The Wolf Of All Streets - BTC ETF Approval Today? Time to BUY or SELL? | Crypto Town Hall

Episode Date: January 8, 2024

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How are things down in Texas, Marshall? Boy, everything is looking good. Yeah? Hey guys, like mining Bitcoin off of asteroids and using thermal geometric energies yet? We prefer dark matter and neutron stars down here, but, you know, just neutron stars. That's the future. That's the narrative I'm here for. Exactly. We're just waiting, obviously, for Mario and Ran to appear, see a bunch of our other guests rolling in, and then we'll really get started here. I think it's pretty obvious that we're in full ETF palooza here. Or the Cointucky Derby, I think, as the Bloomberg guys have dubbed it.

Matt, do you get to sleep at all? Or is it just ETF all day, every day? It's more the latter. It's more the latter. But I wouldn't trade it. It's pretty fun right now. I saw a joke that obviously was that you guys sort of did the reverse prices right, the fees. You guys got in there at 0.24 when the lowest was 0.25.

I like it. I like it. Yes. Well, we're playing to win. And, you know, fees are a big factor in ETFs. So we're excited to be where we are. I feel like by next week, you're going to get a free Tesla for buying an ETF. They're going to be doing, you guys are going to all be doing giveaways. I just pinged my- Man, you can't make calls. You can't make, ignore the five minutes late. You want, hold on. You can't make...

Ignore the five minutes late. You want to be course when you can't drink a straight shot of vodka without complaining for 10 minutes. That was one of the most... First of all, those were double shots. Second of all, that was Russian beer. I don't know much about vodka. I can tell you with conviction that Russian beer

must be one of the worst vodkas in the world. Do you know you became tipsy throughout the show? You should watch it again. And you were groggy. You were groggy as hell afterwards. That's a Friday evening show. It's perfect. I actually, I watched that show.

Obviously, I clicked right on when he was talking about my wife and doing shots every time we say it. And then I was thinking, man, I need to start doing my shows in the evening so that I can somehow get away with drinking. I can't drink at 9 a.m. in my show. You know, we ran to the different times. I can tell you that I felt absolutely like I was going to die by the end of the show.

Also, I hadn't eaten, so it didn't help that I hadn't eaten. And I didn't think I'd drink so many. So each shot was like, I didn't have a glass it's terrible for anyone for anyone that doesn't know what we're talking about there's an episode in which actually scott you can insist about your wife maybe you should explain it well it was it was on friday i think and i i got done doing my show a little bit early. I click over obviously to watch banter. I watch it every day.

And right when I click over, I see like my wife's Twitter on the, on the screen and Rand's talking about all of the Emmy and Rand's talking about all of the different takes, I guess, on ETFs and how obsessed we are. And she basically said, say, ETF one more time, like Pulp Fiction, I dare you. And then her next tweet was, you know, we're going to do a shot every time someone says ETF and to ran, ran with it

and did a shot every time you said ETF approval or something, right? ETF approval. Every time I said ETF approval on my show, I said the comments must force me to drink a vodka. And we were talking about the ETF approval so much that I just kept drinking vodka. Hey, I'm glad that's finished. I had a weekend to recover and now I'm back

and I'm still waiting for finished. I had a weekend to recover, and now I'm back, and I'm still waiting for the ETF approval. Yeah, yeah. Well, as you guys got on, Matt and I were sort of talking about the fee war, and I think that's an important topic right now because we're really starting to get a ton of clarity on what each of these are going to look like. The one that's just shocking me, by the way, is that Grayscale just is like 1.5%, dude.

Forget it. I have a few insights about this. One of them, which I spoke about on the show, and I do want to preface this discussion with this insight. So to the best of my knowledge, we've never ever had a scenario where like 10 or 11 of the biggest asset managers in the world were all launching the same ETF for the same asset on the same day, potentially, if everything goes as we think it's going to go. But I think that most successful is unprecedented. So you've never had 10 of the biggest asset managers in the world all going out competing to outsell one another on an asset

where the retail investor has been able to buy the asset before the institution. So you're almost getting the institutions, the most powerful institutions in the world, becoming a sales force working for us to pump our bags so we can just sit back and relax now and almost let them work for us for a change. I don't know. Does that make sense to you? Do you get what I'm saying here? Yeah, I think that that's a very reasonable view. We have a lot of them on stage here. Obviously, we've got our ETF experts

