or two to get through the system. Like Biddo traded a billion, but only saw 500 or 400 million in inflows on the first day. So I would look for...

Right, this is more than Biddo. is better, right? More than Biddo. Right, so this is more than Biddo. And we know that with T plus one, we're probably going to see a massive revision up after today's trading, right? Well, let me tell you what's happening right now as we speak. So right now, as we speak, the Bitcoin price is, I hate using the word dumping

when it's only down a couple of percent but the bitcoin price isn't looking amazing and the gbtc discount has actually returned so the it went back to to to uh no discount and now you've got a three well i'm not watching it live i was watching a few seconds ago but but 3% discount on GBTC again, which means that there's not enough buyers of the shares of the ETF to absorb the selling pressure at the moment out of GBTC. And so what you're going to get now is you're going to get arbitrage, hopefully you're going to get arbitrage coming into the market,

buying the GBTC shares and hoping to close that discount. But net-net, what we wanted to see was we wanted to see net inflow knowing that there was going to be a lot of selling out of Grayscale. One of my concerns, you may recall, was I was very scared that the Grayscale GBTC would have been approved before the others. And I always say that that's one of the biggest risks to crypto is that GBTC gets approved before the others and we get a massive net outflow with nothing to absorb the buying pressure. And that could still happen because remember, GBTC is a $20, $25 billion, $28 billion worth of Bitcoin locked up, which has been locked up there for a couple of years. Now, people are trying to get out

of it. They're even willing to take a 3% discount on SpotBitcoin. That was always going to happen. That's what I'm saying. The minute that people were finally able to get out of GBTC, they were always going to do that. To me, that's almost an outlier event that's less involved and shouldn't even be considered GBTC, they were always going to do that. So to me, that's almost an outlier event that's less

involved and shouldn't even be considered in the numbers as Eric is calculating it. It's just a different view, but if people just got the opportunity, this is the first opportunity that GBTC people literally have had to exit to that degree.

This is what hits the Bitcoin. Ultimately, we wanted bitcoin ets because they were going to create spot buying of bitcoin and now as i said in the beginning a successful launch to me would have would have said more spot buying than spot selling okay so your argument is it's a failure because bitcoin underlying price did not go up no my underlying is that there was less less demand than supply on the first day. There were more sellers than buyers on the first day of Bitcoin as a result of the ETF approval. Right, but the people selling GBTC don't care that it was the day of an ETF launch.

They were literally waiting in line for an exit at the first available moment, which has nothing to do with ETF launch. Not apples to apples. I think we are being a bit general on who's involved in selling what. I think it would be helpful if we took a step back and thought a bit more carefully about that. If you try and go through on GBTC, for example, right? There are some people who just own crypto through GBTC. That was how they expressed their ownership. They would seem likely if they

sold gbtc to buy into another one for lower fees right if you can get out at what we don't know is how many people own gbtc versus we're short um bitcoin in an effort to capture some sort of an arbitrage i would assume if you had that sort of a trade on you are out that should be a net neutral right you should be selling your GBTC and buying back spot Bitcoin. So that what we don't know is how much of GBTC was people owning it for an outright trade versus how many people had some sort of arbitrage on. Those are the people who would certainly exit at zero and maybe even at minus 3% back to a discount because if they got in at 30% discount, they're able to trade this out. They're able to

close that trade. So I think we'll find out in about a week or so what percentage of GBTC money was kind of our type community who should exit versus those who are in it, who I think they will transfer it around to other crypto, right? Why would you keep it at even a half percent? But the one thing I think we have to be very careful when you're looking at these volumes, how much is just people trading GBTC versus the other 10 ETFs, right? So I think it's a bit unfair to kind of aggregate all the volume and say, oh, look at how much volume, because the algos are certainly trying to trade every single one of those against each other. So there's going to be an immense amount of volume just from trading one against the other.

