The Wolf Of All Streets - Crypto Is Pumping | Why? What's Next? | Crypto Town Hall

Episode Date: February 14, 2024

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so mario heard yesterday was the best space ever because i was uh not speaking that's what you told me i never said that i never said that but i think you read the comments uh but yeah i never personally said that it was implied again i never said it if the comments say it has nothing to do with them people that's true here's what they want to say i do not even if they're i do not influence what they say i do not influence what they say my burner account i like how you choose your words carefully it do not hurt my feelings now i have nothing to do with the comments i do not influence them in any way you can take the feedback as you see fit um so if you do if you do want to instruct if you want to mute your mic and stay quiet i don't feel bad that's what i'm going to say but if you want

to speak i'm largely going to do that today. I'm a mess. What's happening? How sick are you? Pretty sick. I think improving. I'm sick and then I had to travel. Not ideal. That's what happens when you have kids. All my kids were sick. Wife was sick. That means I get sick. That's how it works. Anybody who's ever had children knows that it's inevitable. By way i um i'm going to the u.s it's not confirmed yet but i'm going to the u.s for so i'm moderating a big panel with a bunch of politicians in a couple of weeks

so we could finally have that beautiful bro hug and where washington wait where have you guys not many have you guys not met each other yet? No. No, but I waved at him. I waved at him up to his window in Dubai when I chose golf. Yeah. And I gave him the finger. I was playing night golf. But then again, like, Ryan, you meeting me in that room is a very rare occurrence.

I'm extremely introverted. Not introverted, but I avoid meetings. I thought you said we're not talking about the time that I came up to your room, bro. You never came to my room. It's all coming out now. We'll keep it between. We'll keep it between us three.

I saw the mattress on the floor and the bottles of water. That's like the only thing in the room. Supplements. And a computer, bro. And a computer. in the room. Supplements. And a computer, bro. And a computer. And the supplements. You know, there's all those memes. It's like men will make a million dollars in a bear market, bull market and live like this.

Mattress, bro. It's like a mattress on the floor in a video game. But you got to come to Washington, Scott. I don't know. An outcome seat. When is it, though? like a mattress on the floor in a video game. But you got to come to Washington, Scott. I don't know. I'll now come see. When is it, though? Actually, I'm supposed to go, I think, in May for the Blockchain Association Summit

or something like that. I got to look. But I'm literally going to go there for a day or two, do the panel, and then leave. I don't like being away from home. Got it. All right. Well, you guys should dive in here.

Cool. Yeah, let's kick it off. i was actually watching ran's show before this i'm so glad we have the ran himself it's a pleasure it's a pleasure to have you you're one of the guests that doesn't you know you jump on here and there it's a pleasure to have you every once in a while bro sorry i've been very i was very sick man i lost i told you i lost six and a half kilos in the last couple of since since friday i lost six and a half kilos i mean last couple of since Friday I lost six and a half kilos I mean today I ate probably one kilo so I put probably a kilo back but I lost six and a half kilos from the stomach virus

I got destroyed anyway can you hear me I don't know if you guys can hear me we can hear you so let's kick off the show if you can hear me i'm having a stomach virus you should say bro how you feeling you know like you should

something i just got a i just got a message that caught my attention i got um i'm just gonna ignore the message let me focus on the show yes i was going through the agenda i was going through um what you were talking about as well so i was listening to it earlier and you were kind of pretty proud after tweeting that today looks like a good day. And I think Bitcoin is up, what, 7 percent? So, yeah, what actually happened is, you know, that the ETFs are settling on T plus one, which means if we have a good ETF day today, then effectively they have to settle the next day. Which means that the buying actually only happens after the fact. And so when you see like yesterday, even though the inflation numbers were bad and that took the markets down,

what we had was we had a very good ETF inflow day. And because we had a very, very good ETF inflow day, we kind of, you can look at data and tell them they're going to have to come into the market and actually buy up these Bitcoin. And that's what's happening. And so right now we're in a position where the ETF trade is actually starting to gain momentum. And someone explained it to me pretty well. They said, look, you know, you have this army of wealth

advisors who's now starting to shill these products, for lack of a better word. And the sell cycle is not immediate. So they don't go to a client and then, you know, tomorrow morning the client buys Bitcoin. You know, the clients have got to go and present to their clients. And it's like, it's a process. And only at the next investment meeting, be it, you know, at the end of the week or the next month or the quarterly, then they make the decision to actually allocate to these ETFs, right? And so what we're seeing now is we're seeing this like army of advisors

basically going out. And now the sales cycle is actually starting to close, which is why you're starting to see an acceleration in the BlackRock numbers and in the ETF inflow numbers. You're starting to see this acceleration. acceleration, you can almost say that it's going to support the Bitcoin fast. And so there's a tweet that I want to talk about. I want to

read a tweet to you guys. Give me one second. I just have to get my laptop on. Just give me a second. I've got the agenda. Which tweet is this? Who's it by? Don't worry, I've got it in front of me, sir. Don't worry, sir. Don't worry. It's all under control.