across the board. But I mean, how low can these fees really go, guys? I mean, are we seeing this is pretty much the offering, right? I mean, everybody's submitted what they're going to do. We obviously have quite a few people giving six months free fees to incentivize to get in. But just to be clear clear at this point, now that everybody has basically filed and put these out there, how much more can people jockey for position? I mean, Alex, Matt, Ryan, any of you guys, um, is this, are we basically seeing where these are going to be? I mean, bitwise, Matt at 0.24, are you guys now going to officially be the lowest or can someone still come in lower? Yeah, it's a great question. I think it's conceivably possible for people to update

their S1s again, but I think it's probably unlikely, but we don't know for sure. We won't know for sure until these products are live. But down below 30 basis points, these are extraordinarily cheap. You have to remember that as of right now the largest crypto etf or crypto fund in the world charges two percent so it's a 88 percent reduction uh and at some point you get very close to the to the bone it's great for investors um i bet this is somewhere around where things will settle out, but you don't know for sure until they launch. So I have a few questions. I have a few questions about this. What is the normal ETF fees like for a non-Bitcoin ETF?

Like, for example, on GLD or what are the normal ETF fees? Yeah, absolutely. So GLD was the first gold ETF to launch. It launched all by itself and had a handful of months head start. It priced at 40 basis points and it's stuck at 40 basis points since then. After that, how much money is under management in GLD? Well, that's a good question. At one point it was up over a hundred billion dollars. I think it may be lower than that now.

There are now cheaper gold ETFs. They're ETFs at 25 basis points and at 20 basis points. That's usually the way this competition works is first to market is able to have a higher expense ratio and then people cut it. But, you know, as you mentioned, this is unprecedented with everyone launching it at the same time. At what point does an ETF become not viable? What I'm trying to ascertain is to say, look, you're getting into a fee war. And let's say that the new benchmark is not 25 bps. And so I'm just thinking if you get $10 billion under management, you earn $25 million a year.

And I'm asking this completely because I don't really understand the lay of the land, but is $25 million a lot to earn on ETF? Or is it like, what are the numbers here? What's viable? What's completely not viable and potentially not really worth keeping? Walk us through that kind of number. Yeah, absolutely. I think first you need to think about the costs underlying the ETF that are covered by that expense ratio. So those costs include custody, audit, paperwork, legal, etc. So you need the expense ratio to be more than that, or else the fund is simply

unprofitable. Now those costs go down as the size of the ETF scale. I think it's fair to say that if these ETFs, you know, attract, you know, hundreds of millions of dollars, they're not viable entities, but if they get to be large, um, as many people think, then they will be. So that's the game that people are playing. You're playing a scale game. You're trying to establish yourself in this market as a leader. You're trying to do the right things for investors. And at these prices, if these ETFs are as successful as many people think they are, then these will be good businesses. Would it be easier if the going fee was one percent of course it would

be but that's just not reality that's not how etfs work it's a it's a brutal game right eric bautunis calls it the terror dome and um that's the pricing we're seeing here okay and i mean so grayscale made a decision to stay at one and a half billion i mean i i guess that the rationale is look we've already got whatever the number is 25 25 billion or 600,000 bitcoins, 25, almost 30 billion under management. We'd rather continue to charge one and a half than take the risk of people redeeming and going to buy another asset. Is that the play here? Yeah, I think, you know, I don't know what grace, I can't speak for grayscale, obviously. But if you look at the history of sort of ETF companies approaching this, the question they play is how much assets can they retain versus how much would they gain if they bring in, if they lower the fee to get new assets.

Some of the assets in products that have existed for a while have big embedded capital gains. And therefore, even if the fee is higher, people won't sell out of them because they don't want to realize that tax event. So that may be part of their calculus. I don't know. They could also update their fee in the future. But it is sort of extraordinary to have a spread of products accessing a commodity where the fee range is from 24 basis points to one and a half percent. That's not something that I've ever seen in the ETF market. And I was in the ETF market for 15 years before joining Bitwise.

And it's an interesting experiment. So walk me through who actually wins here. Like when I say who wins, so is the way I see it, Grayscale off to a head start, they got $25 billion under management. BlackRock seemed to have the biggest distribution network, if I understand. And again, I'm saying this, I don't know if this is correct.

Correct me if I'm wrong. BlackRock have the biggest distribution network and the highest amount of assets under management, if I'm not mistaken. Walk me through each party's competitive advantages. Sure. Yeah, I'll do one more and then let people in. I think BlackRock obviously has enormous brand and distribution.

