The Wolf Of All Streets - BTC Halving In 15 Days-Sell The News? Debating Ordinals | Crypto Town Hall

Episode Date: April 5, 2024

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Should we sell the new scope? I don't think so. I mean, I think we just chop for a while. That's what I've been saying for weeks. It's like everything that happens ends up happening exactly as we, not as we predict, but like, kind of the logical things that should happen are happening. ETF launches, inflows come in, market pumps.

ETF launch, inflows came in market pumps etf launch influence came in the market pump the halving comes in and we'll see a a pre-harving and you know again i'm not the analyst here but we see a pre-harving dump or consolidation and we saw that exactly now the having will come in and we're going to see the the markets i'm guessing if history repeats itself the market rally post-harving and it's going to be exactly what happens. It just seems a lot simpler than we can imagine. If history repeats itself, then it's going to be exceptionally

boring until September or October. Oh wow, that long? Yeah. Low volume, low volatility, four to six months after the halving, you see the absolute parabolic move. I'm not saying the cycle will repeat itself, but if what you're saying is correct and that each of these things

has happened as sort of anticipated, then that's what you would anticipate. And I don't think people are well positioned for months of chop. Yeah, I see Quinton posted as well that hedge funds are shorting Bitcoin at record levels. Well, there's some nuance to that. So maybe Dave Weisberger can probably help us dig into that. But when you look at that, that's based obviously on CME futures, I believe, being at record high for shorts. But the assumption is not that that means they're bearish.

It's probably the carry trade where you're long because futures are in contango, meaning that the futures are priced higher than current prices, which effectively is, quote unquote, free yield if you short the futures and are long spot. Bitcoin is a trade that doesn't obviously just exist in crypto. It's a very common trade. Actually, a version of that was the trade last cycle that ended up being the widowmaker for the entire industry, which was GBTC. Because not only were they doing it in that manner, but it was trading at a tremendous premium. But the problem was it went to a discount before they could unlock. That's what basically unwound the 3AC, BlockFi, et cetera, and sort of buried the industry. But my assumption, Dave, maybe you can dig in more to that, is that the bulk of those shorts are hedges or part of that carry trade.

Yeah. Well, first of all, the GBTC trade was about 100x, literally 100 times more positive carry. So it's really completely incomparable. You know, it was 25% as opposed to, you know, 25 basis points, very, very, very big difference. So let's just get that out of the way because there are a lot of people on there that listen to this, that will hear you and go, oh my fucking God, let's sell everything and, and, you know, sell in May and go away, but let's do it in April because Scott just told me that the whole house of cards is going to come down. So no, it's not that. Yeah, not my intention. I was just saying structurally the same idea. I'm not blaming you. You're always the voice of reason. So this is not a bad thing. I heard that and my antenna went way up. Okay. But let's talk about what's really happening. So first, there's structural longs in the futures market

created by Gensler's SEC having their heads up their asses and stopping all U.S. broker-dealers from being able to buy and sell spot Bitcoin. Yet many of them are authorized participants for the Bitcoin ETF. And so the only way that they can hedge is by being structurally long in the futures market, or they can just completely offload it to crypto native market makers and take a spread. And there's probably both of those going on, but there's certainly some structural long there. There's also structural long created by corporate clients and other clients in the United States that only have relationships and their risk committees will only let them deal with Morgan Stanley, Goldman Sachs, UBS,

et cetera, and not with the galaxies and B2C2s of the world. Frankly, those risk committees, if they're not willing to deal with galaxy, are probably not. I have opinions about that that are not positive, but that's a reality. So when you have that, what does that mean? That means that they buy a structured product to be long Bitcoin that the broker-dealer more or less ends up in futures and ends up taking the futures role and they want to do it that way. So there's structural longs. At the same time, you're right.

Those longs are offset by people playing the carry trade on the other side. And the carry trade is basically priced enough so as to take some of the profit from the initial long trade. And, you know, it's priced at a sufficiently high level for people to be willing to take the other side of that trade. And so, yeah, you have structurally more futures open interest. Effectively, that's a complete, it doesn't matter from the market. Basically, the longs in those situations are basically diamond handed because they're holding to duration. And the shorts are on the other side of those and will move as they move. So I see the futures open interest as a non-event from a structural price prediction point of view. Because a lot of the tapes are that those are squeezable shorts, but it sounds like

that's not necessarily the take. They're more relevant. Literal, literal horseshit. You can't squeeze a short that's hedged. And anybody that's putting on the carry trade by being short futures at a premium are long either perpetual swaps or spot, depending on at any point in time. In fact, what they're actually doing is trading basis trades. A lot of our volume, look, I can't go into specifics, but a lot of CoinRoute's clients use our system specifically to be able

to trade the basis between futures and perpetual swaps and spot and trade in and out of that, because that market has now become more interesting. And I know based on volumes that it's a popular trade because our clients can do it for extremely low cost using algorithms. So there's nothing squeezable there. You want to see a squeezable short? A squeezable short is when you have a constraint on a borrow. That's when you get a squeezable short. And that doesn't happen. Futures are infinite. I mean, you could get Caitlin Long on and she'll, of course, say that's how they're going to ultimately manipulate the price of Bitcoin down the same way they manipulate the price of gold down. I think you got to pump the brakes a bit on that, given the global nature of the market. But no, there's nothing squeezable in the shorts on the future side.