The tweet says the following. It says, the 2020 bull market was primarily fueled by borrowed money and leverage. And that's the CRS capital borrowing from Genesis to buy GBTC, Terra Luna buying Bitcoin to issue stable coins, DGens borrowing from Binance for 100x perps,

MicroStrategy borrowing from bondholders to acquire Bitcoin. This market is actually based on asset allocation, not on all this leverage. And so I think that's the tweet. That's the tweet which kind of highlights the stage of the cycle that we're in. And it's not like we're not relying on leverage from a bunch of crypto bros. This is a bull market

which is actually powered by asset allocation, which is, I think that's the narrative. So I think that's effectively, I think what's happening in the market. I think that's why we're pumping like crazy. And you can kind of say that you can watch the ETF inflows. And if there's high ETF inflows on the one day, then you can assume that there's going to be huge buying on the next day, which is quite big. One little adjustment to what Rand said. Retail is not here in large numbers yet. So financial advisors, most of those platforms have not approved these products yet. And not only have they not approved the products, but some of the few that have approved these products, there are still significant speed bumps to getting customers

into those products. So most of those organizations have mandated to financial advisors that you can't actively market these products to your customers. They have to come to you and request to buy Bitcoin ETFs in an unsolicited manner. So when you put an order through on whatever system you're using at whatever wealth management firm that you work at, it has to be marked as unsolicited, meaning there's a reason for that. There's a compliance reason for that. Most super, super risky organizations that decide what is super risky product, we don't want to touch it. In fact, we want to somewhat discourage our clients from touching it. So we have to tell them that if you want this product, it's coming from you.

We're going to mark your order as unsolicited so that if things go badly, it's not our fault. That's what's happening at Merrill Lynch, Bank of America, UBS, right? Those are massive, massive organizations here in the United States. And whether the products are not approved or they have to be marked as unsolicited in terms of being purchased. We're still at the tip of the iceberg here, folks, with these products and the inflows into Bitcoin ETFs. There are still significant roadblocks from a retail standpoint. And yeah, it's great. You know, Fidelity, you can go buy it. Some other platforms, you can go buy it.

But those are online, it's great. You know, Fidelity, you can go buy it and some other platforms, you can go buy it. But those are online, basically online platforms. Guys that have three to five to 10 to 12 million bucks and meet with a financial advisor every six weeks to review their portfolio. These products are effectively not available to them yet. And the only way that they get them at UBS, by the way, UBS is the largest global wealth manager. They're the biggest wealth manager on the planet by assets, right? So the only way that you get it at an organization like that is you pound the table in front of your financial advisor and say, I don't care what you have to market when I order it. I want it. Then they'll allow them to purchase something. And let me just share the numbers just to give the audience an idea of how well the ETFs are doing. The net inflows, so we got a 13th consecutive

day of net inflows. And now it's at $631 million for yesterday, which is the highest we've had. And that's after, obviously, Grayscale's had. And that's after, obviously, BlackRock's dominating. But at Grayscale's outflows are at $73 million for yesterday. So it's got to give everyone an idea of what we've reached so far. And I don't know what the total numbers are. I don't know, Ryan, you talked about it in your show and how it was beating expectations. So I'll try to find the total numbers and share it but dave go ahead all right you want to share the total numbers if you know them blackrock is 300 million dollars shy of uh five billion dollars now i don't know if you remember but when we started speaking about the ets we

said if we can get to five billion after after three months, that would be huge. Now, one ETF has got $5 billion after 30, 35 days. And what's the total of all ETFs? Do you have that number? I don't have it in front of me, unfortunately. Yeah, I'll try to find it now. Dave. Yeah, I just wanted to find it now. Dave. Yeah, I just wanted to – two things. First, I agree with overall what Ran was saying, but a couple things on mechanics are not right.

So the way it works, just so you all understand, is all day long you can see – let me go get my watch list up from my Schwab account because it's the easiest way to see it. All day long you can see bidding and offering on the exchange. And generally speaking, it's funny, Schwab's having problems, or at least my account was. Right now, the iBit is trading $29.67 to $29.68. So it's a penny wide. It's free to trade. So really tight. The reason that's true is there are people who are trading the ETFs in and out. Market makers are sitting there and they're offering at a price that's at a premium. And when they need to cover, they can hedge small amounts however they want to hedge it. When they need to cover, they go to the ETF issuer and they say, OK, how do I buy? And they buy in blocks called a creation unit.

If you've been watching, you can set your watch by the fact that there's been a rally every day between three and four, because that's the time that the actual buying is happening on behalf of the ETF. I mean, it can happen any time. You have to work with the issuer. But in general, they hedge and then buy at that period of time. It's not a day later. So the day later buying is because people think that there's going to be, or they know that there's going to be demand because people in the U S tend to buy on the market open, which starts at nine 30. And so people run in front of this. I've seen this explain to me if BlackRock sells $600 million today, how do they then refill the etf with the 600 dollars

but like if they if they they they literally the day that they a lot of that buying is happening between three and four in the afternoon although they can there's nothing stopping you i'm pretty sure going to blackrock and saying hey i want to want to buy $100 million of the ETF. What's the price? And BlackRock goes to their market makers and they get the price and they do it. Now, the way it happens functionally, so you all understand it, is there's a reference price. And each ETF is slightly different, but there's a reference price at a point in time. And so they agree that at this point in time, that's going to be the price. So what actually happens is market makers are buying Bitcoin into that time period in order to achieve that price. So you buy it on the way up and you finish it, you're done, and then you deliver the Bitcoin and that's how it works.

