The Wolf Of All Streets - Crypto A.I Pumping - ETH ETF & Altcoin Analysis | Crypto Town Hall

Episode Date: February 22, 2024

Crypto Town Hall is a daily X Spaces hosted by Scott Melker, Ran Neuner & Mario Nawfal. Every day we discuss the latest news in crypto and bring the biggest names in the space to share their insight. ►►TRADING ALPHA READY TO TRADE LIKE THE PROS? THE BEST TRADERS IN CRYPTO ARE RELYING ON THESE INDICATORS TO MAKE TRADES. USE CODE ‘2MONTHSOFF’ WHEN VISITING MY LINK.  👉 https://tradingalpha.io/?via=scottmelker  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/    ►► OKX Sign up for an OKX Trading Account then deposit & trade to unlock mystery box rewards of up to $10,000!  👉  https://www.okx.com/join/SCOTTMELKER ►►NGRAVE This is the coldest hardware wallet in the world and the only one that I personally use. 👉https://www.ngrave.io/?sca_ref=4531319.pgXuTYJlYd ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/   ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL  - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets    Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #Trading The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor.  Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

Juan, can you hear me? Yes, I can hear you. How are you? I'm doing great, my friend. How are you? Good, good. I'm glad you're here. I didn't go through the list of panelists that are joining us today, but in my mind, I'm like, I hope someone that can give us an update on the ETFs could come up. And here you are. So there's no better person to come up. So I'm glad you're here. Yeah, great to be here. It's crazy how history repeats itself in crypto. It's literally identical every cycle to the team. No matter what happens, it's the same shit, different day.

Well, and to your point and on the title for the panel today, we see what we've seen every cycle. Bitcoin leads the way early in the cycle, and then Ethereum and then other coins start taking over. We saw how Bitcoin outperformed Ethereum last year. And now, since November, now slowly, but picking up steam this year, Ethereum has now started outperforming Bitcoin. And I think it's now outperforming it by 10% over a three-month period. Let me check the charts, whatereum is doing um actually scott the chart himself is here so ethereum is at almost 3k it didn't break 3k or just touch 3k kind of immediately it's broken 3k multiple times uh this week but uh yeah obviously having trouble getting

there but it has been at or above 3k at some point for the last three trading days, including today. Yeah, it's right there. Yeah, it's hitting its new resistance. And hopefully we'll see it break through. As you said, it's sort of nudged its way a little bit. But it's up, you know, Ethereum, I think, is up 30% year to date, beating Bitcoin that is up like 17 or 18%. So it's gaining steam. And I think

that'll continue. The anticipation will continue to build through May on the spot ETF applications for Ethereum. We just saw Coinbase come out with a piece endorsing the ETH ETFs, making some pretty clear arguments about ETH being a commodity, the SEC having approved the spot Bitcoin ETFs and also having approved the Ethereum futures ETFs. highlighting the liquidity in spot Ethereum markets and then highlighting Coinbase's own futures markets, surveillance sharing agreements with the CME, all making the case for why the Ethereum ETF should be approved. So we'll see what happens. But I think anticipation and momentum is going to continue to build into May for Ethereum. Mario, you may remember, but when we probably when we started this show, we were in the heat of what's going to happen with every FOMC meeting, all these announcements, bank collapses. And I used to joke that you could probably fall on your head and get amnesia and

wake up this fall, look back at a chart of the Bitcoin having four-year cycle and the crypto cycles and say, I could have spent every second that I worried about all these other things on something else because it's going to look exactly the same. And it's already shaping up to look exactly the same. To almost exactly the same, even though I said it. Listen, history rhymed, it doesn't repeat, right? So obviously we have the Bitcoin spot ETF. We're, you know, meaningfully ahead of price.

If you're looking at Fibonacci levels or something than we would have been in past cycles. But what Juan just described may not happen this time, but it seemingly will. We get even the same mini cycles where we go through large cap, mid cap, low cap.

We get the same hype bubbles that will inevitably pop within each cycle that then repeat. The DeFi summers, NFT summers, Metaverse falls, AI hype. Give me an effing break with this. NVIDIA does well. So everything that has anything to do with AI or claims to have anything to do with AI, when crypto goes up massively, we know how that ends, right?

Some of them will emerge in the next cycle, I'm sure, throughout. But it's the same exact cycles, the same thing. It could be completely different this time, but all the analysis done throughout the bear market and to this point has literally been a waste of time if you spent five seconds looking at the halving chart. Maybe it's different moving forward, but it's been the same to this point. There are many shows we've done on what's going to happen if this happens today and the news and the FOMC and oh my God, what's it going to mean for crypto?

