The Wolf Of All Streets - ETF APPROVAL TODAY 4pm? ETH ETF next? | Crypto Town Hall

Episode Date: January 10, 2024

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Hey, Mario, I may be wrong, but I'm going to guess that if John Reed Stark was still at the SEC, they would be using 2FA on their Twitter account. John, am I right? Would you have, you know, with you, that for government agencies, they probably have no process, no compliance procedures, and who knows how they're managing all of this. The only thing I told my wife was that if I were still working there, you'd never see me because I'd be booked up for the next year just dealing with the multiple of constituencies that are going to be on the SEC about this. But you're right. We would have two-factor. I was just like, you know, I've got a pretty full bingo card. But this was definitely not on it. A lot of things that could have happened, but SEC not having 2fa on their account and getting hacked the

day before was definitely not on there i know we'll talk about it more i mean mario how crazy is it that we uh spin up a spaces yesterday after we decided that this was not real news and there had been a hack and it's like our biggest spaces ever by probably double. Bye-bye alone. It's Mario here, testing. Yeah. Well, for anyone who wasn't paying attention, yeah, we did a Spaces yesterday, right when this happened,

and had like 20,000 people. It was just astounding because people wanted to unpack what was happening here. I mean, John, you just said, obviously, that you'd be busy for a year. How bad is this, honestly? It's bad. Well, let's look at it from all different angles. So how many investigations will this prompt? Okay, first of all, there's going to be an, there probably already is an FBI investigation, a DOJ investigation to find out if this is some kind of market manipulation.

And they're going to look at the trading trail, the audit trail, the money trail, the internet protocol trail, and figure out whatever they can. It'll be tough because, again, you're not dealing with regulated entities. You know, a lot of the impersonation cases that we did when I was chief of the Office of Internet Enforcement were always very easy to do because I could just call FINRA and get all the trading and find out every single person who made any money on a particular posting. So there's that. Then there's the oddity that who's going to investigate on the civil side the manipulation case? And that could turn out to be the CFTC.

So the CFTC could be investigating and actually taking the testimony of staff people at the SEC. Then you have the inspector general's office, who is fairly – it's sort of like the Office of Internal Affairs in the sense that they do two things. They do audits. Like my office got audited by the inspector general's office. Every three or four years, they would look at it and try to improve things. After the big Edgar data breach, remember that one when that guy, a group, a gang hacked into the Edgar database,

the electronic data gathering and retrieval service at the SEC? They hacked into that service. And because with the filings, you could actually file at 3.30 instead of 4 o'clock. So if you want to disseminate your news, like you're Microsoft and you want to disseminate your 10Q or your 10K or an 8K or something, you could do a test run at 3.30 because you typically want to disseminate it after the market so that the market would have some time for people like you

to read it and digest that information as opposed to just acting impulsively. So there was this old system under Edgar that you could file at 3.30 just to sort of test it. So a bunch of hackers figured that out and grabbed all that information and traded on it. So the SEC brought a case there, as well as the criminal authorities prosecuting them. So this is not unprecedented for the SEC to get hit by a cyber attack, whether it's a simple compromise of a password or a SIM swap or it's a more orchestrated and intricate, really big kind of attack. So in those situations, you're going to get two things. You're going to have an audit to find out, hey, how can you do things better? And you're also going to have an investigation to find out if anybody did anything

wrong. And so the inspector general's office at the SEC, they have their own corner of the building. They're locked up. They investigate all sorts of things. And then at the end of the investigation, they give their report to the chairman. And if they make a referral to the Department of Justice, they'll send it over to the Department of Justice. They might also send it to Congress. So Congress is definitely going to have hearings. They'll have the inspector general up there. They'll have whoever at the SEC is responsible for cybersecurity. And, you know, there need to be all kinds of policies and procedures, like about format, right? Where can you post? When can you post? Who gets to approve it? Who gets to do it? What kind of format. So you have a multifaceted level of

investigations, and that's just the tip of the iceberg. I mean, how are we supposed to trust the SEC to protect investors if they can't even protect their Twitter account? Just asking for a friend. Look, first of all, let's not be too hard on the SEC here. And you know, I'm a big SEC critic, guys. But the thing is, is that every single federal agency is a complete mess when it comes to cybersecurity. They've all gotten hacked on different occasions. Cybersecurity, you all know, is an oxymoron. You're definitely going to get attacked. It's not a matter of if, but when.