So David, let me just give me a go ahead. Yeah, I was gonna ask David just again, David's one new favorite market analyst. David, looking at the title of this space and also what Scott said earlier, that history will continue repeating itself as it has for the last few months. Would you expect things to be pretty boring for,

actually Scott, when you say things are pretty boring, you're talking about Bitcoin or the entire market. Could Bitcoin stagnate and the rest of the money pumps into the rest of the market? You know, meme coins and coins and... Like I said, I'm not necessarily expecting history to repeat itself. I was just making the point that if we believe that it

has, then that's what you would expect if you think that the roadmap will continue. If your point is, we've done exactly what we should pre-halving, we've done exactly what we should after the halving, then your expectation should not be 100K in the middle of the summer. And generally, it's low volume. I mean, if my recollection is correct, Bitcoin chops, the volume goes down, and altcoins do not wildly outperform. Although I do believe it was one of the cycles, maybe 20, where we had DeFi summer

during that time. So I think that you get sectors that will continue to rotate. But like this mythical alt season of every single coin goes up together, no matter what it is, 100x while Bitcoin's chopping sideways, that's not that time that actually generally happens kind of when Bitcoin tops. If you've looked at the past, you look at 2017, Bitcoin topped when futures were launched, whatever, whatever year it was at 17. And then, you know, if went up multiple times in the next month, you had this huge cycle, but Bitcoin didn't make another high. And then we obviously sort of, what do you expect to happen after September then if things are going to be boring until then? I mean, that's when you go parabolic. The halving sort of plays its role

four to six months. But listen, I think the ETF has changed this a bit. And as Dave, so that he doesn't have to say it, often points out, we have what, three halvings previously? That's statistically non-significant. That's not a sample size of any meaning. And every one of these cycles, you're basically looking at a completely different asset class, right? A reduction in supply in half when the market cap of the entire industry is a fraction, but it is now is much more meaningful. I mean, I think Tom Dunleavy was here, but I don't remember he points out the numbers. I think the entire halving only annually reduces like the selling four to six billion or something. It's not huge relative to the size of the market at this point,

especially when you consider that we had GBT outflows of a billion a day that this market was absorbing at one point. So it's not really that significant when Bitcoin is a trillion plus asset. David, I want to... Great narrative though. Yeah, David, I'd love your comments on this as well. And then Isabel, and we're good to get just a regulatory update. We used to talk about regulation on an almost daily basis

back in the bear market and now we're barely bringing it up. So it'd be good to get just an overview on Dan because I think that's, we talk about what could happen assuming no Black Swan events take place

and one potential Black Swan event is a regulatory crackdown, which I think would be good to get an update on that from Dan. But Dave, just kind of the same question I was asking Scott and you earlier, what happens after September?

And then the question I asked you a few months ago is how long do you think it will last? Dave? Your mic is on. I just got a drop, guys. Go ahead, Dan. Yeah, go ahead. I got a drop, but there's some kind of earthquake here in the New York area.

We just had the same earthquake in New Jersey. Yeah, I'm feeling it. Okay. Well, I got to drop, guys. I got to call at 1030, but I'll be back on as soon as it's over. I don't know if you're dropping for the call at 1030 or you've got an earthquake happening. I think the earthquake is a better reason to drop. But, Dave, go ahead. I'm guessing it's a better reason to drop. But Dave, go ahead.

I'm guessing it's a pretty mild earthquake. Dave? I'm in Florida. We didn't feel anything. So I don't know. I hope it's a mild earthquake because I own a house in New Jersey. Yeah, I mean, Scott and I are very much on the same page on this. I think that people need to understand that the longer we stay shopping, the more

bullish it is. There are multiple differences in this cycle than others. For starters, it's a presidential election year. And understand that that does mean something. Yes, there was a cycle like this in 2020. So it's not like it's negative. It's not like it's completely irrelevant. But, you know, the dynamics of the Federal Reserve now are different. I think the majority of people based on the bond market are starting to come to the conclusion that the Fed is kind of in between a rock and a hard place. And, you know, we can deconstruct macro later. But what does that mean? It means that we more or less have a normalizing of inflation at the same time that every single

RIA, FA, and asset manager is now evaluating whether or not to put an allocation to Bitcoin. Now, we've said this a million times. People don't want to listen to what it means. Every time this has come up, and I don't care if it's Matt Hogan, who I know agrees with me. I don't know if Matt's on board right now. I can't tell. Or, is that we expected the initial Bitcoin NTFs, we expected to be slow and to gradually become, go from a trickle to a stream to then went to a flow. And now we're seeing the beginnings of the potential tsunami. But that tsunami could take another three to six months. It's going to be one. It's hand-to-hand combat.