Literally, like I could have learned to speak fucking Japanese by now if I had just not done a YouTube show or spaces. Yes and no. Again, history rhymes, does not not repeat so you got to figure out what how it differs the bitcoin etf numbers i think things could have gone wrong if the bitcoin etf was a flop for example i don't think we'll be where we are today um i don't think we'd be where we are today but i think we'd be in the same place in december or january which makes a difference i think timing timing is pretty important and these things do help in timing even though again i'm playing devil's advocate here because i'm horrible at trading and especially at timing and then the other thing to mention is understanding what narratives we

should focus on obviously ai and videos earnings something we talked about yesterday we'll talk about today uh danish you covered that in today's show as well maybe you can give us an overview on why that's important ran covered it yesterday as well. Yeah, NVIDIA just killed on every metric. Top line, bottom line. Their forecast was so insane that it completely beat expectations. The most important thing was their software and services business.

They generated $1 billion in revenue on software. By the way, this is a hardware business that is running on 75% margins. It is unheard of. NVIDIA is sort of the new Apple. They're absolutely murdering it. The whole crypto part, you know my opinions on it. It's just narrative.

And I don't think that there's any value to anything in crypto right now when NVIDIA is just doing such an incredible job. I took a bet against NVIDIA yesterday by taking some shorts on crypto tokens, on AI crypto tokens. And today, I'm burning like a mofo. Burning like crazy. I mean, NVIDIA, rationally, I guess, if you haven't dug into it or didn't look at the numbers and what Don is, was describing,

I think the retail sentiment would be no way they can hit these numbers. Right. And they did. Right. So I think that's a, I think that's a, I think that's a safe bet. You managed your risk. You knew exactly what would happen if you were wrong. I'm assuming. Right. So it's not really, I didn't actually manage my risk because i fell asleep and then i was i woke up in like four hours later in a in a cold sweat because i was so short but by that time it was just too late your risk management should be more coffee and adderall dependent clearly just just for the audience and before you continue guys sim, Simon, James, Nick, we'll bring you up shortly after your requesting to kind of get your thoughts on everything as well.

So please remain there and keep your request open. But Ryan, maybe give us an overview on how AI tokens reacted and whether your take on that we're 90% through the AI narrative. Quickly, and Ran, also to Ran, I'm quite confident that as a narrative or as an investor, you will be correct. You're just wrong as a trader today. Yeah, sure. I mean, I think I said before, I think the AI token narrative is 90% hot air. I mean, for once, I actually agree with Danish. I mean, it doesn't happen often, but I think that there's a lot of hot air.

I think it's a load of garbage, a lot of garbage. We will get one or two winners, I think. But for now, I'm not very, very, very excited about it. So, you know, I just think it's overhyped. Tokens have gone up to all-time highs. The tokens still don't have any users. So, I don't know. To me, I've shorted.

And look, right now, it's quite a sore short. I won't lie to you. And it's getting more sore every minute also. But I'm hoping that by tomorrow or the next day, the AI hype will die down and things will come back into equilibrium. Otherwise, wrecked in peace, I guess. I've got a question for the group uh i saw a stat yesterday that and this was before the stock pumped 15 percent it's up today but i saw yesterday that nvidia's if nvidia was a stock

exchange it would be the 10th largest stock exchange in the world which i thought was a pretty crazy stat and and then we then I was talking about this in another group chat. And the question was, NVIDIA's market cap right now is $1.9 trillion. Is that a meme? Is NVIDIA's market cap a meme? That's my question that I posed to the group. I think it's interesting. I think so. I was going to say just really quick, Danish. I mean, if you look at the growth today or after post earnings, actually, I mean, their earnings and the amount of money they're making is rising proportionally faster than the actual stock price. So it's hard to say that it's actually a meme. The question is, did it get there on a meme? Like, did the market cap get to that point? right now as astounding as the price action

is on something this huge with such a large margin cap it is a hundred percent justified by any fundamental analysis that you can do like i i don't know if i could get conscious by nvidia right now but it is justified if you look at it through the same lens where you value companies. Yeah. So really quickly on the numbers, 1200% increase in profit, 700% increase in margin or in revenue, sorry. We're seeing forward guidance be insane, 20 something billion dollars in this quarter. And the most insane part about this is they still have a backlog and they have a whole new business that is at a $1 billion run rate and has not even ramped up. Their forward guidance is that their software business, which will be 90% plus margin, will be running at $30 billion. If you just take into account their forward guidance, their forward PE is 33.

I think in good conscience, you cannot think that this is not a company that is... Scott said it right. It's like, hey, it seemed overvalued until you saw the guidance. This is real guidance and there's real demand. And these guys have just figured out to do what honestly Tesla was supposed to do, but was unable to do it because of bad leadership. These guys have taken the hardware to software transition and executed on it perfectly. They deserve all the credit. So I don't think this is a meme stock in any or a meme in any way. I think this is the real deal. It's as if we're watching Apple at $20 a share and asking ourselves, are they going to be big? This is just that they are literally at the tipping point. They own the business. They own the market.

They haven't even ramped up production. I mean, it's a you people that know me know I'm not the most bullish about anything. This is like a legitimate company doing incredible work. Travis, just to kind of give the other side of it i'll take the main side sorry sorry it's not it's not like apple at 20 because it's it's currently a 1.9 dollar market cap so yeah not even comparable making is more than apple it's already trading at 34 times forward earnings. So right now, again, for a company that is growing this fast and has these levels of margins, as a reminder, the AI revolution has not even begun yet.