And when it comes to these attacks, they're growing. They're different. We have a big ransomware conference coming up. I sponsor this conference next week. And, you know, ransomware attacks are getting worse and worse, more and more sophisticated, and the victims are everywhere. So I don't want to be too hard on the SEC for this, but, Ron, you're not wrong in that it's amazing that the SEC on the one hand can tell regulated entities that, hey, you better shore up your cyber and charge them for a simple failure to report a minor incident up the chain and to call out an egregious violation that warrants

a fine and all sorts of millions of dollars that You know, you've victimized a victim's life in those circumstances. Can I ask a question? Yeah, go ahead. So I've got a few friends who were liquidated on their leverage positions overnight because of this SEC shenanigans. Can they institute a civil claim against the SEC? I don't think so. I mean, you could file a class action if you want. There's nothing to stop you there. I think in most of the cases that I've done, you could file a class action if you want. There's nothing to stop you there. I think in most of the cases that I've done, and remember, I was there for 20 years. I was chief for 11 years.

I was, before that, special counsel for internet projects for four years. So I worked on most of these, what I call impersonation cases, when someone goes online and impersonates a company, impersonates an agency. They're all types. And we brought cases in every way in this regard. And we typically didn't charge any of the intermediaries unless they were complicit. And most of the time, they were just not complicit. So if it was just some negligence or stupidity or just par for the course at the SEC, I don't think it makes them responsible. Now, that's not going to stop you, Ron, from suing.

And you're right about this, the leverage. I mean, if you have triggers in your account, that happens with these impersonation cases because people want to get in quickly. There were bogus postings on Bloomberg about a company named Pair Game that we brought. There were bogus postings about a company called Lucent, which is no longer around. And that case was brought criminally by the Southern District of New York. And that guy went to prison for five years because he posted a phony earnings report on Lucent. So there's all sorts of precedent for using social media,

online newsletters or websites or message boards, those were sort of the precursor to the social media, of using those to conduct market manipulations. It's always going to be a matter of intent, Ron. So if someone has the intent to manipulate, whether they profit or not doesn't matter. If you have an intent to manipulate, then you can be found culpable. Ran, I want to know, I want to ask you a question. What was your first reaction when you woke up this morning? Because yesterday, Mario and I were going nuts. We thought there was an approval. We were trying to get in touch with everyone. Let's spin up a space.

Then we found out it was fake. We couldn't decide whether we should do it. We did do a space and instantly had like 20,000 people there. So clearly everybody was wondering what the hell was going on. You were asleep, I'm assuming. Yeah, I was fast asleep. I woke up this morning and I saw the first thing I saw was a message in our news group, which said ETF approved. And then I looked at the price and the price was 45,000 something. And I was like, what the hell happened here? And then obviously I started to unravel the whole story. I mean, were you shocked?

Because we were, I was seeing it in real time. I'm trying to imagine what it would have been like to process that entire thing in one fell swoop. I mean, you want to talk about, you want to talk about like shocked. It's very hard to shock me like these days. So, you know, it becomes so like, nothing shocks me in this game anymore. Nothing shocks me about the SEC. Like, nothing shocks me anymore,

but it was just like, I looked at this and I went, just another day in crypto. You know what I mean? Seriously, just another day in crypto. But Scott, you couldn't even make

this stuff up. If I asked you, you couldn't do it. The movie is going to be amazing. Yeah. You can't. I mean,

everything's par for the course here. I'm wondering, you know, at this point, how the Elizabeth Warren camp or certain people are going to just blame us for this. I know, we've already got senators obviously demanding Gary's head and asking for answers. But I know there's another side of this that's going to drop, which is going to be a bunch of tweets about how the crypto industry is a bunch of hackers and shadowy super coders, and that it's our fault that somehow the SEC got hacked and that the market moved. And even when you just described it, John, you said, you know,

I said, how bad is this? The first reaction obviously was, well, it's bad for whoever hacked the account and manipulated the market, right? So there's that side, which is that clearly somebody probably made a whole lot of money on doing this. They didn't take this big of a risk just for fun. But the other side is obviously the SEC doesn't even have 2FA, right? So that's...

The question I have is, the two things I'm more interested in, John. First one is how the market reacted. And I think, Ryan, you were talking about how ETH pumped and Bitcoin dumped. But I'll talk about that one. I'll ask about that one afterwards. But the question I have and I asked about that yesterday, John, could this impact the decision in any way? No, no. I don't think good Ophelia posted.

I don't think it will affect the process of what comes next. Is there any way that could delay the decision just based on what happened yesterday? Or does that twist their arm? If there was a small possibility they would say no after the embarrassment they had yesterday, that possibility is almost gone now. Well, it's tough to say, Mario. It's tough to say. I feel like it's going to happen today based on the reports, if the reports are accurate, meaning the SEC had all these meetings and with the exchanges and the applicants and was really sort of dotting their I's and crossing their T's. But there's a couple of qualifications there. The first thing is that the information

that you're getting, Mario, is primarily, it's not from people at the SEC, okay? It's from counsel to the applicants who are basing their, and they've got their own agenda, and they're basing their observations on the bits and pieces that they can glean from whatever the staff is telling them in whatever communications they're having. So that's number one. The information flow that you're getting is not coming from within the SEC. Remember, there are very few, if any, political appointees in the whole building of the SEC other than the commissioners. A couple people in legislative affairs, political appointees in the whole building of the SEC other than the commissioners. A couple people in legislative affairs, a couple people in communications office, that's it.