Fidelity has enormous brand and distribution. You know, at Bitwise, we're excited that as of right now, we have the lowest fee and, you know, six plus years of managing crypto funds and significant sort of assets committed through the seed. So we should be in good place to start. I think the real question is between crypto native firms and large traditional asset managers. And sort of the 30,000 foot view would be that large asset managers would have the advantage because they have these huge distribution forces. But crypto native firms that have distribution historically win in ETFs. If you look in niche areas of the ETF market, like MLPs or commodities, it's actually the specialist players who win. So, you know, I'm talking my book here because Bitwise is one of those specialist players, but we hope that the combination of low fees plus crypto expertise, plus a sales team,

a 20-person sales team meeting with advisors allows to compete. How do you compete with BlackRock-type distribution? So what I'm thinking here is I'm saying, if I'm a fund manager who wants to buy a couple of Bitcoin for my client, and I'm already plugged into the BlackRock systems, the distribution system, et cetera, et cetera. Why would I then go and seek a specialist when it's all actually really available to me without really having to do any work? Like what's the case for the specialist? Yeah, I think it's, I think the case for the specialist is, you know, either you have a preexisting relationship, right?

Bitwise has been, as an example, has been selling to advisors for six years, have lots of relationships, or you want someone to call with expertise when there's news. If you're an advisor with clients and news breaks, Elizabeth Warren says something, you know, a company fails, there's passage of news in Congress, you want someone you can count on to provide answers to you. So some people will choose the bigger brand, some people will choose the bigger expert. And I think there'll be multiple winners. I don't think this is going to be a winner take all market. Okay, and let me let me send you down six months from today. So six months from approval. It was not six months from approval. No, no.

Six months from the time we start trading. Who do you think are the top three horses in the race? By locked AUM. By locked AUM. With the following assumptions. Grayscale are starting off with $25 billion under management. Or whatever the number exactly is. Walk me through who you believe the top three horses in the race are going to be.

Yeah, I should probably let an independent person make that guess. Yeah, is it this like a Dave Chappelle skit, the greatest five rappers of all time, Dylon, Dylon, Dylon, Dylon, and Dylon? You're a bit wise, a bit wise, a bit wise, right? That is a great question. We can ask Alex, though. You're going to tell us Invesco Galaxy three times, right?

Yeah, I'm being a little cautious because at the moment, all of these are currently unregistered securities. So I'm not at liberty to talk about any kind of differentiation between the products. I do not think there will be about any kind of differentiation between the products. I do not think there will be more than three or four ultimately that have significant AUM personally. But it's it's absolutely I mean, Kentucky Derby, Terror Dome. I mean, Matt knows well, like this is true across the ETF ecosystem, regardless of asset class.

You know, there are several, you know, Matt's right to point out the traditionals with distribution versus the crypto natives. There is at least one that is the fourth largest issuer with a crypto native partner that I should mention. Everyone is playing to figure out a way to get edge, right? There's no doubt about that. I think the fact that you see the fee war sort of already beginning before these are even approved shows that the issuers think there's significant demand and value and sucking up as much AUM as they can early, right? I mean, typically the early winners tend to hold the lead for a while. Alex, I think most of us agree that the ETF approval has been mostly priced in but then the

next question is what we should be focusing on is what inflows would you be expecting I'd ask you and Matt and others the question what would you consider it to be a disappointment and what would you consider to be above expectations? Margot one step back and just are you saying most people believe that the ETF approval has been approved? I did think that until this morning when they started to fight and then we got and then we got a candle up and i was like is the etf actually priced in if if you're getting a thousand dollar pump on on a fee wall but how do you know the pump is because of the fee wall you're just assuming that this is the reason it started when the announcements came out of the fuel yeah but you know it could be correlation.

It could be a million other reasons that pumped to that price. I just think, like when we saw the big dump when that report came out from these, I can't remember who it was, a few days ago, it shows that it's already been priced in. Otherwise, you wouldn't see such a dump because of one analyst, Matrix Force. Yeah, because of one analyst saying it's not going to be approved. But let's say it has like- William's got his hand up. I think he

wants to talk about this specifically william do you think this is yeah and what while william's answering i want the audience to like let's just look at the audience like in the order in in the in the order look at the purple bubble at the bottom right corner i'm gonna go through it tell us if you think if you if you think vtf is going to be approved and you're going to check grant all or not going to say yes they expect it to be approved and that you're going to check, right? All of them are going to say yes. They expect it to be approved. And that kind of answers the question, no? William? Yeah, yeah. I mean, first of all, I'm going to be the contrarian here. I don't think it's going to be approved this week. As I've said before, I don't think the SEC is going to gift the industry

an industry they hate with something that would be such good news for everybody, because it's going to ignite prices across the board, obviously. Now, if they do that, and when they do it, if they do it this week, it's going to come with a caveat. It's going to come with some negative news. I don't think that they are going to give a blank check of optimism to the industry. For example, they might only approve two out of the six or seven, or they might approve Bitcoin and then say something negative about the other coins, including Ethereum.