That was the point that I'm making, which is they have a much better running start into this. I know it bothers people. When you're this big, when you're this big, you can keep your advantage for a short period of time, but over a long period of time, the world will come back into equilibrium

and you'll lose your market share. And there's no... I just don't think that this is one of everyone's rampant production right now. The only time you can argue that... Sorry. The only time you can argue that that's not the case is if there's true network effects out of your product. And I don't know. I mean, there are network effects in NVIDIA, but I don't know if they're as strong as social network effects, if you know what I'm saying.

Like social media. As part of the call, he mentioned the social media. So me, as part of the, in the call, he mentioned the network effect. So I'll just share that. He literally talked about how people are handing over their code into NVIDIA. NVIDIA is then ingesting it, updating, optimizing, and sending it back.

Literally people at these large enterprises are handing over their entire playbook to NVIDIA. NVIDIA then is building software that will then be available to everybody else the network effects comes from cuda that is the software business is the part of the business that i think i'm referring to and the point that i was making is look you all can feel whatever you want to feel about 33 pe but this company clearly deserves it they have i mean i I, if you, if you listened to our show yesterday, I was saying, Hey, how are they going to beat this? And they didn't just beat

it. They beat it. Like, you know, they, they hit it out of the park. So you have to like readjust your perspective on these things. If this company keeps beating expectations, it keeps raising guidance and going into an economic slowdown potentially. I think it's just incredible. And I think that they deserve all the credit right now. But what will Elizabeth Warren do if it gets too big? She's going to crush it, dude. She's going to absolutely annihilate it. It's over.

That's why they can't be Apple. Because to be Apple at $20, that means they're going to, like, what? $20 trillion market cap? That just could happen. Okay, guys, I didn't mean to interrupt with a joke. You guys guys thought it was funny but now we have to actually keep talking about no no no let's get no no before no no i just want to go back to the ai narrative because remember we had vinny on the show one of the infamous or the funniest episodes we had where vinny's like guys i'm gonna paraphrase it in a misleading way fuck crypto i'm going into ai again he's gonna fix what i just said

but then you're seeing crypto and ai both do well so maybe getting vinny's thoughts on nvidia's in a misleading way, fuck crypto, I'm going into AI again. He's going to fix what I just said. But then you're seeing crypto and AI both do well. So maybe getting Vinny's thoughts on NVIDIA's earnings and the AI narratives in crypto and the use case. Vinny? Sure. I mean, I said what I said was I personally am operating in AI, not in crypto, because I build products, and crypto is really hard to build products

for consumers. And that's kind of my background. So that was my impetus for moving out of crypto as an operator. I think it's just really hard to build mainstream products and none of the products have gotten to, you know, other than trading on exchanges, none of them have built products that people can actually use. That said, crypto and AI, there's some really interesting intersections there. I've been tweeting about it recently.

I mean, I think Render is incredible right now. It's a fraction of where NVIDIA is. And now with the nonsense yesterday about restrictions in China and the inability for NVIDIA to sell into China, and it's probably going to be more than that over time, distributed compute is going to be important. And distributed compute over crypto networks is going to be what saves the day, I think, in terms of global compute demand. But I'm with Dr. Danish on this. I think that, you know, give credit to NVIDIA. They're proving out the critics.

They continue to grow. I do disagree with Ryan on the point that, you know, the markets will normalize. I think the amount of specialized IP that exists in NVIDIA is second to none, but maybe Apple can catch up, but Apple's a proprietary cloud system where they're not part of the Microsoft universe at all. So that's a little bit different. And also, I think you also have a lot of substrate issues where NVIDIA has locked have a lot of, you know, substrate issues where, you know,

NVIDIA has locked up a lot of the supply. Obviously, the fabs that are out there producing chips for them right now, the guys trying to compete. I mean, these guys are the head start of years with TSMC and a few others. Like, it's going to take a while, you know, for the market to actually catch up. So, for now, NVIDIA has a massive moat around their business, brand, IP, infrastructure, resources. We only have one Earth, so the resources are fixed. And so I think they're the game in town, and they're going to keep producing stellar results, even in a downturn, because the demand – I mean, we're in the beginning of the AI wave right now. So I think there'll be lots of other companies that you can play, like you can benefit obviously with Render

and a few others probably in the upswing, get higher beta maybe. But NVIDIA is the gorilla in the room. That's my take. I think what Ryan said, Alex and Matt and Juan, I do want to jump in, I saw your hand up. But Ryan was talking about the AI hype

being 90% through and we're reaching a peak. Again, Ryan, correct me if I got this wrong. Your thoughts on this, Vinny? Do you think we are still in the early stages? I'm talking about a crypto narrative. In crypto. No, no.

In crypto AI or in AI? Crypto, crypto. So, guys, look at crypto as an enabling technology, right? So if we can use crypto to improve decentralized storage or or we can improve decentralized compute, or we can do multiple things, yes, crypto will do fine in those segments. I do think I'm seeing a lot of frothy behavior in the AI sector in crypto. Lots of guys, and I've spoken to some of these teams. They've pitched me. I've had tons of calls.