And I think that'll settle down once we move in a little bit. But I'd be very concerned about saying all this volume and all the others was just barring. I think there was a lot of trading going on because the market makers are able to trade one versus the other quite easily. I agree. I agree. And that's why I think that we had a net negative. And I think we're going to continue to see net negative now for a couple of weeks. And I think the biggest reason why we're going to see a net negative for a couple of weeks. I'm not sure that the other investment companies, so to speak, have enough demand to absorb what is going to flow out of GBTC. I definitely agree with that, and I think we'll see some weakness. We won't know, though, I think, whether this is a success or not until two to three weeks after,

where you get a sense of how much net new demand has been created and the total shares outstanding across the space starts increasing or doesn't increase. That's kind of what I'll be looking for is a week or so into this total shares outstanding. It will be kind of the judgment and whether that's increasing or not. That to me will be reflective finally of whether people are buying into this. And I've been listening to all the commercials. The one thing that I find awkward about all these commercials, I think it's even different than physical gold, where physical gold is actually a pain to own. In theory, crypto is meant to be a store of value that you should be able to own. And basically all the things are saying this thing is going to change the world, but it's too complicated for you.

So buy an ETF. I don't think that resonates as a marketing pitch with a lot of people very long. God, there's so many things to unpack. I mean, let's just start with I'm on team Eric. I think that his take is correct. Let's be clear. First, I want to dispense with the stupidity. We saw grayscale investors buy up to a 60% premium people who wanted to get exposure. A lot of retail investors have no clue what the NAV is when they're buying or selling. They just said, oh, okay, fine. I've made money. I want to get out. I saw it at this price and it's dumping. Oh, my stops are being triggered. That happens. Arbitrage is difficult. You guys all know I wrote an article for Bitcoin Magazine.

The fact that the cash creation means that arbitrage channels are going to be wider for a while until the issuers get their shit together. We know that. It is just the absolute truth that the arbitrage channel with it not being in kind is harder. You're going to see this stuff and people have to actually figure out what what the nav is in real time and start getting it now the professionals can do it and ran your right in a sense but the bid offer spreads on most of these things like grayscale's bid offer spread right now i'm looking at it's two cents that's pretty good but for size it's not that high and it's not that low it is expensive expensive to arbitrage this stuff. And look, I run an arbitrage platform. I know I've seen far bigger arbitrages open up in the Bitcoin world.

But the real thing that people have to understand is net new inflows. This is the kind of thing that is going to start slow and grow. BlackRock hasn't even advertised yet. None of these companies could. This was a close decision. The biggest single piece of news that no one keeps talking about companies could. This was a close decision. The biggest single piece of news that no one keeps talking about is this was a 3-2 decision. This was not unanimous. This was grudging over the line. This is with the SEC kicking and screaming. This is with

at least half, if not more, of the retail community in the United States saying we're not going to offer the product. It's going to take time. But the door is now open. And so all of a sudden, we will get into a world where people start looking at the Bitcoin hash rate and where it is relative to price and other things. There will be other narratives. This is like typical alt-re-rotation, which we've seen in Bitcoin. It's still sitting in the top, it's still above its support level. And we'll see it there. I just don't know why everyone expects this thing to be, bam, we want instant gratification to the all time high. That should never have been the case, and nor is it likely to be the case. William? Yeah, yeah. Okay. So two things. I mean, if we're looking at the Bitcoin price,

or whatever happened in the first day, I think it's not a good measure, especially that we have GBTC in the mix as the oddity here. And it's history whether there's flushing or not. It's thoroughly to judge because we need to see the full effect of the inflows and the outflows over a period of time and not even weeks. I'm thinking. Oh, so you think a few weeks is not enough to judge? Yeah, sorry, go ahead, William. That's why I said period of time, if you could define it. I think three to six months, I think overall.

The launch itself was a success. I agree with Eric by a lot of the measures that he mentioned. Now, things will reveal themselves over time. So my timeline for success is three to six months now the more important thing is that bitcoin is now to be taken seriously more seriously by the financial community but it also means that there are more eyes on it so now there's more people watching how bitcoin is going to live up to its promises. Now it has to insert itself into more new financial products. For example, Grayscale today applied for covered calls on their GBTC.

So this is new and we're going to see more. The other thing is, let's not forget, this approval was an ETP. And it means that other ETFs, I believe, could be launched under that umbrella. Now, the SEC was very cautious in holding up their nose when they announced it as an ETP, but it could open the floodgates for other ETFs under it. Larry Fink today or yesterday hinted that Ethereum could follow because they have the blueprint now. So I think it's too early. I think we should focus now

on making sure that we see Bitcoin in many other financial products. We need to see Bitcoin emerge as a new financial instrument. And that's what I think is going to be how we judge the success. Let me ask you a simple question, Ryan, Get your thoughts. And there is a lot more news today. There's the Vanguard news, which Scott went on a vendetta against Vanguard for some weird reason. And we've got the, as you mentioned, William and Larry. I got boycott Vanguard trending. You're welcome.