And because it's cash creation, it's a little bit more complicated, but it's more or less the same thing. And Dave, where are they actually buying them from? Is some like on exchange or from market makers or who are they actually buying them from? Well, I mean, I happen to look yesterday, people made the claim that what you can see, it was all buying on Coinbase. Interesting claim. So I went and I looked. 54% of the time, Coinbase was the best bid yesterday during that three to four period of time when the market was rallying. So it looks like a lot of the buying is happening there, but it's not exclusively there. I mean, they can buy OTC. There are a lot of OTC brokers that are trading this stuff and working with the ETF issuers.

But the important point is it's real demand, and there's not nearly as much of a lag as ran was saying that's all i was trying to get at but everything else that you guys were saying and particularly what andrew was saying he's absolutely right i mean it's people need to understand the fact that that still 70 some odd percent of all financial advisors either aren't allowed or being actively discouraged from selling this stuff. Are they ever taking price risk in that time? They can. That's quite a job, right?

Well, I mean, they can, but they're letting the market… I can only hear Dave. Simon, I'll bring Simon. I'll bring Simon down and back up. He might be the issue. Go ahead, Dave. Yeah, I was saying, for the most part, the issuers are working with market makers

and what you guys would call liquidity providers. And so the agreement is, I have to do this in cash. So I need to set a reference price at some point in the future, five minutes from now, 10 minutes from now, an hour from now, whatever it is. And when that, at that price, whenever it's determined, you need to be able to deliver me the Bitcoin. So they make that side deal. And so then they make that that that price.

So that's what's happening. You know, if you think about it, it's not that dissimilar. Just it's happening much more frequently than the way mutual funds work. What a mutual fund does is you are you you provide money and you are guaranteed to be in at the NAV of the mutual fund at the time of day. That's the actual market close. In this case, there's no actual close, but there are times and each issuer is slightly different. And you'd have to get – you should see if the Bitwise people want to disclose how and when they do that and how it works. I don't know each one of them, what the mechanics are. But what I do know is that there's not this huge lag. The fact is, it's just continual rolling demand. And it's more like a swarm of piranha attacking than it is one big whale.

Everyone who says, oh, it's BlackRock buying. No, it's not BlackRock buying. It's BlackRock's clients buying. And there's lots of them. That's really what's going on here. I'd say it's that. And also because people are looking at Bitcoin as an asset that they can hold like 1% of their total net worth in or 0.5%,, 3 percent, they're not going to be as worried if the price goes down. So they're not going to panic sell as much. So this is really good setup, even despite. And I think the fact that Andrew pointed out that so much of the financial advisors and the Merrill Lynch's of the world, UBS, they don't allow their clients to do this except on reverse inquiry. That's actually a really good setup

for a sustainable kind of somewhat more gradual increase in the Bitcoin price, where us Bitcoiners are used to very violent swings in the price, both up and down. This will be a dampening effect where you have some people that are allowing their folks to invest, whether it's Goldman or Schwab or whatever, and then others do not yet. And then the last thing I'd say is registered investment advisors who are going to tell their clients they haven't come in yet at scale are going to tell their clients allocate 2%, allocate 1% to Bitcoin.

That's going to cause folks to rebalance, right? Every quarter, every six months, however often they do it. And they'll be selling when the market is higher and buying when the price is lower. And that's also really good for price, sort of the sustained momentum upwards. Taras, linking that to what Ran was mentioning earlier, I think this is a tweet he's referring to or the one he's reading from Fred Kruger. He says, the 2020 bull run was primarily fueled by borrowed money and leverage. Three hours capital borrowing from Genesis to buy GBTC, Jarluna buying GBTC by

issuing stable coins, DGens borrowing from Binance to play 100x perps. And then he says this new market is based on asset allocation interest in Bitcoin is 10 times as big or more and it's much more stable, kind of linking to what you said, Terrence. Would anyone, Terrence, I'll let you comment on this. Does anyone disagree with that narrative that this time it is different? I don't disagree. I also want to point out something. The other difference is you'll all notice that this rally has been three to four, you know, anywhere from three to five percent a day for multiple days, not 20 percent God candle up. And that is exactly what happened. As I said, I was starting to say I've seen this movie before.

This is extremely similar to the way the tech sector traded in early 2000. I mean, extremely similar. When that rally went to what was called a blow off top, but it wasn't, you know, God candles, right? You know, it was three to 5% a day for a couple of months. Now, in that case, they got way overextended beyond price to fight every fundamental metric, based on the growth of the Bitcoin network and the halvening and how we look at all competitive metrics, Bitcoin isn't even close to extend it. In fact, we all look at it and say, well, 10x this and we're at digital gold and that's not even the top. So it is easy to see this sort of rally happening. Obviously, if there's a stock market disaster you know it'll pause or go down but but the fact is this is much more like money coming into the system i i'll tell you when it's

over it's over when every uber driver starts asking me about as always yeah and dog and that has so i see terence you actually replied to the tweet before going to whoever's jumping in i think it's you simon but terence you did reply and kind of explaining in a very basic way what Fred is talking about, how this time will be different. You said it'll be less volatile, number one. Number two, the market will be slower, more sustainable right up. Dave, that kind of links to what you just said. Stairs up, stairs down, but more stairs up than down. Terence is kind of oversimplifying here.