They've got nothing. They're, like, throwing shit together in the past three months, and they're asking for $100 million valuations in their company or their token. It's bullshit. There are a few companies that have been focusing on AI within crypto for years, and they're the ones I think are going to be the winners. I think this bull run in crypto is going to be very different than previous bull runs because we've got a lot more knowledge over previous runs. We're over a decade into this. So I think that we're going to see a boom. Bitcoin is going to go up maybe to all-time highs,

whatever, about 68,000 plus. And I just don't think that the money is going to flow all the way down to all the shit coins at the bottom and all the meme coins like we've had in the past, maybe a couple a year in there, but it'll be fleeting. I think the most likely outcome is that we see Bitcoin soar, Ethereum, Solana, Renda, whatever, you know, Avalanche, like just the top stuff really go up. And then the mid-level stuff doesn't really move much. But you're always

going to get these guys hyping shit at the bottom coming in. And if you look at projects that are new, this is a mistake we always make. We always think that the new projects are going to be the ones that pump. And most of the time, it is what it is. It's a pump and dump. You have to look at the stuff that's going to be sustainable over the long term. So, yes, something can pump 10x. And I've been there before. And the stuff, it's not liquid. You can't get out. Even though it shows it's up 10x, you try dropping 100 grand out, it just dumps the price. So, you know, it works for like D-gen traders. It doesn't work for people who are actually trying to invest and build portfolios. So my advice is like, yes, I agree that it's frothy.

My advice is be careful. Jump in, guys. I agree with that. Can I speak to like another side of the N the Nvidia trade just to paint the other case? I think, you know, backwards looking. Yes.

Like there, there's no doubt that Nvidia has performed extremely well. Right. But part of trading is forward looking. Right. And therefore looking forward earnings is at a 34 multiple right now. And what you have to keep in mind is once you get up to a size of this, that NVIDIA is, right, basically $2 trillion, forward looking for them to actually continue to grow at this rate, they have to start eating

entire new categories. And NYU professor Oswald Nemodaran, who is basically known as like the dean of valuation. He basically pointed out that in order to continue to sustain that growth that NVIDIA has and to actually meet that forward earnings multiple they have. They basically have to discover an entire new category to keep doing it. So that's that's point number one. I think point number two is that Chamath Palihapitiya had a really good point, I thought, the other day, where he basically pointed out that of every VC dollar raised right now by AI startups, he believes up to 60% of that might be flowing into NVIDIA. And I think this is where you have a little bit of a bubble of sorts, where you basically, or I don't know, some people call it a Ponzi. I think it's a little bit overkill, but you absolutely have a situation where VCs have pumped a ton of

capital into undifferentiated AI startups who are then taking all that and pouring it directly into compute from NVIDIA. And so the idea that like we aren't at some level of saturation on that when you look at the VC funding dollars that are flowing into AI startups, I don't agree with. I think we are at like a local maxima in that sense. So that would be my second point. And then I guess my third and final point to speak to the idea of like how does crypto play into all of this?

I mean, look, I think the past 48 hours with the Google Gemini model, if anyone's been keeping track of that, show why it's so important that we don't have censored and extremely woke AI models. And really every layer of the AI stack, it's important that that doesn't get captured by large corporations. So that's kind of my three part. Can you say this? Like, that's not to say that NVIDIA isn't a great company or that, you know, they they're way overvalued. But forward looking to expect it to do a two to three X when it's already at, you know, two trillion dollars doesn't really make sense. And then and then just quickly and quickly, if you can give us your thoughts on crypto AI.

You got a bit of background noise. Crypto AI as well, the narrative there. And then we've got Matt, James, and Ryan, I don't know if you want to jump in as well. Just a quick, short thought on crypto AI. Are we near the end of that bull run? Yeah, look, I mean, I just think starting from my first principles, I think there, as I mentioned, I think there is a need for this. Like, I think AI is a naturally centralizing technology, whether or not, you know, you believe crypto, traditional crypto or these. Sorry, Alex, just want to dig into it a bit further.

Why? How do you see that fit? Well, so part of the problem right now, right, is if you can actually centralize the compute as well as centralize the storage of information, which these models need to be trained on, then it's basically going to leave it in the hands of a few small corporations to decide, right, how the future of the internet works. I mean, we're already seeing that happen. And so I think that just makes the case stronger than ever of like why you actually need to decentralize at all layers of the stack with AI compute, information storage, how you actually build the models. And there's a lot of great teams doing that right now. To the degree in which those teams right now, their valuations

match the utility they're driving. I mean, in crypto, it tends to rarely line up directly, but I do think there's value there. I won't speak too much to individual tokens. There's a lot of good teams, though. I'm in Austin and like the BitTensor teams down here and I know they've been working really hard, but I can't really speculate on price. I think probably some people on stage can speak better to it. Matt, James?