One company, one network at a time. probably happened if our original expectation was an initial surge followed by slow to a trickle and then building again slowly, which is what most people thought, you would have expected Bitcoin to rally probably to where it did because a lot of hot money got in. But the correction would have been into the 50s, if not the 40s. Instead, we're sitting at 67 and right in between, you know, pivoting around the 67, 68 area. That is meaningful. And the reason is because it's a supply demand shift upwards in the curve. So when you talk about Bitcoin, you have to understand that it's different than every previous cycle, because now 50 percent of the world's investable money is capable of gradually investing in it. So it's not just crypto fast

money. It's not just one new believer like Michael Saylor was in two cycles ago. And then, you know, we've had a lot, you know, Paul Tudor Jones in the last cycle, etc. It's a much more broad based thing. So my expectation is this cycle will play out in some sense similar, but that Bitcoin is different than the altcoin cycles. Whereas the other thing that's going on is there are a lot of altcoins where usability is getting higher. And is their product market fit? And last time, before I left, I had a big rant about how meme coins, that the meme economy is real, that many of these meme coins are bullshit, but many of them will actually build communities. And to be blunt, it's a community based upon a

meme as opposed to a meme based upon a business that's going into the toilet, like it was in GameStop or AMC or Bed Bath and Beyond and all the others. And, you know, it's kind of amusing, but it is real. So if money gets siphoned off into that, and we're seeing this in the real economy, too. Look at Birkenbag prices, by the way. It was always Beanie Baby or Birkenbag was what I was talking about last cycle of memes, that there is money behind this stuff. So, you know, it's not at all clear where we're going to go over the summer. But, you know, the Bitcoin network is a very clear narrative. The meme coin narrative, I mean, I guess we'll see if we end up with people's perception that

money is going to have to stay easy and the Federal Reserve needs to target asset prices to get better in order to keep bond yields low. Then, yeah, I think that we'll see a pretty interesting summer. But otherwise, it's more likely to stay kind of where it is until we get a clear beat on the presidential election. Can you just expand on the Birkin bag correlation with the markets? Yeah, well, you know, you look at all luxury goods and you look at all things that people think have perceived scarcity. And it's actually a fairly interesting indicator. I don't have the data. Maybe our friends at Bloomberg, maybe Mike can pull this up because he's up here. I don't know if they track Birkin bags. But luxury goods in general and secondhand luxury goods in

general are an indicator of people with disposable income buying scarcity, whether it's for status or prestige. In my mind, there's no difference in buying a Birkin bag. If you're, if you're a woman out on the, well, I, I'm, I guess I'm being misogynist there, but if you, if you believe that, that wearing, as my wife would call it a Birkin bag or a Chanel limited edition or a Louis limited edition or whatever, if you believe that these things, uh, you know, kind of speak to who you are explaining to me the difference in that and buying a board ape or whatever avatar, uh, you know, Pepe the frog doesn't matter. Explainaining me the difference in that and buying a board ape or whatever avatar, you know, Pepe the Frog, doesn't matter. Explain to me the difference. And if you can, then I'm going to give you a PhD in bullshit because there is no difference. It's the same

freaking thing. People buy for status and prestige based upon scarcity and people and being able to say, look what I can do. And so I think it's very relevant. And so when you have an entire economy where these luxury goods, where these things that convey status about individuals are booming, I think it's perfectly reasonable to expect that things like NFTs will be doing well. And then that tends to drive the meme economy where while you get the bonks of the world going crazy, et cetera, et cetera, which of course creates a demand for Solana, et cetera, et cetera. So that's what I mean by that. Yeah, I've been very surprised by the stagnation in the NFT market, which is a topic for another discussion.

But Isabel, before going to Andrew, we'd love to get your thoughts on the discussion. I saw a few emojis flying. Oh, I think, yeah, I also had to like quickly jump off because of the earthquake in New York. That was very strange. But yeah, I mean, I think before I. That was very strange. Um, but yeah, I mean, I think before I was sort of emoji-ing about, you know, sort of this, um, I think there's people kind of overestimate, you know, the impact of the happening on actual like supply dynamics,

for sure. I completely agreed with Scott there. Um, but obviously there's some psychological, you know, kind of factor with, with the happening. It'll be interesting to see how impactful that is this coming happening. As far as the Birkin bags are concerned, Dave, I'm curious because it's funny. I am a woman and I've actually thought about this quite a bit as somebody who spent a lot of money on luxury goods. And I think like, oh my gosh, I regret that so much. I regret every fancy handbag I've ever bought. And I wish I had bought something with harder scarcity instead. I think there's a lot of people out there who are buying NFTs, Orginals, whatever it is. And they're not talking about it at all.

They don't care if anyone knows that they own it. They're buying it because whatever they think that there's some reason why supply dynamics are going to act in their favor. And I actually kind of see that as very different than like wearing a handbag just because like it makes you look a certain way. You know, so I don't know if you have any thoughts about that. I feel like the supply dynamics of Birkin bags are actually pretty bad compared to like, for instance, like a really, really, you know, high end or like, you know, certain kinds of NFT collections that you actually really believe are going to have supply shots. What do you think, Isabel? Maybe I can link to my question, Dave, for you and Isabel.

Why do you think that we're still seeing stagnation in the NFT market? We're not seeing stagnation in the ordinals market. So I think that like we're seeing stagnation in Ethereum NFTs. We are not seeing stagnation in the ordinals market. And to like a lesser extent, I think also Solana is sort of doing okay, obviously on the meme coin side, not as much the NFT side. I think Ordinals is taking over the NFT markets. I mean, I think that's what we're actually seeing in NFTs is that people are so excited about being able to play this game

on this mother chain, on this first love asset. And I think, you know, the folks who are paying attention to Ordinals are just like, I mean, Ordinals are absolutely ripping, ripping in the past year. It's just completely insane. And, you know, if you're just focused on Ethereum NFTs, you might just not be paying attention is sort of my point of view. Yeah. No, I agree. Just a disclaimer, we've invested in a whole bunch of projects in the BRC20 ecosystem.