So I might be wrong, but I'm basing this on the pattern that we've seen. Mario, you sound like a robot. Mario, you're a robot. Get out of your sauna chamber. Come on. William, can I ask you, like, under, when you say won't be approved, what exactly do you mean? Are you suggesting the commissioners themselves would vote down the staff recommendations, or do you have a specific idea? I was finishing my point because they haven't had a pattern to telegraph their actions. I mean, do we know for sure it's going to be happening this Wednesday?

It's going to come with some strings. Gensler is very political. I don't think he's going to allow this good news to happen so early in the election cycle. It might happen closer to the elections, but not right now. that the, because it's been widely reported, and you saw this morning, that the SEC ordered all the issuers to have updated S-1s in by 8 a.m. and 19B-4s by last Friday. Like, are you suggesting that the staff recommendation would be voted against, say, by Chair Gensler? I think Gensler has a big voice in here. So they may be going through the motions. And again, this is not based on any insider knowledge. This is more based on outsider thinking. And I may be wrong.

I hope I'm wrong for the benefit of everybody that's involved, including myself. And to answer your question quickly, Maria, I don't think it's priced in because it's going to be such good news that it's going to bring a new inflow of capital. This is us so far, the crypto Twitter and the crypto insiders that are moving the price up and down based on the matrix report and stuff like that. But we're talking about a new inflow of money. And you also asked how much money is going to come in.

I mean, it's going to be in the billions over the next few months. Yeah, I would dispute the first half of your assessment and agree probably with the second half. I think Gensler uses this actually as a victory lap, and he says, look, we held these for 10 years until we had trusted. I don't know if it's just me. It's just you, I think. But I think he'll say, you know, we have trusted,

now we have our trusted Wall Street institutions, the biggest names, we know they won't manipulate the price, blah, blah, blah, for better or for worse. So I think he takes a victory lap on Bitcoin, but the part I agree with is then continues scorched earth against the rest of the market. Right. Yeah, I would agree. He would have to do a lot of explaining, though, as to how he, over the last few months, was able to fix things in in terms of compliance registration working with the industry or at least a part of it yes i would agree that they would he would have he has a lot of explaining to do at while he takes that victory lap but yeah he he might not be positive all throughout

alex you're jumping in well yeah i i'm just my under like it almost sounds as if william hasn't been paying attention because the again recall the only two aspects that the sec um has ever denied a bitcoin etf for are the lack of a regulated surveillance sharing agreement for a regulated market of significant size. And this was wholly settled in the DC Circuit Court of Appeals. And then as it's been widely reported, they've been working significantly with issuers on all of these issues, surveillance, if you watch, if you look at the multiple rounds of S1s, they've all consistently been updated to address you look at the multiple rounds of S1s, they've all consistently been updated to address significant issues at the SEC's direction. So I, none of these are a done

deal until they are done. Right. But I'm not hearing any actual specific idea from William as to why they would be rejected, except for feels about the politics. Yeah, I think Alex, everybody has PTSD with Gensler. And we hear that consistently, I think on the show and elsewhere. But I think if you do zoom out and take the, you know, take a wider view, the SEC is expending a lot of resources, money and time to go through this process with the pilot. I'm following it. But I mean, do we know if there won't be any other new objections? We don't know. The assumption is that once

they've been deemed arbitrary and capricious and I think that they've been sort of dismissed and answered that it would be a hell of a scorched earth approach for them to come with a new argument against it that hasn't been mentioned at this point and they probably get sued through the floor.

Scott, what would it take them to delay it right just to just don't want to launch a delay it's just when there's maximum euphoria you know i've been in long enough in the market i expect i expect pain um yeah but the pain the paint come with price going down on approvals as well right pain doesn't have to be a rejection i'm not saying saying that's going to happen. I must say, I tend to start with, was it Joe who said that? I must say, I keep thinking this is too easy. This is too easy. 100% of the market is pricing in an ETF approval at the moment. I don't understand what you mean by easy, Rand, because this has been 10 years in the making. It's been months of work by all the issuers. No, no, no. It seems pretty nonsensical.