Yeah, thanks for having me. Just in regards to NVIDIA, obviously yesterday about 1.20 Pacific time, that was your re-entry point when it was about 6.50. And how far this thing will go is obviously no one really knows. But I guess my questions, we look at the competition surrounding them coming up in the future with whether it's AMD or Intel, and I know they're doing stuff with Intel and the packaging and stuff of that nature.

But I really think that you look at the halo effect of NVIDIA and some of the other companies around them that are working with them, and one in particular, and I'm not here to shill it, but I've just been keeping an eye on it, is Medtronic. And it's AI and healthcare and blockchain. And I really think that this is an intersection with a lot of potential. And a company like Medtronic, who is partnering with NVIDIA to work, especially in the medical industry,

is really an encouraging and exciting, I think, landscape for where things are headed. But I guess my biggest question would be on the competition back to NVIDIA and the folks who are coming on their heels. I know they've got a big moat, but I think that that's really my big concern, is the competition and when they catch up and how long is that time?

It's James here. I'm saying we, coin shares, we have a kind of good relationship with many miners and quite a common theme amongst certain miners is they're considering using AI and AI compute

and replacing it instead of Bitcoin mining. And I think there are certain sites that these miners have that it makes more sense. They've got great data connections, good power redundancy systems. And for them, they're seeing they can make more money with AI. But the CapEx costs are very, very different. It's $40 million a megawatt for AI and it's a million dollars a megawatt for bitcoin mining but i do see this potential bigger trend of of really ai competing with bitcoin mining in certain areas and perhaps a greater and therefore we might see

bitcoin mining move more towards renewable resources which are stranded where ai can't work and that's quite an interesting trend. Just my point. Isn't the hardware different for those, James? Yeah, completely different. For those people that want to switch, it's a pretty non-trivial change though, right? Because you basically have to rebuy all of your hardware and sell builds and stuff like that.

NVIDIA have been very good on their websites. They give you all the architecture for this hardware and it's huge the infrastructure you need you need two backup power generators in case one goes down you need 99.67 uptime with massive data pipes for ai it's completely different for bitcoin mining you know if you turn an ai rig off it might take weeks to turn it back on and get all those calculation processes going again with bitcoin mining they to turn it back on and get all those calculation processes going again, whereas Bitcoin mining, they can turn it off and on in seconds. And I think this

is a mistake some miners are making. They're thinking that it's just a simple transition, but it's not. Another use case, Vitalik, not sure if you guys saw that, but Vitalik, and I'm actually pretty happy seeing that. James, if you can give a bit of feedback on your end. Vitalik did talk about AI-based code audits.

And other developers are backing up that idea, which is good for us. We're invested in a couple of projects that do that. I won't name them, which is pretty cool. Alex, have you heard that? What are your thoughts? Alex? Sorry, you were saying about the actual audits of ai projects code audits no no

no ai based code audits yeah i'm not oh yeah so that's funny you mentioned that um so we we recently just that we literally just today uh released our our audit uh from zelic and it's funny when we were sourcing uh you know, different projects to see their quotes. There's a guy that works out of the office in Austin who who basically has a business that does this. Right. They use AI to basically still do it. I think for us personally, the reason we passed is that it just isn't industry best practice right now. And we felt like that's that's not the area we wanted to basically like shave money just because like trust is so important in that front. But could it eventually get there?

Maybe as like someone who's a client of that right now, I'm not ready to make that jump yet. I wanted to ask Vinny about other narratives that interest him in crypto, obviously Deepin and Gabing being the two other major ones. But before doing that, since we have Juan and Matt, any thoughts on the discussion so far, guys, and maybe an ETF update? I think things have been slower in the last probably day or two, even three days. Maybe give us a general update, Matt, and your thoughts on the performance. Yeah, I can jump in there. I mean, just on the AI front, it seems to me that there are a few logical winners in crypto from the AI boom. One we talked about, which is Render, which seems the most obvious to me. But the second is stablecoins.

If you play this out a few years, AI agents will need to use crypto to conduct commerce. And so the winners are stablecoins. I look at companies like Circle and PayPal. It's the natural extended winners from the AI boom. On the ETF front, things have slowed down. I think yesterday was the first day of net negative flows in a couple of weeks. I think it's a natural pause. We're still moving from the early initial buyers, sort of retail hedge fund, a few RIAs into the second wave of buyers. I've talked about it on these spaces before, but I think the expectation would be a boom, a rest period, and then a secondary

boom as these ETFs are approved on major national account platforms. Those approvals are starting to happen, but they really won't accelerate in know, accelerate in a big way until, you know, maybe April, maybe May. So, you know, it's quieted down and maybe that's reflected into the price action, but I think it would be wrong to assume that we won't return to significant inflows in the coming weeks. That would be my base case. Matt, a question for you. You guys' AUM is a bit over a billion dollars right now, right? In the Bitcoin ETF? Yep, that's right.