Smaller bubbles, smaller corrections. It's actually lower volatility on the way up. You don't say how far, you know, where do you think we'll peak, Terrence, before going to Simon? Oh, I have no idea. But I think a lot of it depends on the marketing and the FOMO.

One thing I'm very happy about is we are replacing, right, some of the less savory characters, whether it's SBF or CZ, with BlackRock and Fidelity. And so it's much more credible to people and I think more sustainable. But yeah, I'm not great at price predictions to be honest. There are others on stage that can do a much better job than me, I think. Scott? Sorry, Simon? Yeah, there's a few interesting things to talk about there. So basically on the rebalancing,

if rebalancing becomes a big thing where a lot of significant volume is saying X percent in Bitcoin, then whenever stocks outperform Bitcoin, then you'd have a rebalancing. And every time Bitcoin outperforms stocks, you'd have a selling pressure. Then we'll put it more in line with correlation to stock markets. On the whole SBF, all those three arrows, capital or the degen in, don't underestimate the ability for TradFi hedge funds to do exactly the same at much bigger scale and still blow up the whole thing. You're talking hedge, TradFi degenning?

Yeah, TradFi degenning is just as bad as crypto unregulated degenning. So you still get the same things. It's not just BlackRock and the asset managers. You're going to have all the leverage products that will be built on top of this. You're probably not going to get 100x leverage, but you're going to just be doing the same thing with bigger numbers. So I'd expect some definite disasters along the way.

We always have in every Trad5 financial product. And Matthew, I just sent you an invite up. I know you're always in the audience. We're good to have you on the panel. I saw your comment. Just for the audience, we do go through the comments that I just did. And so Matthew's comment and brought him up. That's a bubble in the bottom right corner.

He said, looks like 735,000 BTCs allocated to ETFs as of market opening today. That's 3.5% of all BTC. So what are you saying, Terrence? What is actually Matthew saying? Oh, there he is. Matthew's up. So Matthew, can you just explain just for the audience what you're saying, what that means for the industry and for the markets? Yeah, good morning, everybody. I think what's really important to see here, and I really love what Andrew mentioned, especially with regards to the fact that you can't necessarily as a registered investment advisor, now being custodied or now being held in these ETFs. So that's crazy to see just in

the month and a half or month or so that this has been out. It almost begs the question, at what point does this continue on in this trajectory and does it keep going up? And at what point do you have a ton of of holdings now in these institutions uh where we actually get to a point where people might be trading in satoshi's if you can imagine that like satoshi is the the smallest value of a bitcoin that you can get to and we might get to the point where the value of bitcoin becomes so obscenely expensive that people now have to transmit in in the the very small small digits of it so it's just been amazing to see the influx of this from an institutional perspective.

You definitely have seen pent up demand for the past decade of people trying to get this into either their 401ks or seeing endowments, pension funds, et cetera, now having quote unquote permission to go ask their advisor whether this is something that they should or that they can go put into their portfolio. Definitely on my side as an RIA, I have been advocating for one, even 2%. It's some of the larger cases, 5% allocations, and really looking to educate people on why this is an important ecosystem to be a part of, asymmetric returns, and things, especially in regards to non-correlated assets. As we saw yesterday, 500 point drop in the Dow and you see Bitcoin rip. So there's really some evidence here that

there's a narrative that comes changing with this and definitely agree that as this grows, you're going to see less and less volatility because now you've got more and more of this capital spread around. And hopefully you see a lot less, I don't want to say market volatility, because now you've got more and more of this capital spread around. And hopefully, you see a lot less, I don't want to say market volatility, but sort of the sort of nefarious activities that go on with some of these larger tokens. James? Yeah, I want to echo a lot of what was just said there by Matthew, I mean, very similar. So I'm going around speaking to institutional investors. They're all buying for the reason of diversification. It's the main thing.

Some of them, I'd say it's speculation, but a lot of them are just frustrated with the correlation between equity and bonds and are looking for assets that diversify. And Bitcoin certainly fits the bill there. Just in answer to your question earlier you're asking about price and what might happen um i recently wrote a bit of research and there does seem to be a link between these fund flows and the bitcoin price so perhaps one of the better

ways to look at it is uh flows as a percentage of total assets under management. So let's say if we said we saw 10% flows of percentage of assets under management, that's about the 3.5 billion we've seen year-to-date flows. That would equate to a price of around 58,000. Now, we're not actually that far off, but stretch that out a bit further. Let's say we saw $6 billion of inflows, that'd be 20% of assets under management. That would equate to a price of around 81,000. And if we were to beat

the 2021 record inflows at 10,000, let's say we went to 12,000 of inflows, that's 40% of assets under management, that would be a Bitcoin price of 127,000. So that gives you some ideas what could happen. Matthew, you agree with those numbers? Yeah, I definitely don't think it's out of the question. And those even seem conservative, you know, based on some of the things that he just mentioned is those kinds of inflows and this kind of consistency. That's what I really like to see this sort of consistency over time, 5% here, 10% there, and not this sort of god candle that we are so accustomed to and some of the other depths of the crypto space.