Congratulations. Larry Fink did say he sees value in an Ethereum and having an Ethereum ETF, which is important as well. But I think that the ETF numbers from yesterday are still the main topic. Ran, would you say that the launch, just between me and you, it's being opened,

would you say it is a success if we didn't have such high expectations? Is that fair to say, Ran? No, I can't see this as a success. I really can't. I mean, I think, look, I think, let's just say this, I think it's,

to judge an ETF on the first day is not, I don't even think, look, I think, let's just say this. I think it's, to judge an ETF on the first day is not, like, I don't even think we should be doing it. But if we are going to do it, then I think that net-net, it's not a success. And again, I'm going to reiterate the point, the main point. If there are 11 horses in the race, and one of the ways to differentiate yourself is to create the biggest ETF, the quickest. And we know that that was what people were gunning for. They were going to say, look, there's going to be a race to see who can get the most TVL in their ETF the quickest. Now, if this is the best foot forward for the institutions and what we got yesterday, which I would assume that yesterday, if you take all the numbers, once you've filtered out the crap, probably one and a half billion flowed in.

I don't have the exact numbers. I'm sure Eric and one of the other guys can probably give you much more accurate numbers. I would estimate that net-net yesterday, $1.5 billion flowed in. And as we can see, GBTC is now selling off. And as I speak to you, it's actually selling off a lot quicker. So the pace of selling off is much more. You're asking me, is this a success? No, it's not a success.

A success would have been that we would have had more buyers on day one than there would have been sellers on day one. But then again, I also think it's completely, completely, completely unfair to judge a product like this on the launch. And what I think is going to happen now is I think we're going to be in for two weeks of a lot of pain on Bitcoin. And thank God, I'm actually watching the markets. It's a very interesting, what's going on in the markets

is actually really, really interesting because Bitcoin is now dumping, but ETH is moving up and Arbitrum is moving up and all the ETH tokens are actually moving up. So generally, you'd think that if Bitcoin took a dump from 46.5 to 44.5, that's quite a serious dump. And what we see now is that the rest of the market just doesn't care and they really have managed to isolate that to Bitcoin.

But would you say that dump is related to the ETF or is it more because the price session for the ETF was yesterday's exchange outfalls, for example? No, no, it's great. It's GBTC. You can see exactly what's going on. I'm watching two charts here. Watch the GBTC discount, which shows you how quickly people are selling their GBTC shares. And watch the Bitcoin price.

And what you can see is that people are trying to get out of GBTC. The discount now is three and a half percent. They're willing to lose three and a half percent to get out of an ETF, which is, that's quite a big spread to be able to get out of. Doesn't that, maybe I'm just missing the point here, but doesn't that play to my point that people were looking for a GBTC exit, no matter what the situation period, and that has nothing to do really then with the ETF launch. This is not apples to apples at all. You're comparing two completely separate, unrelated situations that happened to have happened

on the same day. Do not underestimate stupidity. I'm telling you, we've seen it. People have been told for six months that if they get an ETF, when they sell GBTC post ETF, it will be at fair value. I'm telling you, a lot of the people with their orders in retail, look, on this stage, I'm probably, I'm the only one who's done this. I ran two Sigma securities. Our business was taking the other side of retail. I am telling you, there are a lot of retail sellers that have no clue they're selling into 3% discount. They only know they see the price dropping and they're zooming out. Now, the other

point I'll make, and Ran, I know you agree with this, is that you have to zoom out when you talk about success or failure. The day that Larry Fink announced that BlackRock was going to file for an ETF, Bitcoin was trading at $25,000. I made a bet with it, then rallied to $31,000 and came all the way back down, right? And we're back at 25 again. And then, you know, that's the journey that we've been on. I made a bet with Mike McGlone about it going to 40, et cetera. We're well above those levels now. At the end of the day, success or failure, remember, the markets are, in the long run,