And if you think back to, like, you know, I don't know, first week of Jan, is your AUM where it is right now surprising relative to expectations back then? Yeah, it's way ahead of my expectations. I thought hundreds of millions, but I didn't think we would be over a billion or the complex would be as big as we are. I think we're ahead of schedule and the demand is higher and more sustained than I suspected. And like I said, I think there's going to be a second wave that comes as these national account platforms are turned on. So you're not the only person that's in a similar position that I've heard say something similar that, you know, the inflows have been surprising

and ahead of expectations, even for, you know, people that are kind of the most insiders like yourself, they would like have, you know, likely the best handle on, on what these numbers would be, you know, and there's probably confidentiality type of stuff that, that, uh, you know, so just maybe in like broad brushstrokes, can you just like characterize anything about like where those surprises are coming from? Yeah. Yeah. And just to put a point on why it's surprising, remember I'm super bullish. You know, I dedicated many years of my life, took 30 trips to DC trying to get an ETF launch. So I was all in on these things being successful. So the fact that they're more successful than I expected, really is saying something. It's hard, you know, as an ETF issuer, you don't know exactly who's

buying your product. We can track some of it through our sales activity. And we know that there are some RIAs that are buying. But I think, you know, there's probably a little bit more retail demand out of the gate than we expected. If you look at the average size of trades on these ETFs, many of them are quite low. There's probably a little bit more hedge fund demand than we expected. You can see some sort of signals of algorithmic trading that's been driving some of this flow. But in general, you know, it's just faster acceptance of Bitcoin into the mainstream. That is the primary thing almost at every level. You know, I was at a big ETF conference exchange a few weeks ago. And the change in the tune from a year ago,

when we were still sort of finding our feet post FTX and no one would talk to you if you said the word Bitcoin to just accepting it, that it's part of the firmament and it's interesting as an asset and it should be discussed alongside other assets. That's just happened faster than I expected. So if I was being specific, retail hedge fund activity, probably higher than I expected. So, you know, if I was being specific, retail, hedge fund activity, probably higher than I expected. But in general, everything's just a little bit ahead of schedule. It's all just moving a little bit faster than, you know, I even hoped. Guys, you there yeah i think that was the effective way the utf update one did you have anything to add before uh we move uh yeah just to to add to what matt said um

it's still now we're sitting at five billion in net inflows and even though this week uh as matt pointed out yesterday is the first uh net outflows in a couple of weeks. Last week was the biggest week since the ETFs got launched. There was two and a half billion of net inflows last week. So, you know, things have things even accelerated last week. And as Matt said, have surprised us in terms of the pace. And the other thing that's great is that all of this liquidity has improved overall market liquidity.

The market depth is up 30% since the ETF debuted in January. So increased market liquidity also attracts market participants. Maybe that's what has attracted the hedge fund types that Matt was talking about. So we continue to be very excited.

As Matt said, there might be a bit of a slowdown before things pick up again when national platforms get approved. But it looks very constructive for the rest of the year. The other thing I wanted to touch on is on the AI and crypto symbiosis. I think there's an increasing recognition. Sorry, before getting to one, just before you get into the AI and crypto symbiosis. I think there's an increasing recognition. Before getting to one, just before you get into the AI discussion, I want to ask you one more question about the ETFs, regarding the ETH ETF. Has there been any updates there?

And what are the predictions now? It would have been great to have James on stage as well. Yeah, on that, while everyone's watching the batch of applicants right now, the first final deadline is late May. So everyone's watching that as the decision date for the current batch of applicants. And I think expectations have been tilting a little more positive in coming weeks with the positive sentiment that's happening in the market, the change of tune we're seeing from regulatory perspective. I think we saw Federal Reserve Governor Christopher Walker make a positive comment on stablecoins being supportive of the dollar. You saw the banks file that letter to the SEC for allowing them to custody Bitcoin ETFs and tokenized assets. And so I think you saw, for example, in the Senate hearing,

in the House committee hearing, the Treasury official actually counter Elizabeth Warren's stance on terrorist financing via crypto. So I think that the sort of regulatory and officials' perspective and stance on crypto is starting to turn. And I think that gives positive momentum to the Ethereum spot ETFs as well. But we'll see. There's still hurdles that they need to clear. Go ahead, guys. I was just reading about – oh, James is here. Perfect.

I kind of hinted to James that I want him up on stage to discuss the ETH ETF. So let him just slow before we go back to the AI discussion. I want to ask the panel of any other narratives. Doug, we haven't gotten your thoughts yet either. Wait for James to come on. James, we'd love your take on the ETH ETF and yesterday's net outflows when it comes to the Bitcoin ETF as well. Yeah. I mean, like Matt said, I mean, it was the first outflow day since Jan 25th. So it's been almost a month of straight inflows every single trading day. So I mean, the one thing I would say is there's going to be outflow days for these

things going forward. What we saw in the last month is not the standard situation or how things are going to operate going forward. As far as ETH goes, what Juan said is right. I mean, we have the equivalent deadline of January 10th with spot Bitcoin ETFs is May 23rd. That said, we were very confident that we were going to see a spot Bitcoin ETF approved, obviously. I've said it on these spaces many times. Our confidence level is nowhere near that of where we were on Bitcoin. I tend to lean more likely than not. I'm over 50%.