I don't think the ETF is easy. I know that in a market where every participant in the market is expecting the same outcome, usually that's not the outcome that happens. Usually the outcome comes with a curveball. It just feels too easy that there's going to be an ETF approved anytime between now and Wednesday, and then the Bitcoin price naturally will probably spike up initially and then probably come down or do whatever it does afterwards. But I'm just saying it just feels too predictable. I've taken off all my leverage positions even though i could probably make a packet of money i just think

for the sake of of i just it's just too easy guys sorry um can i i'll go back to my question actually unless you want to comment on it kelly and then go back to my question on what inflows we can expect. Kelly? Yeah, thanks for having me back up here. I agree with Ran. I just feel like the market, yeah, it's been expected for 10 years. But we have to remember, every cycle, we get an exponential disproportionate number of new people in the cycle. And everybody's looking at this like this is going to be the saving grace and it's going to be only God candles from here. And all of us that have been involved in the market are very aware, just like Ran just said, when things get frothy and it's 100% expected or it seems like that, that's the opportunity for that correction. And we've gotten 30 to 40, sometimes even 60% correction pre-having all previous cycles.

And we haven't got anywhere near that yet. So I feel like... Yeah, but you guys are... Sorry, I think everybody's completing an expectation of what price will do with an expectation of a fundamental process. I think that they're very different. I think to Alex's point, it's just everybody's literally saying, I feel like... Well, to that point, I agree. But I think this is a perfect sort of, you know, segue right into what Mario is about to ask. I think what I think everybody's expecting ETF approval, and that means price go up. But I think there's going to be Hawkeyes with, you know, people that understand this market watching flows on the space.

And I don't think it's going to be as easy as it's approved and everybody pours money in. There's going to be a bit of a learning curve and also a psychological adjustment from the cognitive dissonance money managers have had over the last 10 years before that flow truly is consistent. Yeah, that's totally reasonable. Like when flows or how much flows or what impact on Bitcoin price,

like in near, medium, long term, absolutely up for debate. But this is the second. The last thing I'll say with that being said, that doesn't mean I don't think we're going to get some great price action. I think we'll probably break past the golden pocket, you know, well into the 50s, probably maybe into the upper 50s. But I still see a stronger possibility than not that we'll get some sort of correction from whatever initial pump that we get.

Yeah, so doesn't that all depend on what inflows we see over the next few days and weeks? And can we give some projections, Ryan, Kelly, Matt, Alex, and William, on what we could expect? Because this could all backfire really badly. What's worse than TradFi not being able to enter the market without the presence of an ETF is an ETF being there, but they're not interested in entering the market. Well, I mean, I think there's going to be an initial flow. We see potentially the year marking of $2 billion or more from BlackRock and likely other institutional partners that they have that are going to be contributing to that flow. But my question is going to be here as that flow comes in, how consistent is it going to be through March? I feel like sometime around March is

likely where we'll get to a pretty large correction. And then the other question I have with that is, what is the Bitcoin futures ETF going to look like following the spot ETFs? How much hedging is going to be coming in from these large market players? If we can get Alex to find... I just want to point this out really quick. I won't call it breaking news, but literally Gary Gensler is actively posting a thread as we speak. A thread, some things to keep in mind if you're considering investing in crypto assets. Can you read it? Can you read it out, Scott?

Yeah, sure. Number one. Share it in the nest. Yeah, I'll do that. I'm doing that right now. Number one, those offering crypto asset investment services may not be complying with applicable law, including federal securities laws. Investors in crypto asset security should understand they may be deprived of key info and other important protections in connection with their investment. Two, investments in crypto assets also can be exceptionally risky and are often volatile. A number of major platforms in crypto assets have become insolvent and or lost value.

Investments in crypto assets continue to be subject to significant risk. Number three, fraudsters continue to exploit the rising popularity of crypto assets to lure retail investors into scams. These investors continue to be replete with fraud, bogus coin offerings, Ponzi pyramid schemes, and outright theft where a project promoter disappears with investors' money. Okay, that's where he is so far. I think we all agree with that. I think that this even gives him more confidence. He's lining up to say, see, look, Bitcoin spot ETF safe, everything else, hot, steaming trash. Ryan? Sorry. Yeah, Ryan. Oh, I was going to speak to the question around how big we think these ETFs can be in the trajectory

over the next couple of months slash years before we have the Gary Gensler risks tweet. So if we want to pivot back to that real quick, I guess what I was going to say is that I think it's important that people zoom out and think about the long-term impact that an ETF can have on any given market versus, I mean, it's important what happens in the next couple of months, obviously, and leading up to potential approvals or rejections. But I think what's the most outcome of the spot Bitcoin ETFs is that over the long term, we're now opening the gates upon an approval for traditional