Being able to see this as a longer term play and just being able to sit on it and see that these implos are going to keep happening is going to be really, really interesting to see. And hopefully we see that consistency. I am still a little cautious about how we approach the having just in terms of price action. But I think over time, you're going to see a lot of people from an investment advisory perspective saying, you know, hey, here's the, you know, when they have the ability to go sort of solicit this in a different manner, they can sort of obfuscate some of the technological pieces of this and just go to somebody and say, look, there's some technological changes that are happening with this particular token. There's going to cut production and that's going to increase demand and supply is going to go lower. So there's a really big narrative here and a

powerful narrative for registered investment advisors to say, this is the time to get in. It's just a great buy and hold strategy. And you can enjoy these different asymmetric returns and not correlated returns. A case could be made that this move, the first 45 days of these ETFs and price movement in Bitcoin, it is traditional finance, institutional buying. Because there is very, very limited traditional finance and wealth management retail access to these products, but there is almost unfettered traditional finance institutional access to these products. So what you're seeing is TradFi on the institutional side for all intents and purposes. And by the way, this has happened for a hundred years, institutions front running their retail clients. Okay. It's it, it just, that just is what it is. That's what happens. So you, you, you get a product that you think is superior and you want to get your hands on, and the system inside of traditional finance is set it is the way that the system works.

So retail has not shown up on the traditional finance side. And it's the reason why a couple weeks ago I said I'm bullish short-term, mid-term, and long-term. Because short-term, we have this ridiculous sell-the-news narrative that got blown out of the the water and we're watching it right now. BlackRock doesn't show up to any party without the assumption that they're going to dominate that party. The halving is what, I don't know, a month and a half away, right? And then at some point, the LPLs of the world are going to approve this product. Right now, they're waiting another three months, and that's 22,000 advisors that cannot get these products into the hands of their retail clients. You know, I would assume that a good portion of the RIAs that are on this call, custody either through Schwab or Pershing, there's only like three left now. They've all consolidated, right? So even inside of those organizations, you have to position a purchase in an unsolicited

manner still. At some point, that cap will come off. So it's midterm. When that cap comes off, we have another leg of significant uptake in the product. It's really fascinating to watch. And it's happening much faster than the gold ETF trade happened. And why? Well, because society always moves faster a decade and the next decade, the next decade. And Andrew, it's not even kind of the sinister type of front running because it's a commodity backed DTF and all the economics of Bitcoin are fully transparent and known. And so

even before the launch, anyone could have bought Bitcoin. So front running is not really even sinister in this case. It's not sinister. It just is the way that the system works, at least here in the United States and, of course, across the globe, that institutions are set up to, quote, unquote, take this risk in the beginning, and then it flows down to retail. Tom? Yeah, so real – morning, everybody. Real briefly, really excited about the background bid that we've all been talking about for a while. It's just beginning from RAs and retail and others, and that's what's propped up the stock

market the last few years, right? It's that background bid for equities every time we rebalance or have a down day and things flowing from 401 s biweekly. We all sort of understand this. But the one thing that I think we're not appreciating for the past few days is the liquidations as we get to these key numbers. I really used to dismiss technicals and key resistance levels, but it's very apparent in a market as thinly traded as Bitcoin, even still thinly traded, despite the level of

institutional adoption, how much can get liquidated quickly? So we had close to 100 million liquidated around that $50,000 level. And as we get to key numbers going ahead, we're going to see more liquidation. So the direction is just up and up for Bitcoin. Obviously, we're going to reset these levels, but liquidations in the short term would have sort of helped there simon yeah the the other trade is i i really like the the not talked about much stable coin to bitcoin trade so whether like the traditional money service providers that start issuing stable coins start to follow the tether model now that there's etfs where you could so you know tether gets all the money from purchasing the treasuries gives everyone a free stable coin and then uses the excess profit profits from the treasury yield in order to buy bitcoin

and they're just accumulating a massive amount of Bitcoin from that trade. So if we start to get the PayPal issuers that see like the synergy and stable coin adoption, which is essentially, you know, the stable coins are being issued in Ethereum, Ethereum is staking, the staking then gives you the share of your transaction fee. And if you can get greater and greater disruption from banking to stablecoin and then back by treasuries and then treasury yield allows you to buy more Bitcoin, you do that through the Bitcoin ETF. You've just got this nightmare of disruption that can come from Bitcoin and stablecoins and using that trade. And it's going to be a really interesting one to watch. Dave, William?

Yeah, I think it's also worth pointing out, because people were talking about liquidations and you're talking about hedging, that, you know, we've seen today, actually, the CME futures trading at a much bigger premium than they had at any point since the ETFs went live, which tells me that some people who are using them as their primary hedging vehicle kind of got caught short. And it's been more volatile today. And so when you look, that's what our clients have access to all this stuff. If you're looking at this, the technicals of the market are different. We also saw the first signs today of funding rates showing some speculation. Nothing huge, not compared to what we've seen.