they're a weighing mechanism. In the short run, they're a discounting mechanism. All these narratives are discounted. And what we don't know, what we didn't know when we were looking at whether it would be a sell the news event, et cetera, et cetera, was that more than half of the retail systems and all the RAs are going to be actively discouraged from trading it, which means it's going to take longer. I just think that gives a buying opportunity, to be honest with you. But I don't disagree with your view of the market. There definitely is selling pressure from GBTC. You're not wrong about that. There's definitely some of that money is

going back into the other ETFs. You're not wrong about that. But for the purpose of looking at this, you have to zoom out. The point I made, which I think you agreed with, but you didn't credit, is this looks like a typical alt season. I mean, the BTC to get to probably the best trading call on this site was when Scott last week, when the Bitcoin ETH ratio was at 0.48, and Scott said, basically back up the truck. And now it's at 0.059. That's an enormous move in Ether outperformance that was called and absolutely was predictable because it's what happens with alt season. Ryan, before you respond, I just want to ask the audience also, let us know, are you on

Team Ryan or Team Scott or Eric? Just in the comments, do you think the Bitcoin ETF launch was a success or a flop? Let us know in the comments, bottom right corner. Ryan, I'll let you respond to Dave, but also I've got a question for you afterwards. I think Dave's right. I think we also called the trade. We said that the money's going to move into ETH. We've been very

vocal about that. I think Bitcoin's time is finished for now. I mean, I love Bitcoin. It's the biggest holding in my portfolio. But I think for now it's time to shift focus to ETH and ETH-related stuff. And then I think we now, it's time to shift focus to ETH and ETH-related stuff. And then slowly we'll filter. And then I think we'll follow

the normal Bitcoin, ETH, major altcoins, small altcoins. So look, one of the best comments is HODL Disaster. It just says, you know, can RAND take some of the crypto prophecies made and buy a new microphone? I think that's one of the better feedback.

But I think most people are considering getting a success. I'm just going through the comments now. How long will the GBTC overhang remain there for? Listen, it's huge. I mean, I think it could be a couple of months. It's got $25 billion worth of Bitcoin. Let's say 20% of it gets leaked out. That's $5 billion worth of Bitcoin in the market. And you think about the big ETF they launch, you've got one and a half billion of net buying pressure. So this could be a couple of months.

It's also worth mentioning that, you know, like this dissent that I basically ripped into, I'm actually writing a long form takedown of Crenshaw's dissent because it's just absolutely one of the worst things I've ever read coming from a government official. But it's being used, that and the better markets thing, by Vanguard, by Citigroup, by whatever, Edward Jones, etc. And so the narrative will take time to shift, but they're on the wrong side. And the narrative will end up where we need it to be. I mean, the problem with Bitcoin is that it doesn't take much for – because it just isn't that much supply. Right now, this is the crypto world trading it. And if it's only the crypto world trading, it's going to do exactly what Rand said.

What we don't know is will one or two large pools of capital start moving in. That's all that it takes. I wanted to move on to the, Eric, if you're still with us, BlackRock. So Larry Fink's comments, BlackRock CEO's comments about the ETH ETF. So saying he sees value in having an Ethereum ETF. Not sure if he said more about it. Is that something you'd expect him to say? Is that coming as a surprise?

And do you think that increases the likelihood that you will see it? If Larry says he wants one, we'll essentially get one as we did with the Bitcoin ETF. And do you think we'll get one by mid this year? odds, even early, because they are just such a big firm. They've got people who used to work on the regulatory side working there who have good feel for that. My bullishness on the Ether approval is really just based on simple, like an SAT analogy. You approve Bitcoin futures, you didn't approve spot, you got sued, You have to approve spot. You approve ether futures. Well, if you don't approve them, you're going to get sued. So I just feel like Grayscale could do the same thing all over again if they wanted. So ipso facto, I just think their SEC kind of is in a corner here and has to approve them. That said, there could be some other sort of political black swan I'm not seeing. But you know, we haven't really put a lot of attention into handicapping the odds

of ether. But James and I had a quick chat and we're like 70% by May, which is when Black Rocks is due. So I would kind of leave it there. But if Larry Fink says it, I think it holds a lot more weight versus say a mid tier issuer. And just being honest. Well, that aligns with standard. Yeah, that's pretty shocking. I mean, that's the standard chartered sort of, right? They made the prediction in their prediction that Bitcoin would reach 200 million, I mean, 200,000, excuse me, by the end of 2025. And they said, I believe they expected 50 to 100 billion in inflows by the end of 2024 to Bitcoin spot ETF.