And I can say in all my time at the SEC, I've never leaked, I never leaked anything during my 20 years. I never knew anybody who leaked anything. Everything the SEC does is secret. And then look at the other dynamic to it. The commissioners themselves and the chair can never meet with each other because of the Sunshine Act. If they meet with each other, it either has to be in a closed commission meeting or it has to be in an open meeting. So what happens is the counsel that work for me, every commissioner has like three or four legal counsel and the chair maybe has 15 or 20, maybe a few more. And those counsel just start scurrying around talking to the staff, because typically these kinds of applications are ruled on a staff level. They aren't brought to a commission vote.

But this is an entirely new paradigm. The SEC has never before been under this kind of scrutiny, never before been in the headlines like this about a rulemaking. And it's not even a rulemaking, it's an application, whether this application can take place. There's usually a lot of news around any sort of new iteration of securities offerings or new securities products, but not to this level. So any commissioner, you have Mark Ueda and Hester Peirce, who are clearly in favor of the Bitcoin spot ETF. And if it doesn't happen, they're going to issue immediate statements talking about how terrible the SEC is. And Hester will do this. Again, I've known both of them for

25 or 30 years. I don't know Mark very well, but I know Hester very well. And her heart's in the right place. She's just a very caveat emptor, capitalist libertarian who believes the government has gone way too far. And she's not trying for any crypto job or anything like that. This is really what she believes. She's the consummate public servant. I happen to disagree with her, but her view is absolutely this should be approved. So I think that right away, those two are being very active right now saying it must be done today. And here's what the guidelines require with respect to timing. And then you might have the other three saying, look, we've got all kinds of wrenches here. We have all kinds of conspiracy theories out there. Who knows if Gary Gensler goes down,

if Gary Gensler goes down to his general counsel's office and says, can you figure out a way that I can delay this? They will figure out a way. I don't even know what the ramifications are if you miss whatever this deadline is. You know, but what I do find incredible is the cryptoverse in general. And Scott, you touched on this. You know, I mean, me as a person who doesn't, I don't recommend this investment, obviously. I think the Bitcoin spot ETF is ironically, wow, very decentralized to have these financial behemoths have established this new fee-sucking mechanism to rape you guys, and you're loving it. You know, I don't get any of that. But putting all that aside, it's an amazing culture. I think my friend Anthony Scott, your friend Anthony Scaramucci, who I've known for 50 years. Anthony believes that you guys are one issue voters, that you can go to these swing states of which there are whatever, four or five of them.

You can band together, you can communicate with each other and you can tilt the scale. You can, you can move this election in your favor. You know, it's a real masala, a real mixed bag of people in the cryptoverse that I've discovered, you know, and the fact that I like a lot of them is just interesting, maybe because I'm a libertarian and I get that. But also, there's progressives in there. There's people who don't like government. There's pure capitalists in there. There's a lot of smart people whose hearts are in the right place. There are a tremendous amount of grifters who are organized, and're incredibly well capitalized, incredibly well financed. You have really powerful lobbying groups. So you can really move the needle here. And I find that to be, it's more than a religion. It's more than a cult. It's a movement that you guys have created. And this Bitcoin spot ETF is an incredible achievement for you. I predicted six months ago that this would never happen in a million years.

I read the SEC's letter and I look at all the cases. And we got Larry Fink, John. Larry Fink was our great white hype. We didn't know. John, you're a libertarian and you don't like crypto at all? Absolutely. That's a pretty rare combo. I'm not going to lie.

That's a small club. I get it. I get it. Look, I'm a big First Amendment guy. Actually, John, hold on. Does your sentiment about crypto change once the ETF is approved? No. No, it gets worse because, again, I think the Bitcoin ETF is just so ridiculous.

John just described 25 bips as rape. So, you know, I don't think that's going to change. I think that all these spot ETF issuers are in a race to the bottom that only one or two can win as a result of this fee war. Right. I mean, John, I guess it's rape to some degree that it's not free. But I mean, I was talking to some of these people. I can't name names. So I reached out yesterday as the fee war was going on. And the math is pretty astounding on how much AUM they're going to have to pull in just to break even with fees this low.