And, you know, certainly at the all time highs was much, much more than that. But we definitely are seeing some of that. And so this is part of that that kind of restraint on volatility. but everyone's really attuned to that. And it's important to watch. And that's one of the reasons why you don't expect it to have God candles each day. You expect more this kind of climb a wall of worry kind of thing. And I think it's important to be looking at that. Go ahead, William. Yeah. Hi. So I'm a little uh different in terms of what i'm thinking here right now and i'm not i wouldn't get too carried away trying to find a cause and effect thing

between what's happening in the in the markets and and bitcoin and and the prices in general, because, again, we shouldn't confuse correlation with causation. And, yeah, you can draw all kinds of correlations from the economy or from the Bitcoin ETF volumes. But the cause and effect is not 100% clear, in my opinion. I think there is more of a second order causation. And that is perhaps more of a mood, qualitative kind of related thing and less of a purely quantitative kind of correlation, causation. So that's not to say that the ETF inflows are not meaningful. They are. But there's more to it than just the numbers. And to put things in perspective, aside from the grayscale size, which is the old money, the new, new money into these ETFs is still at about $11 billion, which is only 1% of the Bitcoin supply. So in my opinion, I think we need to see this go up to the 5% to 10% range to see it become more significant, no matter where these inflows come from.

So that's kind of my viewpoint on that. And your thoughts on the numbers that Matthew mentioned earlier, and I've got another TED Talks macro point. It posted something similar. He said, with each $100 million in net inflows, Bitcoin's price has surged approximately $290. For every billion dollars of net inflows, Bitcoin price has risen by roughly 2.9K. I would like to get your thoughts on this, William and Matthew. Any further comments on the price? And also, Matthew, the question will be,

wouldn't the markets preempt that and respond in advance based on the inflows and projected inflows? Yeah, I mean, yeah, there is correlation in the growth for sure. And the question I was discussing with Dave

on Twitter, we have to think, project, like by the end of the year, what do you think? Will we get to 5%, 4%, 8%? The number on average, on average, most ETFs reach up to 14% of the markets that they represent on average. So maybe that is like the next goalpost. And I'm not sure how quickly we're going to get there, but that's kind of what we can keep an eye on. Matthew?

I think one of the most fundamental things for people to remember is that this is probably the best lesson in supply and demand that you could get with respect to how markets really deal with the value of something. And as people have said, there's no value in this. It's just a funny money or lottery tickets or fun coupons. We put value on something as a collective society. And in order to do that, and the fact that we do do that means that there's really no end to this price in some sense. This is a supply and demand equation. And if you keep getting infl of people understanding that this is something that they can put their money into and not get laughed

out of meetings or out of their Thanksgiving dinners, right? Like now we're going to come to Thanksgiving this year being like, oh yeah, remember three years ago when you didn't think this was a great idea? My mom thought this was a Ponzi scheme back in 2017. Like now she's asking me about this stuff. So we're right at the great cost with this narrative of just supply and demand really being the biggest piece here. Tom? Yeah, great points. I heard something the other day that I thought was pretty funny. So Americans own 60% of Americans own equities and we're generally risk takers, right?

If you look conversely at someone like China, only 20% or so of households own equities and we're generally risk takers, right? If you look conversely at someone like China, only 20% or so of households own equities. So US folks, which kind of drive the overall risk-taking appetite in the world are going to be buying this. And we only own 20% today as speaker just mentioned. So we have a big gap to fill there. In terms of price targets and flows for the rest of the year, obviously, we have the halving upcoming. What I think folks are underappreciating there is while this halving is reducing supply in terms of Bitcoin much less than the previous ones did, the aggregate dollar amount is much

higher because the price of Bitcoin is much higher. So we're going to have $8 to $10 billion less of Bitcoin put into the market annually. And what that means is each one of these miners who are actually mining Bitcoin generally sell a lot of that to fund their operations, particularly when their profit margins are going down. So we're going to have $7 to $10 billion of annual sell pressure on Bitcoin also exit the market, in addition to the continued bid from ETFs and others as these come online with RAs. So I think we have a sort of dual, reduced sell pressure and increased buy pressure that's going

to be pretty explosive for price, particularly when you've seen post having, you know, Bitcoin go up 10 to, you know, a thousand percent, which sample size of three or four, whatever it is, you know, not, not, not huge, but in aggregate, you know, I think two to five X on Bitcoin for the next year is, is very, very attainable because of the, those dynamics. Two to five X over the next year. Exactly. Do you expect a similar, go ahead. Yeah. And you could just roll those dynamics out. I just retweeted a chart here, a great chart from Galaxy that just put out what you can