They said that they expected an Ethereum spot ETF to be approved by the second quarter. Ran, you actually said the same thing. That was your expectation as well, based on exactly what Eric just said. Yeah, exactly. It's exactly what Eric just said. I mean, were they going to go back to court and be called arbitrary and capricious again? I mean, that just sounds like a bad strategy for the SEC. But Eric, what are your thoughts on Gensler's comments

once the ETF got approved? Because it looked like he was kind of toning down and excitement around an ETH ETF. So it's kind of contrary to what Larry Fink said today. Is that what you'd expect Gensler to say, or did it catch you anything particular that was out of the ordinary? Yeah, I suppose Gensler's comments

were the reason I wouldn't be higher than 70. It was a little surprising he made that point. But I also think he wanted to do as good of a job as possible at just shutting down the hype machine a little bit because between the fake tweet or the hack tweet and everything, their incoming must have been ridiculous over the past couple of weeks. So I'm guessing he just wants to like move on for a while and just sort of make his case that, look, I hate this. The court made me do it. I'm on record hating it. And, you know, he can wash his hands of it to a degree. So I wasn't surprised. There was one thing, his comments that I thought was telling, which is that he kind of settled into the point of view that me and Nate and others have been at for 10 years, which is, hey, look, if we're going to move forward with anything in ETFs, this is probably one of the better deals.

Compared to what's out there and other ways to get exposure, this is a regulated fund vehicle with a good track record. And that's the only reason we've been sort of on the side of this wasn't we're not pro Bitcoiners at all, we're neutral. But we are, we have seen how good the ETF can operate, and how the competition makes fees lower for investors and how the market makers are good at making tight spreads. So we just thought you just, you know, put it in ETF and let the magic happen. And that's why I'm excited and think it will be a good deal long term for investors. Let me ask, Ryan, I've got another question for you. And just going through the comments, Rampage Call says high level battle going on in here.

I think the audience is enjoying the back and forth and the balance. You did mention one thing that you cannot compare one ETF to 11 providers, 11 ETFs, Ryan. But why would that impact the buying pressure? Is this essentially spreading the buying pressure among more ETFs and it's increasing competition? If anything, it should increase buying pressure because they're all trying to compete and reduce fees. It's probably the only difference.

But other than – That's exactly it. Okay, the drop in fees. Yeah, fair point. The drop in fees. That's exactly it. So, you know – And more marketers, more ETFs, more bigger marketing budget as well.

Yeah, exactly. So I think part of the demand for this ETF is you realize that you've got to get momentum, and momentum is defined as assets locked under management very, very quickly to get credibility in this game. That's how these things work, right? So let's just work it. You get a lot of assets under management. Therefore, you get a lot of trade volume. Therefore, You get a lot of assets under management. Therefore, you get a lot of trade volume. Therefore, you get a lot of liquidity.

Therefore, you get a lot of confidence from people who are looking to invest. So if I have two ETFs that are exactly the same, holding exactly the same asset, which is quite rare, and I'm, as a fund manager, looking to allocate shares, allocate money into these ETFs. What is my deciding factor? My deciding factor is, where am I going to get the most liquidity when I need to exit? How easy is it for me to going to be to exit? So because they are 11, and it's completely, completely, completely unprecedented, the institutions understand that you have to survive or you have to win the first leg of the ETF race

so that you can make the money on the second and third leg of the ETF race. And what is the second and third leg of the ETF race? It's all the fancy structured products that you can create around ETFs and stuff like that, lending, borrowing options, etc, etc. Now, when you have 11 of the most powerful asset managers in the world all competing, well, for one, you're going to get a lot more advertising. You're going to get a lot more incentivization of brokers if that's legal. I'm not sure if that's legal in the United States. You're going to get a lot more, hey, guys, closed meetings. Hey, guys, we need to win this race because. Now, that doesn't normally happen. So it's almost like yesterday was the starting gate,

and now they all know that within the first week or month or whatever the measuring point is, you have to have your horse in the front of the race if you're going to win the race. The faster you are out the gate, the more chance you've got of being the preferred choice as investors start to allocate money into these ETFs. And so I think it's unprecedented that this has ever happened.