But Dave, maybe get your thoughts on the, I'd rephrase it, stagnation in the NFT market, excluding ordinals. Solana's pumping, but meme coins are pumping and Ethereum, we've got altcoins are pumping,

but nothing in NFT market other than ordinals. Dave? While Dave fixes his mic, there's another earthquake there, Dave. Let's go to Tom and then Andrew, I'll go to you right after because I know this is a discussion on NFTs. I know Tom works for Carl Chess, a master venture. So it'd be good for him to weigh in and then get your thoughts again, Andrew, because I think you want to comment on what Dave was talking about earlier. Go ahead, Tom.

Yeah, thanks. And we felt that earthquake all the way up here in Boston from New Jersey, so pretty crazy. But yeah, so there's also a few other indexes you can watch, like Rolex watches and things like that. But I think the broader point here is that cream sort of rises to the top, and there are only a handful of these assets that can have value and selection over time. And it's really all about attention and status at the end of the day.

And whatever sort of assigns value over time based on that, it's in my mind all about sort of marketing, right? So like Pudgy Penguins, Bored Apes, and a handful of others in the NFT economy are garnering that and have become OGs. I find it hard to believe that Ordinals or others will attain a similar status. Maybe a handful will, but the 99% of NFTs are still going to zero. So it's really just about finding which one of those go to zero. On that point, Tom and Isabel, I saw you put a thumbs down. Is there anything in the ordinals ecosystem that's kind of reaching those same standards as a pudgy penguins or even as a board?

Oh, my God. Node monks, which is like the first 10K on ordinals. Like, I think that that's an asset that's going to live the test of multiple cycles, potentially. I mean, like these are. What's the flow on that one now? It's about 0.5 Bitcoin. So that is 35 000 us um i mean the thing that i think i mean again if you're not paying attention to ordinals it's easy to dismiss ordinals as like oh the new hot trend thing what people don't recognize about ordinals is that ordinals is on chain data on bitcoin on bitcoin this is not just like some random chain that's going away.

This is literally layer one Bitcoin we're talking about. The most immutable, the most censorship-resistant chain in the world. Artists are losing their minds once they figure this out, right? People are rushing into Ordinals, not because it's the new hot thing. They're rushing into it because they can actually put their work on Bitcoin. And for me, the difference between a Birkin bag and... I think about NFTs, on-chain NFTs in particular, purely 100% on-chain NFTs is more like really, really scarce art or really, really scarce collectible goods. Bitcoin is where you want to put something that you want to pass down to your

grandchildren, right? Like if you're an artist, why would you put your work on something that's probably going to 404 because it's sitting on a centralized server somewhere has nothing to do, you know, NFTs are just like little, you know, these like little like dots on a blockchain that represent some image somewhere else on like an Amazon server. Ordinals is like, literally, you're putting that art data forever immutably on chain on Bitcoin. That is not going anywhere ever. You can pass that piece of art down to your great, great, great grandkids. As long as Bitcoin survives, so will Ordinals.

And so I think my personal point of view about like, you know, it takes time for people to get educated about what Ordinals really are. But as people are figuring it out, they're like rushing in and they're not turning back right like no one is buying ethereum nfts right now after they figure out the ordinal thesis it's just like why would you it just doesn't make sense that hurts uh tom uh do you think punks will continue the the the world's choice of the n market? And one of the reasons why punks are so amazing is because they are 100% fully on-chain. But that is not the majority of

Ethereum NFTs. If punks happened, punks were this miracle, amazing thing that happened. I absolutely love CryptoPunks. But 98% of Ethereum NFTs are just these dots that point to Amazon servers. Who cares? That is a big difference.

Yeah, I think we're making the same point here. There's going to be a handful of NFTs on each chain that sort of accrue value over time. And maybe node monkeys are it for Bitcoin. But at least on the private market side, we see a ton of opportunistic people who are trying to launch things on ordinals and others that are very speculative, very scammy, and all those things are probably going to zero,

but there are certainly great projects that are still going to do very well. It's just a very select few. Andrew, I want to go back to the initial discussion just about selling the news and the Bitcoin halving nearing. So I'll start with about five or six words. BlackRock, Citadel, Goldman Sachs, UBS, JP Morgan. Okay. These are all organizations, the largest banks in the world, the largest market makers in the world,

the largest wealth management organizations on the planet. These are all organizations that have taken a stake in the upward movement of Bitcoin as an asset, and they've now all made it public. The narrative around the having and price is, is just been, uh, demolished. We don't have any idea. There's not been a time in, in Bitcoin's history where these organizations have come to the table, have, um, you know, attached their brands and revenue generation to Bitcoin. And what does that mean? That means that these organizations don't come to a process or a project or an ETF and expect to lose money. They expect to make money and lots of money, right? So the expectation here, when you have