see post each halving and the outcomes are between 10 and 100x for each halving cycle. So if you just say, okay, a lot of economic weight in this asset, it's going to be less than previous cycles, you know, two to five X is certainly reasonable. And you could just roll that out into Ethereum, which is obviously lag Bitcoin and Solana as, you know, sort of, you know, beta plus 0.2, 0.4 for each one of those assets. But yeah, certainly attainable target in my mind by this time next year, two to five X. And your comments on, yeah, James, I'll give you the mic. Just one more question to Tom before going to James. I think it was Simon that talked about hedge fund degenning. How could that look like? Hedge funds are certainly underexposed here. I'm frankly less concerned about the hedge fund crowd

than the institutional investor crowd because hedge funds are traders. Most of them are not buy and hold fundamental investors who are going to meaningfully allocate here for long swaths of time and hold the asset. I'm more concerned with the bigger crowds like the institutions like endowments, foundations, et cetera, which are certainly coming because of these unlocks here and the broader acceptance that this is not a quote-unquote criminal asset anymore. James? Yeah, I just wanted to make this point that the thing about supply with Bitcoin is it is perfectly known.

And one of the kind of beefs I have with this kind of stock-to-flow approach or any kind of extrapolations of supply is that, you know, certainly for something like gold, new new supply of gold that comes online every year is around like one percent and actually that's the same for for bitcoin now after the halving will be a very small amount of new supply coming online every year as a consequence you know if you look at gold at least actually supply data is an increasingly irrelevant part of price movements and it's more about the demand side of the story. Now, I'm not saying demand's not small,

but I just think we have to be cognizant of that point. And people have extrapolated looking at the sample size of three for the last halving and said, okay, well, the price has risen quite a lot afterwards. You could argue that it was just the stimulus checks in 2020 that pushed up the price and not the halving which leaves you a sample set of two and i think it's we have to be a little bit cautious about trying to extrapolate supply and what it means for price and i think actually the demand story is incredibly important um question for the panel can anyone do zach good to have you back and maybe

get your thoughts on on the etfs performance We were talking about it earlier. But does anyone have a bearish scenario can play devil's advocate on how the market could go over the next six to 12 months? Any potential black swan events, maybe CPI numbers continuing to disappoint? Any scenario where we might start seeing, you know, not see all time highs for the next 24, 48 months? Yeah, I think there are three, I think, one is just macro, right? CPI can go the wrong way, the traditional markets could go the wrong way. And that could drag Bitcoin down a lot, and drag altcoins down even more. I think there could be the second is I think there could be some things that are priced in that are not as powerful as they seem. So that could be ETF demand. That could be about some of the biggest, most important places that people buy Bitcoin. And there are still these massive cases that, you know, we talk about sometimes, but really they are the 800 pound grill in the room where the SEC is going after Coinbase and Binance and Kraken. And, you know, there is some small good news here and there. My expectation, though, is the SEC is going to win all three of those cases.

And that could be very bearish for the rest of crypto in the United States, which could bring the ecosystem down. I don't know that any of those three or all of those three will play out. But those, I think, are obvious sort of possible bearish scenarios. You don't think we're past the fears that regulators will crack down and kind of shut the party down with BlackRock in the game with ETF already approved and the talk about an ETH ETF getting approved as well potentially this year? I don't think regulators are going to shut down Bitcoin. I also don't think regulators are going to shut down ETH. And I think maybe

we eventually get an ETH ETF. I would expect that in the next two to five years. I don't think we're going to get that soon because the SEC is going to fight it. But the rest of crypto, they're pretty clear. They want to shut down like 99% of the coins they're listed on Coinbase. William? Did you watch Gary Gensler this morning on CNBC, by the way? I felt he was quite subdued, less combative, more calm. And I'm not sure how to interpret it, but I felt better. So I think, as you said, Mario, I think those days of being very tough on crypto are over.

I didn't see the same. They were just talking about Bitcoin this morning on CNBC. They're talking about the ETFs and Bitcoin. Yeah. And the SEC views Bitcoin other than the ETF questions outside of their jurisdiction. The SEC is, I mean, there are people like Elizabeth Warren that are going directly against Bitcoin and there are stuff on the like, you know, money laundering FUD front that we do need to worry about and we could get bad legislation. But the SEC war on crypto is not

about Bitcoin that they were talking about this morning. It's really about the altcoins possibly excluding Ethereum. Can I answer a question? Sorry, James. Yeah, about sort of risk factors. In my mind, it's been mentioned briefly slightly before, but the Houthi rebel problem in the Middle East might seem a bit far away, but if we see Iran get involved and it creates an essential sort of blockade of the Red Sea, big spike in oil prices, big spike in goods and commodities, that will put the brakes on any kind of potential rate cuts this year and even potential rate rises because their factor is kind of out of the Fed or the ECB's control.

And I think that's a big risk scenario for Bitcoin. And I don't think it would perform so well if the Fed hiked rates again. Any thoughts on this one, William? Yeah, I would say the opposite. I mean, if there is more uncertainty in the geopolitical arena, now people think that Bitcoin is the safe haven from all these events. maybe a security event of some sort, another big hack or some thing we haven't thought about, that is more troublesome than some of the other things, because Bitcoin and crypto has proven to be very resilient. And more and more, the more turmoil there is in the world, the more Bitcoin and this ecosystem is looking and appearing to look like more and more stable compared to all the crazy stuff that's happening out there.