And therefore, I would have expected a lot more buying pressure. Eric, to that end, to what he just said, I was a bit surprised in your tweet this morning that actually Bitwise was leading, Fidelity was in in second and blackrock was in third what happened to the two billion and uh you know that was expected from blackrock that was lined up uh in advance or is a lot of that potentially coming in still yeah so i look like the 200 million that bitwise had actually outlined in their prospectus as they had a buyer for that actually materialized and came in probably late. It was probably done in a creation after the day. Now, BlackRock, yeah, I mean, I thought we'd see bigger trades, but the good news is BlackRock saw a lot of trades.

So I'm also looking at individual trades. So the good news on BlackRock is the breadth of trades was massive and the size was on theRock is the breadth of trades was massive. And the size was on the smaller size, meaning there was actually like a frenzy of buying amongst many people. What I was actually worried about was the 2 billion would come in like an ESG ETF they used to do. And then that would be like the only trade all day where you'd have this massive number, but like there'd be no actual other trades. I don't know if the $2 billion is going to trickle in over the next couple of days. We'll see. That was the rumor I had verified by two people. And so we'll see. I mean, BlackRock getting, what is it, $111 million. That was tame.

I thought it'd be a little higher, but they traded a billion. So let that number seep into the system for a little bit. So if we have, they're already at $250 million trading already today that's a good sign we're only 11 a.m and they're going to probably hit over half a billion so that's also good to have the second day i point this out because you get volume going good things happen um if you have one giant creation fine it feels good for a minute but then where is everybody else so the fact that the volume is going um is pretty strong today and again if an etf trades four million dollars on day one it's great we're talking about 250 million on day two by 11 a.m so the numbers you guys are like i i'm only telling this as an etf person most ETFs launch and they trade less than a million in the first day. So I don't know.

I guess the hype was so enormous. Perhaps that's what the standard is. But compared to ETFs at large over 20, 30 years of launching, there's nothing like this. Yeah, but Eric, you never also had a $25 billion effective ETF on day one either, right? So it's not quite like this is a brand new thing, right? You've had GBTC. First of all, I wish you guys could watch what's going on. I wish you guys could watch what's going on on chain.

So in the last five minutes, there's been 4,000 Bitcoin transferred from a GBTC wallet somewhere into the market and another $500 million worth of Bitcoin transferred from a GBTC wallet somewhere into the market and another $500 million worth of Bitcoin transferred onto Coinbase separately from the $4,000. This GBTC thing is a big puncture. There's a lot of GBTC flowing onto the market right now. Yeah, look, GBTC is a melting ice cube, obviously. We get it. But let's X out GBTC. The numbers were extraordinary. I mean, I'm not sure. How long?

We can't X out GBTC, right? Because if GBTC, if someone sells that to buy the BlackRock, it's not. I just did. It's not very exciting. They're not. It's not a one for one. There's no way. That's not happening.

The tax implications. very excited they're not it's not a one for one there's no way that's not happening the tax implications there's literally no way that somebody is taking a massive capital gains hit to reduce their fee slightly dollars on the first day is a good launch two million we what standard are we setting here gbtc look i listen guys i gotta go i i can't i don't know what to tell you um you can you can cast out on this but'm telling you, this volume number is very positive. You need volume to attract fish. It's like bait, and you got that. So you should be happy.

I'm moving on. I got to go. Thank you, Eric. Appreciate it. You lost his shit. But that was a really good debate but how about the question that stock talk i'll give you the mic but the question i have peter is that how long will this overhang last you know i asked ran that question i want to get your thoughts on it as well because

we might not care and i think it's fair and i am on the on the scott and eric camp on this one but the market cares and i'm curious on how long that would impact the market for and then we'll go to stock i think we sell off for the next week or so as people digest this i think it gave people an opportunity to exit gbtc i think there was an immense amount of front running and when i watched twitter feeds there were a lot of very naive takes on how etfs work and things so i felt every there was a community within the bitcoin community that was way on how but there's and you get a bit of selling disappointment. I think we talked about this last week. So we don't know how many people had levered bets on expecting Bitcoin to go higher on the open.