BlackRock, Citadel, Goldman Sachs, UBS, Citigroup, JP Morgan, all on the bandwagon and all publicly on the bandwagon, it is hard to communicate what a big deal that is. I know that we've somewhat gone through this when all the ETFs were being approved, but today is another seminal moment in what we're going to see, I think, happen to Bitcoin in the short and midterm. These organizations do not show up to make pennies on the dollar. They simply do not do that. And one could make the case that there's a small sliver of this conversation that could be associated with Ordinals. Ordinals makes the idea of mining and miners making money an entirely different conversation

associated with the having. My business partner, Tillman Holloway, could speak more to that. He's not here. But I'll just throw that in there, too, as it relates to ordinals. But the existence of Citadel, BlackRock, Goldman, UBS, all sitting on the same side of the table associated with the price movements of Bitcoin on a day-to-day basis and generally higher. That is that's that's a truly remarkable thing, guys. It is a remarkable, remarkable thing. And so, you know, I'm going to mark this day when, you know, documents were updated to show who BlackRock's in bed with as their ETF grows

and grows and grows and grows. You know, Scott Melker said, I think, yesterday that the real flippening is when iBit overtakes GBTC, BlackRock overtakes Grayscale. We're probably three weeks away from that, and it's only going to get bigger and bigger and bigger. So it's a remarkable moment for Bitcoin and the traditional financial world. So, Scott, maybe it's good for you to respond, also kind of set the stage for what you were discussing in the comments section about David Tawil becoming the new Michael Saylor. Maybe David should tell you about that.

But yeah, David and I had a call on something, obviously, that he can discuss further and something that he went ahead and executed, but effectively a company that much like MicroStrategy holds Bitcoin as their core business, will be holding Ethereum and I think potentially other assets as their core business. But I think David can speak to that better. As for what Andrew said, obviously, yeah, the ETF news now is becoming par for the course. But I don't think it can be understated the fact that the largest banks and institutions are now FOMOing in behind BlackRock, right? And we saw news that sort of went wildly, I think, under-publicized a few weeks ago that the banks were actually petitioning the SEC to change their laws about custodying these assets when they saw how successful the ETFs were because effectively Coinbase was getting all the custody business.

And because of the laws that were passed not long ago about how banks could custody that they had to, if they were custodying Bitcoin, effectively hold a cash balance against all of those digital assets, which nobody could possibly do as a custodian. They're freaking out. They're really panicking that they're not going to get a piece of this and don't have a way to legally. So I think that's the one point Andrew is making very much more eloquently than me. I'll let David speak about the Ethereum part since you sort of segued there. Thanks, Scott. But before we get there, I actually want to comment on Andrew. I

don't think we've seen the full buy-in yet. We heard from Goldman Sachs Wealth Management Chief Investment Officer, who is very negative about crypto, very negative about Bitcoin, is happy, almost joyful to pronounce that their clients are not asking for crypto and Bitcoin. I think that tune will change. It's just a matter of time. She may no longer be in the seat when, in fact, the tune changes, but it will change. And then, you know, Jamie Dimon will continue to stick to his guns, even though JP Morgan will make money, Goldman Sachs will make money, sure, in terms of processing orders, holding assets under management and so forth. But I think those two institutions have yet to go ahead and go full on in.

I think the more interesting pieces of news, and I'm not downplaying the power of these financial institutions, to Andrew's points. But the fact that the pension fund of Japan, which is the largest pension fund in the world with $1.3 trillion of assets under management, is analyzing Bitcoin, granted, it's a long timeframe over which they will analyze and maybe one day invest in Bitcoin, or the Arizona retirement system allowing Bitcoin to be acquired by their investors. To me, those are bigger watershed moments because retirement systems, pension systems, institutional investors of those kind that will allow individuals to use their retirement accounts to go ahead and either directly or indirectly invest in Bitcoin, I think also needs to be noted.

And the one thing that's so interesting to me about this asset class, I grew up on Wall Street, at least part of my professional career. Most asset classes are devised on Wall Street. And therefore, the earliest investors are the folks that have the inside track on those new products. It's usually people with the most amount of money, the richest, the folks that have the most pull, and so on. And they usually get access first and benefit from when the rest of the world, myself included, as a retail investor come and rush in, you know, that's a little at a later inning. This asset class turned all that turned that paradigm on its head. And really, retail was able to go ahead and capture this first, and will continue to be

able to capture it. I think, again, we're early in the cycle. The amount of money, even if it's 1%, 2%, 3% of the world's investable assets going into Bitcoin or cryptocurrency more generally is just an amazing number in terms of investment. And I think that it's going to just be an enormous push over the coming years in terms of value that is going to find its way into the asset class. There has never been a time like this in the last 40 years where retail has been able to front run for extended periods of time Wall Street. You know, Wall Street completely caught flat on their feet. And so what did they do with the Bitcoin ETFs? They all wanted to jam in, jam themselves in to BlackRock's iBit product so they could get just

a tiny little piece of that last front run, right? That's essentially what they're doing. So when Goldman Sachs is out, their CIO is out talking about, you know, we still don't believe in Bitcoin. When was the last time that any traditional bank or wealth management firm didn't front run their clients? By the way, JP Morgan is notorious for this, and here's why. Their wealth management organization, both their private bank and their traditional wealth management space, they are absolutely terrible at managing money, like

really, really bad. And all they do is stuff JP Morgan products into client portfolios, underperform across the board time and time and time again. So these organizations, this is their only way to very marginally front run all of their clients who they say, we want to protect a little bit and we don't want them to get into the product just yet, do a little bit more due diligence. That's all bullshit. This is the tiny way that they're going to front run because retail has front run all of them for several years now. That's never, ever happened with an asset. As David just said, Wall Street essentially creates asset classes, which allows them to front run before they hand it off to clients because we got to make sure it's safe. We got to be careful here. So