investors and for retail investors who don't use apps like Coinbase and decentralized exchanges and hot wallets and hardware wallets to access crypto. We're opening the doors for them to be able to invest in this asset. And we've seen in the past with commodities and with asset classes like gold, for example, that flows into ETFs grow over time. The first year certainly will be exciting. The first few months certainly should be exciting. But over the long term, it's really when you start to see the impact that ETFs can have on a market and when we'd expect to see significant inflows building over time. So I do think that there's a lot of sideline capital that have been waiting for

traditional ETF formats to access crypto. But I don't necessarily believe that everyone's sitting there waiting with their finger over the mouse on the buy button for something to pop up on their Bloomberg or their TD Ameritrade or Charles Schwab account to ape into these ETFs on day one. So I think expectations are certainly high that price moves significantly if these ETFs are approved. But I think what's more important, in my opinion, is the long-term impact this would have on the market over the next one, two, three, five years. And that's what I get really excited about when I think about how big of an impact these ETFs will have on the market. And so that's my two cents on that. Michael?

Mario, you're a robot again. I'll look. At that point, there was only three. Just a quick question. I'll look. At that point, there was only three. Just a quick question. No more at the moment. I think maybe that was the entire thread. They're setting up for this approval, man. Go ahead.

Yeah, Michael. Yeah, no, I was just going to say on whether or not this was priced in because I think we're missing something very important. Eleanor Fox Business tweeted out the other day that only 39% of investors interviewed in a Bitwise survey actually thought this thing was going to be approved. So we in the cryptocurrency ecosystem, we might all think it's going to get approved. But I think it's a lot different when you look at the traditional institutions. So I think that aspect, this might be priced in a lot less than people are accounting for, because it doesn't seem like the people in the traditional firms really think this thing is going to go through. So we in the cryptocurrency industry, we're talking

like it's going to go through. But once you start to breach out to people outside of our ecosystem, the stats say it's really not priced in to the degree. So I don't think it's some layup where it's all priced in. I think there's a lot of big money who still really don't see this coming and are going to be kind of blindsided. Right. We obviously have Ryan and Matt here from Bitwise, and that came from their survey of over 400 RIAs. I thought there were some other interesting stats. I'm not sure I'm getting them exactly correct, but certainly ballpark because I reported on it for the street. But they said that only 19% right now had a way to give exposure to Bitcoin to their clients. And I think they said 88% said that they were

waiting for the approval of a Bitcoin spot ETF to start offering that to their clients. Ryan, is that correct? I don't want to misquote you guys. Yeah, that's correct. I mean, the stats that we had in the survey are really, really interesting. I think it goes to show that while each of us are chomping at the bit to get more information daily on crypto, majority of investors who spend all of their time managing money on behalf of clients and building books of business to invest in assets aren't thinking about crypto. I think institutional investors, broadly speaking, aren't thinking about crypto on a daily basis, and they aren't even thinking about it on a monthly basis. The survey showed, which we took this survey between October and December of last year,

when we asked when does the audience or the field of the survey participants, when do they expect an ETF to be approved? And there was a very small portion that said 2024, some said 2025, and some said never. And so I think that just goes to show this was in october through december where you had the etf analysts like eric valchunas and james safar pegging the the odds at 90 so that shows the discrepancy between what those following the market closely believe and that will happen versus what those who don't follow the market closely believe will happen i think that is broadly speaking what we're talking about when we say that this is a long-term impact on the asset class. And I have friends who invest and don't focus 100% on crypto. I have colleagues who I've worked with previously, family members, et cetera. And most of them have

no idea that an ETF is about to be approved if they didn't know me and I wasn't talking about it every time I see them and every time we talk about, if I wasn't talking about crypto and, and things that we that I spend all my time doing when I'm interfacing with them. And so I think that's important. We get, we get bogged down in the details and in the excitement here around the potential for these ETFs, but the majority of investors out there that really allocate the majority of capital in the U S aren't thinking about this on a daily basis.

Ryan, we've used that survey multiple times in previous spaces. Ryan talked about it in his show. How big was the sample size in that survey? So this sample size was about 450 participants. These are RAs, financial advisors across the U.S., again, through October through December. But I think it's important that these are similar outcomes every time that we talk to advisors. I presented on Friday with Betify, which is a big ETF research platform, to a room full of 200 financial advisors and RIAs, and only 10% of them said that they're currently investing in

crypto on behalf of clients. And so these little sample sizes give us some insight into how the broader investment community is thinking about crypto and thinking about allocating crypto on clients' behalf. And they can't do it without a format that fits into their compliance, reporting, and trading workflows. And that's exactly why ETFs are so important. This is, but the reason I'm surprised, the reason I'm asking before going to Kelly and Joa is, you know, Kramer was talking about the ETF. Obviously, Larry's is shilling it everywhere.