Simon? Yeah, I agree with William. I think initially, yeah, you get those shocks and corrections, but it doesn't take long for people to discover what Bitcoin actually is. And so the, yeah, the, the, the kind of the beauty and the tragedy of Bitcoin is that the use case has always been hyper accelerated by disasters. Um, and those have been some of the biggest spikes in Bitcoin. So I'd expect, um, initially, you know, you know you got that during the whole covid thing you had a massive crash and then people realized actually bitcoin was the place to be um and it takes a little bit of a while for people to figure out that it has it is actually what

larry fink was pitching when he first decided to enter bitcoin, which is a flight to safety when you give it the time to actually figure out. Don't underestimate the tether trade I keep talking about. As rates go up, stablecoins get more, get a higher amount of money to put into Bitcoin with excess profits. That's a really interesting hedge as stablecoins get more adoption. And

excluding a CPI surprise, is there any other points that we should be paying attention to that could stop Bitcoin from reaching all-time highs over the next 12-24 months? If from a macro perspective everything goes well and there's no surprises.

Simon? Sorry, say the question again, Murray. So if we don't get any CPI disappointments over the next 12 months and we start getting rate cuts later this year, if that goes ahead, is there any other surprises, anything else we should be worried about that could prevent Bitcoin from reaching all-time highs in the next couple of years? It's like for 14 years we've been picking every single thing that could go wrong

and we're starting to run out of what they are. We're now starting to hit the real extreme conspiracy theories of what makes Bitcoin fail. Maybe TradFi can execute a 51% attack even though it's against their interest or we're hitting the quantum resistant cryptography and quantum computers.

We're hitting those stages of the real extremes of what can make Bitcoin fail from here. Matthew Terrence? I was just going to say I totally agree with the quantum computing piece. That is probably the biggest worry in my mind, especially considering if you could break sort of the Bitcoin ecosystem, it could really just bring everything to zero. Now, of course, the other question is, if I, you know, that would have to be a nefarious attack for somebody to use a quantum computer to sort of disrupt the ecosystem. And so you kind of have to think that this is like a mutually assured destruction scenario. This is like a total annihilation of a lot of the work that's been put into the blockchain.

If you guys are starting to talk about quantum computing, it just shows how bullish we are. This is the other than macro concerns or CPI concerns. If the next concern you have is quantum computing, then we seem to be doing pretty damn well. You got to remember that breaks everything. Everything is broken. Your quantum computing, breaking cryptography. It's not just Bitcoin. Yeah, there's a lot more to worry about than just Bitcoin.

I mean, traditional finance typically operates on 128-bit encryption, so the whole of the banking system and online payments would fail. Yeah, it would be terrible. Well, any last quick comments, Terrence? I think we've covered things well. I want to talk about altcoins today. I think, Terrence, make sure you don't join us either tomorrow or after tomorrow, don't join us

because we'll be talking about altcoins and I don't think you'll be too happy. Yeah, I don't want to get triggered. So I just wanted to respond to what William said. The only thing I'd push back on, William, is what you said about the hacks and stuff. And so in Bitcoin, even if there is a hack or a bug, you can always run the earlier version of Bitcoin Core, which is the most popular client implementation by far, or an alternative that

doesn't have the bug that would have been introduced. Also, people can, the developers are strong enough that they'll fix the bug. And so I think with Bitcoin, at least, I don't know as much about the altcoins. I think Bitcoin's pretty safe at this stage from a catastrophic bug. And before we wrap, I just want to go to Marshall. Marshall, you jumped in last minute.

I'm going through the comments. Just no one has a good bearish scenario, Marshall. I think the macro black swan events could be the only scenario where we don't reach all time highs in the next 12 months, 16 months. Where do you stand on this, Marshall, and your thoughts on the market's performance over the last couple of weeks. Mario, brother, man, good to be here. Thanks for having me up. Look, it's playing out just like we thought. Bitcoin is eating all the things. You short this thing, your face is going to get shredded. And there ain't no doubt about that. All right. So bears, watch out. Great, great, great bearish scenario. Appreciate it. Marshall balancing it out, Simon. Yeah, we've we're even losing the Satoshi one because Craig Wright says that he he chucked away all the keys and he destroyed them. So we're not even got the million bitcoins moving. I'm joking. No one has any bearish scenarios here for the audience.

I apologize. I'll try to get some bearish tomorrow to get some different perspectives. But everyone's bullish. The fear and greed index kind of proves that. And congrats on everyone that's um just in the market right now but uh and then we've covered it pretty well and we'll do an old show maybe the next couple of days and when ryan is uh fully with us because that's his area of uh of passion but i think that's it now so you can shut the space down scott hopefully we'll have you back back in action tomorrow thanks everyone i'm here technically technically. I am here. Okay, good.

It was a great show. Well done, man. Great show. Thank you. Yeah, I really think I did a great job. Incredible job. Incredible. Your thoughts, Scott.

Before we finish, she didn't hang up. Any quick thoughts on the Marcus performance? On what was discussed just now? Yeah, I'm super bearish. I think everything's going to zero. Okay, okay. Go take your medicine.

All right. Nasya, end the show. End the show now. Bye, everyone.