I'm probably around somewhere around 60% that's going to happen. But there hasn't been any movement from the SEC as far as we can see publicly or that I've even heard back chatter that the SEC isn't really starting the conversations with these issuers about their filings and the way that we saw all of those meetings and back and forth between the SEC and the issuers like Bitwise. So one, we're waiting to see when that starts. That said, I've heard people say like the SEC needs to start talking to them soon, sometime in March or else it's not going to happen, which I also disagree with

because while Bitcoin and Ethereum are obviously very different and we needed months of the SEC going back and forth between these issuers before they approved those spot Bitcoin ETFs, they're not going to need anywhere near the amount of time because there is significant overlap. So a lot of the big picture issues that the SEC needed to iron out with these issuers before the language was correct when they launched those spot Bitcoin ETFs, you can just basically port a huge percentage of that into Ethereum. So I don't know exactly what the deadline would be that we need to see some sort of movement between the SEC and these issuers for me to increase or decrease our odds. But probably sometime in April. So May 23rd is that date. So if we don't see any movement in April, we don't see any indication that there's comments going

back and forth between the SEC and these issuers, I'll have to decrease my odds and vice versa if we do see movement. So there's a few different things here. The one reason why we're not as confident is, I mean, there's no court case. There's a whole bunch of different things here that are at issue that if Gensler really wants to go to the mat here, there are ways that he can significantly kick this can down the road in ways that he could not have done for spot Bitcoin due to the court decisions and things like that. There's a whole bunch of other nuance that we can get into, but we don't need to get into it here. But that's overall, I think it's more likely than not that we could see an approval. But my confidence interval here is not very strong in

the same way that it was for Bitcoin. Really quick, can I ask a question in regards to the ETFs with Ethereum? The one component regarding the staking, I noticed a lot of folks have been filing for that with Franklin, Templeton, etc. Does that have any impact on when they might be approved, you think? I'd love to hear Matt's view on this. But my personal view is that I, like I said, I'm more likely than not that I think they get approved. I also think that they will not be allowed to stake. The SEC obviously has issues with any sort of staking protocols. I know there's differences between all the exchanges and how they do staking, but the SEC obviously views them as sort of a security offering in the way that staking is offered.

You can see in the Coinbase lawsuit, the Kraken lawsuits, things like that. So my general, not super detailed view is that the SEC is just, they're going to allow the spot to trade. Again, not super confident on that, but they will not allow staking, which is not going to be as interesting for anyone who's, like you basically look at the Bitcoin ETFs and there's not much difference between that and holding spot Bitcoin. Aside from not your keys, not your coins, there is, from a return perspective, it's not that big

of a deal. But from a returns perspective, an ETH, if you can't stake, that is less efficient. There are ways around it. Part of the problem is the SEC could easily argue liquidity issues, which again, I think there are ways around that where you only stake a certain portion of it. You have a credit line to meet any sort of redemptions. I just overall think in a similar way that we do not have in-kind create redeems for Bitcoin. You can't send or receive Bitcoin from the ETFs. It can only be done via cash. I think we're also not going to see in-kind creation for ETH. And I think they're also not going to allow staking. That said, that's probably not how things are going to operate into perpetuity,

right? We have staking ETFs in Canada and in Europe. I think ultimately the US will get there, but probably not anytime soon is the way that I'm looking at it. Also, I would just chime in and say, I think the interest from the TradFi world in crypto is predominantly focused on Bitcoin. And if you look at just the Ethereum futures ETF, Ethereum futures themselves, the interest for Ethereum is vastly inferior to the interest from the transfer world in Bitcoin. Yeah, I think staking would be the thing that long term could theoretically drive more adoption. I was talking about this, literally same thing this morning on the show. We saw the Ethereum futures ETF, obviously launched with a whimper. That's probably an understatement, right, James? I mean,

dead as dead could possibly be. Talk about the antithesis of the Bitcoin spot ETF launches. I think it's going to take a lot of time for institutions to care about Ethereum. I think, you know, go back a few years, maybe we're even behind where Bitcoin would have been. But if there was actually yield in those ETFs and they could understand that with time, that might compel them. But I think an Ethereum spot ETF is really exciting for the industry. But I don't think it's going to drive nearly as much volume, not even a fraction. Matt, what do you think?

I agree with that. And I'll actually give a reason. I think the reason is because the battle for what Ethereum is, you know, the playing field is obviously smart contracts and DeFi. It hasn't been won yet. I mean, Bitcoin is a clear winner with the store of value hypothesis and what they're trying to do there. But Ethereum has got challenges like Solana, you know, close in the heels.

And I don't think that institutions that want to put money into these, they don't want to see a flippant happening where they lose money and they look silly, right? So it's, they're very conservative with capital, especially family offices, large institutions. So they're going to put it into the safe stuff like Bitcoin, and they're going to wait for the smart contract DeFi world to play out and see who wins there. That's my take. Yeah, I agree. I think it's just a very fundamentally big wait for the smart contract DeFi world to play out and see who wins there. That's my take. Yeah, I agree. I think it's just a very fundamentally big event for the industry. I just can't see the rush of AUM and BlackRock's in the world lining up, you know, hundreds of millions for the first day. Maybe I'm wrong, Matt.