So I think it takes a week or two to settle this out. And then we'll start seeing, to me, this will be a success ultimately, if RIAs, people get people who would not have otherwise bought Bitcoin into these ETFs as a way to take Bitcoin exposure. If it's people moving out of Bitcoin into this or moving around these, we can't really tell. I take a doubt with all the volume numbers because people are trading all these around. ARK, for example, still has great volume numbers, even though it's sold off. It's all going to become to me, do you see shares outstanding grow? Shares outstanding are really the only way to see how much is coming in. When I look at, say, HYG, for example, I spent a lot of time on this.

There are a lot of people who doubted you could ever put high yield in an ETF that was very successful, but about 90% of the daily volume is people just buying and selling shares, and only a small percentage of volume is ever create redeem. I'd expect that to take into effect once these things settle out. People are still going to want to trade these. They're going to want to trade one against the other. So I think two weeks to a month, we'll start telling whether all these commercials, whether all this advertisement has that impact.

I think we did not get a day one surge, people waiting to buy Bitcoin. But now we'll see whether these people are able to get new buyers in. And that'll be the success or failure of whether we're at 35 to 40 billion, two months down the road net. So whatever came out of GBDC, I think then it's a rousing success and we can build on if we're under 25 billion net in a month, then I think it's been a real failure and showed that people haven't been able to transfer on.

Peter's got it. Peter's got it. Peter, that is 100% the thing. We can only judge the success if one month from now, on the net net, we've got more than $25 to $30 billion locked up into the ETH. Whatever we get over $25 billion in a month from now, that will determine the success or the failure of this ETF launch. Stock talk? a month from now that could determine the success of the failure of this etf launch stock talk yeah so a couple things first of all um i want to defer to eric's earlier points because i mean eric has been studying etfs for decades and has you know covered the launch of a lot of etfs but i think the point he made was a false equivalency. I mean, look, the volume on these ETFs yesterday was promising and it's good. And I'm not going to discount that. But, you know, couple million of inflows in the first day, I mean, the vast majority of ETFs that are launched are just garbage, nonsense, useless

products. I mean, you can scroll through a list of ETFs on the market, and by the time you get past the first 50, you're going to wonder what 99% of them even exist for. I mean, this has been a problem for decades in the market of just ETFs being nonsense ETFs that cover any number of metrics, whether it's leveraged or unleveraged ETFs that very few people trade. So I want to make that point that it's a false equivalency to say Bitcoin, which has an enormous amount of hype, a ton of media coverage going into the launch of these ETFs to say, well, you know, they're exceeding the average ETF. That just is, to me, it's a moot point. There have been very, very few ETFs that have ever

launched with this amount of hype and this amount of coverage. So that's the first point I'll make. The second point I'll make is one that I kind of touched on in earlier conversations about this topic prior to launch, which was the basic conversation of whether or not an ETF launch is good for an underlying product or asset. And that's a complicated question. But if you want to use an analogy, there's a very, very recent one, which is last year's spot price performance for lithium. So for those that don't know, there was not a lithium spot price ETF for quite some time. And last year, at the start of the year, China launched one. So it was the only spot price ETF in the world for lithium last year.

What happened to lithium's price last year? It went down by 79%. And the reason for it is partially because of regional drops in pricing, but the regional drops in pricing were not reflective at all, even remotely of an 80% drop. What ended up happening was the sole spot price ETF allowed for people to speculate to the downside on an underlying asset that had run 800% in a two-year period. I mean, where's the bias in that trade? Clearly to the downside, and that's exactly what happened. the bias in that trade? Clearly to the downside. And that's exactly what happened. There was an enormous amount of speculation to the downside. And that led to that ETF basically caving from the day that it IPO'd and it led to spot price

globally, consequentially also dropping. So that's what we saw with Biddo and the futures launches, obviously, a lot of people have pointed to that. The two tops of this market have been, for me, historically honest, have coincided largely with the launch of these institutional products. I'm not saying it's apples to apples. I don't believe it is. Yeah, that's the double-edged sword of this, right? Because on face value, the conversation that we had even two days ago when I was on the space, which was that, look, this is undoubtedly a point of validation. It's undoubtedly a point of making institutions more hungry and more willing to participate in this theme. But at the same juncture, it is providing vehicles for speculation in both directions