It's just hard to believe when Kramer knows about it that other fund managers don't. Yeah, it's a good point. I think some people may know about it, but aren't sitting there ready to allocate on behalf of clients. But broadly speaking, a lot of the retail investors who aren't going to use Coinbase and aren't going to use a decentralized exchange or some other means to invest in Bitcoin aren't thinking about it. And they might be watching CNBC in the background on their TV, but they certainly aren't, I believe, sitting there waiting with their finger on the mouse, hoping for those ETF approvals to come. Yeah, I don't get it. Mario, really quickly, I mean, you asked the question before, obviously, and I think you

probably want to circle back to what the expectation is for inflows initially. It's funny because I think it was extremely measured. You know, we had people saying tens of millions, maybe a couple hundred. I think that initially we had Matt Siegel on from VanEck and he was saying that they expected one point five to two billion in the first quarter. But I don't know. He was on Spaces last week and it's become sort of viral news. He said that he had from, you know, on good authority from people very close to the situation that BlackRock already has $2 billion lined up for launch. Right. And so that would be, if true, that would be double the best ETF launch in history, which happens to also have been crypto BITO, which did a billion in, you know, the first 48 to 72 hours. So I think that the goalposts have shifted since he said that on a spaces last week.

And that even they were sort of shocked that that was potentially coming. My opinion has always been that BlackRock is not going to launch an etf and just get like 10 billion in aum right and larry's not on tv talking about it unless he has it lined up and it's going to be successful successful matt matt alex are you guys able to give projections yeah i we have a report out also i think it's somewhat in line with what others have said, but that we think there'll be 14 billion in inflows in year one, ramping to 38 billion in year three of inflows. And that is just looking at similar stuff to what Bitwise has published about the size of the wealth management platforms in the U.S. and how they do not can currently have, you know, broadly do not have access to Bitcoin exposure. I mean, the vast majority of them don't have private funds on

their platforms, they don't allow people to invest in the trusts or the cash settled ETF. So and that's using conservative assumptions, assumptions about what portion of that 48 trillion in US wealth management, aM would actually consider and then how much they would do. So I don't have like a short term, like month one, month three, month six, but we said 14 billion in year one. I think that's conservative. Matt? I love that example. I think that's within reason. The only thing I'd add, I don't have a specific number to share. The only thing I'd add is some ETF history. And a reminder, if you look at the flows into the gold ETFs,

they went up for six straight years before peaking in 2009 after they launched. So it is important to note, it's exciting to think about what happens the week an ETF launches, the month, the quarter, the year. but really it plays out over multiple years. It does take that long. I know that's a little slow for Twitter, but history suggests this is a multi-year story. But I love the numbers that you all were talking about. Kelly? William?

Yeah. I'm surprised you knew that. Well, my question with all this is, you know, obviously, all of us to be in any asset class over time, we're forward looking investors. So one of my sort of curiosities, I'm actually not going to give an answer. I'm curious what y'all's thoughts are. How does this do you think with the advent of having all these trad five people coming into the space and traditional money managers, etc? Is this going to effectively change the Bitcoin market cycle over time? Do you think also, obviously, the having is getting less and less of an effect with it going down by half every four years? Is this is that schedule still going to show its face on the charts? I think before that question gets answered, I covered this on my show today. And I think that

this for me is the end of an era when it comes to Bitcoin. So I think when the institutions get in, there's going to be an opportunity while they are getting their money inflows into Bitcoin. And that's probably a good opportunity. But I think after that, Bitcoin just becomes an institutionalized asset, and starts bringing with it

the returns of institutionalized assets. Now, initially, it will probably be on the higher spectrum of institutionalized asset returns. And then it will start to follow the institutional money cycle. Because, you know, whether it's the gold money cycle, the equities money cycle, it'll become an institutionalized asset. And that's when I think we as speculators on price, not as people who believe in Bitcoin because you want to protect our investment and hold your keys, hold your Bitcoin, et cetera, we'll start moving on to other assets

because the fun will be finished in Bitcoin, et cetera, will start moving on to other assets because the fund will be finished in Bitcoin, so to speak. So just to jump in quickly about the question about the volume, I think the way I think about it is you want to look at the current reference point, which is the current ETF market size. And today, ETFs are about 12 to to 13% of equity assets in the U.S. It's less in Europe and less in Asia. So if you take that number eventually as the eventual endpoint,

12% would be close to $100 billion. This would be over time. So the way I think about it is you want to say, okay, the first year, what will it take? 1%? If it's 1%, that's in the $9 billion range, more or less. It could take a bit more and then gradually work up to $100 billion. This is assuming today's prices of $45,000.