there you go. Can I jump it? David, you're giving me a lot of thumbs down. Oh, well, okay. Yeah, go ahead. Well, either David Towle then David Weisberger. No, I mean, we can finish with this issue and we'll come back to the ETH stuff in a little while. That's fine. Dave Weisberger. Yeah, complete bullshit. I mean, literal bullshit. And I hear it on crypto Twitter all the time, and it annoys me. I mean, I spent 35 years in these institutions, and there's this incredible misconception, and the use of front-running is bandied about blithely. There is no fucking way that any of the institutions you talked about would do what's front running,

which is buying something before when you know a customer is going to buy it, buying something in anticipation of the run up in price. They just don't do that. Now they do. Absolutely. If they believe an asset is going to become investable, they will be looking to collect the most fees as possible. So once they start promoting something, you can be willing to bet they're doing it because they make money. Authorized participants in the ETFs make money by being able to charge for that service. The ETF holder, the creators, BlackRock, they make money based on the AUM going up. And oh, by the way, they like AUM going up and down because then most of the time when people sell an ETF, BlackRock holds, a lot of it, they're buying something else that BlackRock has created. So the money stays in the complex. So the notion that someone would take a compliance risk by doing front running is wrong,

if you want to see it. Yeah, compliance risk. Listen, I just have a different opinion here. There's a reason why people dubbed Goldman Sachs as vampire squid in 08 and 09 when they were taking opposite positions in the mortgage markets. It's a reality. There are some realities. Does it happen all the time? No. But it is a reality. The fact that it never happened is untrue. At the time, I was at Two Sigma. And we didn't trade with Goldman Sachs for a reason, right? Goldman Sachs was, and there's a long story here, and if you ever get Greg Tussar, who's now a very senior at Coinbase, he can describe it. Goldman Sachs, under Greg, had their electronic trading division on the other side of the river, nothing to do with Goldman Sachs, the large hedge fund. And when they brought the electronic trading back over the river into

New York, such that people's order flow could be identified, and so people who were doing multiple orders, serial orders with correlations, there was a lot of lack of trust there. So Goldman's been trying to patch that up ever since. But the truth of the matter is the market tends to punish firms who act like vampire squids. In this particular case, it's much more different. I mean, if you told me that Goldman was selling a structured product to a retailer, to a large asset manager, and they were negotiating it for weeks, and we're going to try to preposition some of it in order to minimize the market impact that came down. But I just hate the use of the Blythe term of front running because it implies something that's different. The other point that I want to make about BlackRock and all these firms is it's their investors that are holding it.

The firms themselves hold a small fraction. I mean, BlackRock's zero. firms is it's their investors that are holding it. The firms themselves hold a small fraction. I mean, BlackRock's zero. They're agent only. But the real demand here is from actual end investors and firms competing to make money from the fact that these investors are buying and not that BlackRock itself. Larry Fink is not buying Bitcoin. Larry Fink basically either believes it and is trying to improve the overall asset retention of his entire complex. Yeah, you're correct on that, David. You know, I think the term front running, you know, maybe I didn't properly use it. But in terms of, you know,

Goldman Sachs trying to get it, you know, Goldman Sachs was trying to wedge its way into BlackRock's product after they found out JP Morgan was in it as an authorized participant, meaning that they're trying to get on the train as quickly as they can because retail, us, we were so far ahead of everybody on this particular trade, right? So they're trying- Yeah, I think that you're both- Yeah, they're trying to get in- I was listening and you're saying the same thing, And it's a matter of semantics on the terminology, like front running as a criminal activity is not, I think, what Andrew was saying. I think he's saying that we've had all these years to believe in Bitcoin and buy it ahead of the institutions adopting it.

And the institutions are still slow to. I would also say, though, that that that long term there is a reality in it. And I think it needs to be said out loud when you have BlackRock, Goldman Sachs and Citadel involved in Bitcoin now, very involved in Bitcoin. I go back to the Robin Hood GameStop era, and we all know what happened there. Absolutely outlandish what happened in that particular situation. Post that situation, there were congressional hearings and there was an investigation. That investigation died and nothing happened. Nothing. Right.

So long term, you know, I don't know, you know, the upside long-term for these organizations being involved in the scale at which they're going to own Bitcoin, you know, that's a discussion for another day, but that gives me a little bit of concern. Tom, Amanda, HC. Yeah, so these guys behind the scenes are trying to build the most profitable verticals, right? So we had a conversation the other day with a high level person at Goldman who is helping build the digital assets business. Not only are they building businesses around mining and other things, but they're also making direct investments. So, you know, I think the comments

by the CIO were a bit different than what's actually going on behind the scenes. And all these guys are seeing what the Bitcoin ETF is doing and how many people are interested, and they're making actual investments. So I think we just need to understand the reality of the situation. Unfortunately, all these institutions move very slowly, so it's going to take time, but they're all the big businesses around it. And Larry Fink's out there on all the shows and rightfully describing the BlackRock ETF and frankly, the Bitcoin ETFs at large as the most successful ETF launch in the history of the category. I mean, you can't ignore that, right? I mean, banks would be, you know, derelict in their fiduciary duty to not be involved in these products when they're