Matt, you would know better. No, I think that's probably right. Like, I think it'll be a nice win for the industry. I think it's likely to happen without staking at first and eventually get to staking. So I agree with everything that people had said. It's not the boom that Bitcoin is. You know, what I was going to say is, you know, we're talking about what the narrative is. I think the Denkun upgrade is the narrative in ETH much more so than the spot Ethereum ETF.

I think that's what's going to be dictating price. That's what people are going to be focused on. And if we get an ETF, that will be a nice cherry on top. And I think it will be successful. Look, I don't think it'll be a flop like the Ethereum futures ETFs. I think it'll be successful, but it's not going to pull in $5 billion in a few weeks. Maybe it'll pull in a few hundred million or a billion dollars over the same time period if we're lucky. But I really think that the narrative driving ETH right now is mainstream adoption and the dead-toon upgrade. And I think that will persist into the summer as the dominant narrative there. The one thing I'll say, maybe more in favor of ETH

is the reflexivity. When you combine ETH ETFs plus the burn plus the amount of total supply that's staked, and then the reflexivity that can be present there, where higher prices just beget higher prices. Bitcoin doesn't have that same staking and burning reflexivity mechanism present. I do agree that the setup on ETH is very different than Bitcoin. I mean, one of the ways I've been framing it since we got these ETFs on Bitcoin is that somewhat ironically, Bitcoin is kind of rapidly becoming not a crypto. It's like sort of not experiencing crypto types of flows. Crypto native capital is less and less of a driver of price action. Participants are less and less crypto native. And the sort of drivers of

Bitcoin's market cap increasing over time is just a pretty different set of drivers than I think any other crypto asset. It doesn't have any competition within crypto. It's in a category by itself within crypto. And it's, you know, sort of competing against, you know, maybe it's gold, maybe it's the U.S. dollar, maybe it's U.S. treasuries, maybe it's, you know, some combination of all those or not really any of those. But just the overall setup on Bitcoin is is being more and more separated relative to any other crypto asset. And then you put that on one hand and then you look at ETH and ETH is still just like right in the middle of mired in this crypto competition, right? I mean, the competition of ETH against other layer ones is probably going to be the headline competition for this coming cycle. Like it's going to be like the headline thing. It's going to be the literally trillion

dollar question of, you know, modular versus monolithic and these other L1 competitors and what they can end up doing and what kind of traction their ecosystems get versus ETH ecosystems. And then how is the crypto market broadly going to assign value to ETH L2s versus ETH L1s? And this is going to be, that's a real headline thing, but that's kind of a classic venture risk type of setup. And so I think that that is quite different than Bitcoin. Simon, anything else? Simon?

Oh, am I up? I didn't realize I was up. Yeah, I think you've covered most of the narrative. So a lot of my mining investments, they've invested... Simon, you didn't say full disclosure I'm invested. So let's start again. I'll give you one. Just say full disclosure I'm invested.

That's cool. Full disclosure, I'm invested in Cryptobank and Wall Street. I'll give you one. Full disclosure, I was a seed investor in Renda. 10 million at 10 cents. So that's one of my token investments that went well. But yeah.

$10 million at $0.10. Wait, wait, wait. $10 million at $0.10. So you put in a million dollars, and today it's worth $7.5 million. No, Bank to the Future raised $10 million for Renda at $0.10 in 2017. Oh, man. Okay. I mean, otherwise I was going to say you. Oh, man. Okay. So, I mean,

I was going to say you're rich, bro. I think you can probably say that, Ren. You know, all things aside. Go ahead. Yeah, no.

You know, a lot of the mining companies... Just say full disclosure. When you come on, just say full disclosure, I'm rich. Okay. All right. I've got nothing else to say.

The mining companies are looking at using the infrastructure, separating the ones that are using hosting and just trying to get as much deployed. But the ones that actually have infrastructure and warehouses and mining farm, they're looking at redeploy're looking let's ask you a completely separate question crypto ai your thoughts of that i don't think you've ever commented on it oh crypto ai um i think it's more i haven't done anything in the you know other than render that was my only crypto ai play um the i think I think it's more utilizing AI for crypto, like CBDCs, and that's the main thing, I think. And I think more like blockchain as a force against AI are the kind of things I'm looking at.

But I haven't done anything in the actual intersection other than render. Cool. I think we've covered it pretty well, digging into AI and discussing the ETFs. Scott, Ryan, anything else to add? I think we're good. I hope that all the AI points crash for you, Ryan. Me too.

If you had to time a correction, what would you time it as? Yesterday. The leverage is slightly down. We're not in dangerous territory anymore. I think maybe a little bit of a slow bleed down sideways, that would be good.

Cool. That's it. Alright, guys. Thanks a lot. Thanks, guys. Awesome. Bye, everyone. Later.