So I'm kind of more in line with the estimates that Alex put forth from Galaxy. They are reasonable kind of moving up into the $10 billion, perhaps easily in the first year at least. John? Yeah, I think although while there was being being said that, you know, Charles Schwab can't offer it without the ETF. I don't think there's like a person in the world who can't buy crypto like through Robinhood, for example, or through that social trading platform. I forget the name that's popular in Europe.

The one that partnered with X a while back, but then nothing happened with it. People have access to it. That was eToro. Yeah, eToro. That's it. I kept thinking bull because I was translating Toro. People have access to it. I don't think retail is going to come jumping in because now it's an ETF. I think institutions will, but I don't expect this big retail run because they can buy it

already if they're already sold on the Bitcoin narrative. Just because it's available doesn't mean all of a sudden now they're buyers, right? Because they could have bought it before. It's just institutional money, really, that needs the ETF, not us. I think that there's a generation gap in that argument. I'm not saying you're incorrect. I think you're right. But I think that anyone who really was passionate about it already is buying or has a way to buy, but those who will kind of find out about it and see it legitimized

are likely to buy it more through an ETF. And certainly, if you're trying to unlock the boomers, that could come through an ETF. But I think we all agree, we've talked about it before, this is one more huge step for the plumbing, right? It gives the access, but that doesn't mean that the big question mark will be how much demand I think comes with that. Yeah. So I don't think that you're necessarily wrong, Joe, but I think that there's not many 70-year-olds trading on Robinhood. Yeah. I mean, I've always been a big adoption cycle person. I use it for 20 plus years with brand for brands and Bitcoin's been around 12%.

Typically there's like a huge gap. Once you get above 18, you jump to 35. It's when you go from like the early adopters to early majority. And I do think this is the early majority cycle. And I do think there's an important part of it. I just think that early majority is going to be the institutional money that's really making that up and giving people exposure who weren't sold on it. They need to hear it from their managers before they get into it. Really quickly. I mean, this isn't news per se, but we just tagged above

Kate Rooney on CNBC just said, looking like Wednesday now for Bitcoin ETF decision expected to be approved. That's in line with what BlackRock says. That's in line with what, I don't know, but it could have, I think some people were thinking it would get preempted, right? Every day we're like, could it happen today? But yeah, so it's looking like that will be. That's what BlackRock said, I think, last week as well. So, you know, just more, I guess, more confirmation of sort of the same idea there, Ren.

And there was that like 2% chance that James Seifert and Eric Bocunis mentioned, which was like that they would delay ARK on the proviso that they give ARK a guarantee that they would approve them in March or something like that. I don't know if you guys read that. Yeah, this is the primary argument for it not happening before January 10th,

is that, right, well, the argument that it would happen is that that's AR arc's final 19 before denial the idea i lost alex there go ahead sorry i'm back sorry i think it's just i'm moving around the wi-fi is different but i i've always thought that a delay uh sorry denial of arc on some kind of promise is very unlikely i think james and eric think that too that's why they peg it at such a low percentage first of all arc doesn't have to withdraw. They could disagree. And then the SEC is put in a position of approving or denying. And if they deny, they're effectively going to have to come up with some good reason that they haven't previously used.

But as we've discussed, that's in contravention of the D.C. Circuit Court of Appeals effectively. So I think they don't have to say yes to withdraw, which is what the SEC would ask them to do if they were going to try to attempt that. But also think of this. I mean, the SEC has had 10 years to look at this and now they're saying, oh, we just need a few more weeks. It just it would be quite bad from a PR standpoint for the SEC. And again, everything that they've been doing, not just with ARK, but the other issuers, has suggested that won't be the case. Mario, I know you have some big news, I think, happening in the war, and you're going to go,

I assume, start in other spaces. So I think we've talked the ETF to death until we get it approved, but I'm sure that won't stop us from talking about it all day tomorrow. Yeah, and when it gets approved, one thing we promise when it gets approved, I'll have to start another war space, just some major developments.

But when it gets approved, we will do a breaking space. One of us three will promise to be there as soon as the ETF is approved. We'll be live no matter what the time is. So that's a promise we can make everyone. But otherwise, a good space. And we'll see everyone tomorrow.

Thanks, guys. Thanks.