that didn't exist before. And even today, the launch of the CBOE margin futures are adding more fuel to that fire. So, you know, it's yet to be determined if the street is going to end up consensus bearish or bullish on Bitcoin. But what we do know is now they have more tools to speculate. And so it's really up to individual holders to decide if that's a good or a bad thing. But the most recent example of that, like I mentioned with lithium last year, was disastrous for the underlying. And I'm not saying Bitcoin is going to crash because of this, but it could lead to downside pressure. And again, it provides a vehicle to speculate to the downside. So those are just facts and something worth

considering. So what you're saying, Scott, before going to David, what you're saying now, the last point you said is that now wall street determines what happens to the market ran you said in your show it's like an end of an era where we control the market to an extent of course now it is it's it's the big guys to a degree yes you've institutionalized the market to a degree and this is also why that's not necessarily and that's not necessarily a good thing it's not necessarily a bad thing or necessarily a good thing it's not necessarily a good thing. It's not necessarily a bad thing or necessarily a good thing. It's not necessarily either. But what it does do is it allows for additional speculation. And that can be interpreted in any number of ways.

But it's just the reality now. And it's part of why I firmly believe whether or not Bitcoin goes up or down, the correlation between Bitcoin and traditional financial markets has now undoubtedly increased by virtue of institutional participation. So the uncorrelation that people have been pounding the table on for years and years and years about Bitcoin, that thesis has now withered a little bit. And you're also 100% every day staring at the shares outstanding as an additional signal into your world of what's it mean? Oh, if shares outstanding start dropping, oh, retail is out of Bitcoin. I think it's going to add another thing to watch and probably create some volatility both directions.

And I do find those inflows and outflows certainly in the credit ETFs. You get outflows when they're trading cheap, it tends to signal more cheapness and vice versa. So I think you're going to wind up seeing these kind of linked to stocks and other trades and some of the things

that we've witnessed in other ETF flows occur here that are very different. So stock ETFs to me, they're very easy because you know exactly what NAV is to a pretty high degree. As you move away from stocks and certainly credit,

it becomes harder to know what NAV. And I think Bitcoin is going to be somewhere like that where NAV is not quite as accurate as it would be for 100 stocks at their last traded price. So I think it's going to create some really interesting dynamics and people are going to have questions about whether it's trading rich or cheap to NAV. And part of that's going to be how accurate is NAV even at any given time? Yeah, it makes it immensely harder.

Yeah, I have to take that one. Look, you know, a lot of these issuers aren't very good at this stuff. And maybe that's the problem. But trust me, there is no commodity on the planet that is even in the same zip code as being able to, at any instant in time, know the price of Bitcoin. I mean, look, OK, coin routes, we're good at that. That's what we do. But it's not hard. At the end of the day, all this data is public. The order books are there.

If you could see what I was seeing, you would know. I could tell you right now, 44,488 is 86,, whatever, is the midpoint of an order book that's consolidated. It is easy to do NAV. It is easy to publish cash creation redemption in real time if the issuers want to do it. They didn't have time to get all that stuff set up this time, but it will improve. But I think the correlation and the financialization is really interesting. The futures products and the leveraged futures to the downside products, those are absolutely trading vehicles, whereas a spot ETF, the

difference is it's more of an investor versus a trading vehicle. And Scott is right. The futures were the first way to be able to sell it. The issue here really is who does it open it up to? And it hasn't really started to open up yet. And so I'll continue to make this point. This is a long-term narrative shift. But one thing we are seeing, and I think the point about the CBOE futures is probably relevant here, is the discount or the premium of the CME futures has changed. It was like a switch got flipped. So I'm looking at my screen and I'll tell you right now it's like eight basis points of the futures trading over it. It's been negative today for the first time basically in months. And this entire rally, we've seen the CME futures

trading at dramatic premiums to what an interest rate calculated fair value would be. That's gone now. So obviously, there were people who were buying futures in order to get ahead of the ETF trade that are now rolling out of their futures. And that matters. So in addition to the GBTC heaviness, which Rand has correctly identified, there's also futures heaviness. As the old expression, this too shall pass. This feels a lot more like a post-IPO day hangover than anything else. And we've seen that in tech stocks and many other places. I don't see this as anything different. Let's go.