the most successful products in the history of the category. I mean, that is, again, short and medium term, the velocity to which we're going to keep moving in a specific direction. Oh, by the way, you know, regulatory regulatory agencies are coming after Ethereum and the trickle down that that has on a bunch of other crypto assets. That's only going to move more capital into Bitcoin. Right. Beyond the fact that Bitcoin, just the word itself, is a brand that people have heard for a decade and understand, okay, I feel a little bit comfortable with that. I'll put 1.2% of my portfolio into Bitcoin. That's not going away anytime soon. And it may be picking up steam because of the other issues I just mentioned. I mean, I think it's worth noting also that we're in a bit of an echo chamber,

in a bubble where we're critical of these institutions for not yet being in the space. And if we are as early as we believe, and kind of what Andrew's saying here with the front running, they honestly have plenty of time to do their due diligence now that these products are approved and to take their time before finding out how they want to enter. I think there's a pretty large spectrum between Vanguard who's utterly dismissive and a lot of the institutions that adopted it first and everyone else in the middle is just trying to figure out which ETF to approve, how to do that, how to craft the language for how they speak to their customers every six months. So I think that people... Tom, you said, unfortunately, it takes a long time for these things. I would say for us, I would almost take the positive side of that, which is the slower they come in and the more they trickle in the more

pent up and steady demand we continue to get in a very small asset class to give us real momentum over the long term right so i don't think it's i don't think it's a bad i'm not saying you were saying it's a bad thing but i don't think it's a bad thing that they didn't all flip the switch the first day right and i think you can't expect these institutions that are this large that have been hearing from the regulator how awful this asset is for so long are going to naturally take time to find any meaningful level of adoption or acceptance. By the way, I don't think, call me crazy, I think about two weeks ago, I did a little bit of research, not a ton, so I could be wrong here. But does Vanguard offer a gold ETF?

I don't – for some reason, I think I noticed that they don't. Is that – They don't. They don't, right? So, you know. GLD by State Street is like 85% to 90% of the market, and then there's a handful of others. But yeah, they don't yeah so so you know i guess to to vanguard's credit i mean you know that it doesn't have any earnings or it doesn't have whatever so they kind of stick to their thing like gold doesn't

have any earnings right they don't have a they don't have a gold etf so i don't think vanguard ever touches this thing um can clients get access to a gold ETF via Vanguard, even though it's not their own? Yes, they can. Just looked it up. Correct. So that's different. You're right. That is different. Yeah, state trade is dominating. Obviously, GLD dominates because it's all the volume. So Vanguard didn't create a product themselves.

But just for people who are listening, the argument here, if we want to do apples to apples, would be that Vanguard has not applied for their own ETF. Right. The fact that they're not even allowing customers access to the ETF is different because they can get access to GLD. Vanguard just doesn't have a product. Right. And Vanguard does have funds that invest parts of their portfolio in precious metals and mining. And, you know, they do have other that of own funds, and they allow access to GLD. And the reason, GLD, it makes much more sense in the gold world for completely dominant ETFs, because the cost of storage and protection is so much higher with gold than it is with

Bitcoin. So you would expect there to be more dominance in the gold ETF category because of scale. You only have to pay a certain number of guys with guns and dig vaults that are certainly deep enough and powerful enough to keep out thieves. With Bitcoin, it's a bit different. HC, you've been waiting really patiently. Go ahead, buddy. Yeah, I'm coming back to something that Andrew said, not right now, but at the very beginning, that the BlackRock, Vanguard and their ETFs have made having a non-event or something like that, I'm paraphrasing.

Maybe actually the having has always been a non-evented and maybe it was always a coincidence that the price increases have happened sort of after a halving. I mean, it's really not that clear, right? I mean, there have been price increases and there have been halvings, but there have been only maybe three of them. And the price increases have not always happened after the same amount of time after the halving, something like a few months later to one and a half years later. And even if you believe in models like the stock-to-flow model, you have to add a moving average on top of the supply shock to make the model actually work and look very nice. So it's not clear that the halvings have ever been an event. And the other thing is that, of course,

they should be decreasing in importance because the amount of emission is going down over time. The second point is that, as Andrew correctly said, is that the ETFs should make the money come in slowly. So over many, many years, probably, maybe even decades. So that begs the question, why has the price been increasing so quickly, so recently coinciding with the ETFs more or less? And that might just be because everyone anticipates the having to have a positive impact on the price. And yeah, that's not clear at at all we might indeed run into a sell the news kind

of event maybe not quite maybe it'll take a few months until that plays out but i would be extremely surprised if um this scenario plays out as before where we have a price increase roughly one year after after the having well there's also you know it's hard to uh correlation causation right so if you listen to raoul paul or or others they'll point out seemingly rightfully that there are other four-year cycles that bitcoin either coincidentally or happens to fall in line with like global liquidity cycles, the election cycle that Dave pointed out, right? I mean, it was the same timing last having and we were going into the election cycle.

Maybe that's the four-year cycle that really we're a part of. So I do agree that it could be coincidence. But at the end of the day, I think most of these narratives are like anything in the world or just a matter of shared belief. So if enough people believe it and the price starts to move in September, October, I would imagine that that momentum will carry through and a year later we'll be saying, look for your cycle. Right. Um, so I agree.

I think you're correct. Yeah. I think to some degree you're correct, but I just wouldn't underestimate that the narrative will continue to play, even if it's those other factors that are inherently moving the price afterwards. Very hard to tell is really the point because there's so many sort of exogenous things happening at once. I mean, coming into a United States election with a Bitcoin spot ETF approval, would anybody be surprised to see price of Bitcoin or all assets at the same time sort of moving positively in the fall? I don't think so. Yeah, I'm adamant about some things. I'm adamant about the long-term trajectory of the price,

that it's not exponential, that it's slower than exponential. But yeah, the halving cycle and the bubbles that seem to follow after it are much more difficult to say anything about. And that could largely be a result of the fact that Satoshi created Bitcoin in response to you know the great, effectively the behavior that led into the great recession and put us into that exact same cycle right. So there's a lot of factors there. Iago, you jumped up. I'm assuming you've been listening. Yeah, just so that you guys were talking ordinals, Bitcoin halving,

and you didn't invite me, I'm feeling extremely left out. You're always invited. You just need to appear, see? All you had to do was appear. Hold on, let me fix my mic. I may be having problems with the spell. Give me a sec.

Yeah, Dave, did you have something to say no i just think it's funny because uh you know yeah i i yago is obviously the one of the go-to sources on those topics so that's all testing one two three sounds better right Testing, one, two, three. Sounds better, right? I don't know if you were listening. We were obviously talking halving and whether it's meaningful and has been the actual catalyst for price or whether it's sort of other factors that are happening at the same time and potentially, obviously, just shared belief in the narrative.

I've had this conversation a lot of times with different people. Honestly, it shouldn't, right? Logically, the halving shouldn't matter, or at least it should matter less each time. It shouldn't matter because people know it's coming. It shouldn't matter because the amount of Bitcoin that are being produced by the miners gets smaller with each halving. And so they have less impact.

And it shouldn't matter because the miners around the halving typically aren't selling most of their Bitcoin anyway. They're holding on to it because they're expecting the price to rise. And yet every single time it does matter. So I don't know. It's just one of those magical things about magic internet money until it stops working. I think, you know,

my bet is halving means 18 months of bull run. Is there anyone on stage who does not agree with that before we go? I know there's only a few of us left. Dave, I said I didn't give you the chance to jump in, but I know that you've sort of laughed off the idea of the having or the cycle because, as I said before, we have such a small sample size and it's so different each time. Yeah, I mean, I don't laugh off the having cycle. I laugh off the having cycle as direct correlation to price. I think that the having cycle, I often refer to it as the Harry Seldon of finance, for those who have read the Asimov Seminal Foundation trilogy.

The idea that somebody could predict a monetary policy going forward into the future hundreds of years. I think it's fairly clear that the halving cycle with Bitcoin is predictive of a monetary policy that has been nothing short of remarkable. So it is not that I laugh off the halving cycle. It's that the fact that you're talking about supply-demand differences that are really much more consequential for the narrative of the halving than it is for the actual amounts. That's all I'm saying. And I think that the amounts are much less than you're seeing from the ETF inflows, which is, we keep saying ETF inflows. What we're really saying is more mass adoption on the part of individuals and institutions who look at Bitcoin as becoming

digital gold. And I always phrase it to that probability, because digital gold for Bitcoin means a 10x in its current price minimum. And the fact is, that means the market is pricing it at a 10% probability of it becoming the next generation's, digital generation's bellwether for asset prices. Frankly, I think that probability is over 75%. So to me, it's a hugely optimistic trade. So it's not about not thinking it. It's about understanding the supply demand factors and quantitative analysis and looking for chart squiggles based off the having, I think, is probably not all that big of a deal. It's the narrative that matters. John?

Yeah. I mean, Scott, if you remember, when we broke back in 2017, we broke the old high, I think it was 17,000, went to 20, bounced down to 15, kept bouncing between 17 and 15. And then once it broke 20 again, we rocketed right to 30. All right. And that's kind of the same thing that's happened here. We broke the old all-time high a little bit. We bounced back down 20%. We'll bounce around here. We break that 72 number again and then we'll probably jump right to 80 or 90. I mean, that's typically what happens like almost every cycle. We're just doing it a bit early. So, I don't think it's because of the halving. I think it's just normal. Right. If we're doing it a bit early, that means it's not the halving. Right. Exactly. Exactly.

So potentially, we could say it's a four-year cycle that's not necessarily related to the halving. But again, I think everyone agrees it's semantics because if it ain't broke, don't try to fix it. Right. Here we are. We're debating what's going to happen after the halving and we've already gotten all the results anyone would have desired from after having by setting a new all time high. So I would say that's generally a positive, but any final thoughts, everyone, before we go, anything, we might've missed because otherwise we're going to go ahead and move into the

weekend wrap and be back obviously on Monday at 10, 15 AM Eastern standard time. Anything I missed guys, or we can, ahead and move into the weekend wrap and be back obviously on Monday at 10 15 a.m. Eastern Standard Time. Anything I missed guys or we can go ahead and wrap it up. I don't even know if Mario's here now. All right guys, we're going to go ahead and wrap it up. Thank you all for joining. Follow our guests. It was a great conversation today. Really enjoyed it. See you guys on Monday. Bye.