You're talking about like three, four billion to break even on some of these, right? Five, six to even make a profit that's worth keeping the lights on. And 14 issuers ain't getting the three to five billion AUM anytime quickly. Yeah, you might be right. But, you know, it's a question of valuation of those entities. I mean, it's very opportunistic on behalf of these big financial firms. And it's ironic to me that these are precisely the kind of firms that Bitcoin was created to avoid because of the nefarious nature of those firms. So I get that. Maybe you're right. I find a lot of hidden fees in these kinds of entities as well. So I guess I'm not just talking about the overt fees. I think it's funny that this cash

redemption is this big issue. I don't understand, Scott, how anybody can invest in anything when they can't have an immediate cash redemption when they want it. Am I missing something there? No, I think that it's the reasonable middle ground, probably. Right. So I don't think you're wrong. I think obviously the industry wants in kind, but I can understand what the SEC is looking back on that for the very reason you're saying mario you sound robotic you sound robotic you sound like you're you're you're doing that that's his new that's his new thing yeah he does it every every show now i want to ask this like i want to go to the second question i i wanted to go to ran on this one and

gareth is here and anyone else it's just a market reaction i know we talked about it yesterday a lot scott so you're pretty pissed you're pretty sick of talking about it. But Ran, your thoughts on how the market reacted. We saw you had your team put out an image in our group where we saw Bitcoin pumped from, let me get the numbers, so pumped from about 46K all the way up to 47. 48.2.

Okay, 48.2. I saw 47.9. pumped from about 46k all the way up to 40 to 48 to 47 but then it just pumped and then it jumped pretty hard before gary's tweet 3200 it dropped basically to yeah the mid 44s 44.6 depending on what exchange i think on the tether exchanges as dave weisberger pointed out there's a lot more volatility but doesn't that, but can we conclude that we're likely to see a dump when the ETF is approved? Yes. Look, I think,

so one of two things happened. A few things happened, but one of two things happened. One is we only managed to get up to 48,000 or whatever it was. And that to me says that either insiders knew that this was wrong

and then took the opportunity to short, or the ETF approval is already priced in. And then the interesting, the part that shows me that the ETF, that this wasn't insiders pushing it down, but actually the ETF is priced in, but is the fact that ETH BTC started pumping and total three against BTC started pumping, which kind of says, look, the ETF trade is over

and now we're moving to the next trade and the next trade is the ETH trade and potentially altcoins. And I think that's what the market's basically telling you. Yeah, that was a large, I mean, I tweeted it and we showed it in the spaces yesterday, Mario, but that was the largest volume ETH BTC pair hourly candle that we've seen. I went back, I couldn't find one that was nearly close. It was pretty convincing. And if you looked at the timing that at least traders, I can't say that this has to do, obviously, with the real effects of a Bitcoin spot ETF.

But traders rotated immediately into Ethereum with the Ethereum ETF being next in line. Standard Chartered, by the way, in their report that said that they thought Bitcoin would go to $200,000 by the end of 2025, which I don't think is hyperbolic. They said, yeah, they were like, Ethereum gets approved really soon. Yeah, they said the second quarter of this year, no? Yeah, yeah, the second quarter of this year. So in the next three to four months. Remember we discussed it on the spaces, and I said that we're moving on to the next trade. And you said, hey, what's the next trade?

I said, the obvious trade is the ETTF. Yeah, true. So you were making two arguments either on the show or on your show. But one of them is the Solana argument and how L2s are not doing as well as everyone expected

and other layer ones are gaining all the attention. But then you also said that the least exciting trade right now, and I'm horrible at trading, so don't listen to me, everyone, but the least exciting trade right now, the one not getting attention, the one getting probably a lot of hate, is the ETH trade. So don't mistake the two.

Don't mistake the two. So the ETH trade is the next trade after the Bitcoin trade. It's a trade. The ETH and the ETH layer twos are a trade. That's what it is. It's money moving. We missed the Bitcoin ETF trade or we caught the Bitcoin ETF trade. We saw everybody else making money.

We now know the same thing is going to happen on ETH. We're jumping on the ETH trade. That's trade number one. Then separately to that, there is an investing... There is an investing... Before you go to the second one, I want to focus on the first one, the ETH ETF trade. And I want to get your thoughts on John's thought. Does a Bitcoin ETF, does that mean they have to approve an ETH ETF? Can't we wait years for an ETH ETF? Because they're

very different asset classes. Can I jump in here? This is Dave Noddick from Betafight. I think it's extremely unlikely that we see an ETH ETF just sort of roll causally right after this. If anything, I think there's enough difference and there's certainly not a direct lawsuit overhanging them the way there was for Bitcoin. I would not be surprised for them to push ETH out of this year in terms of actually doing an approval. And go to court and get called arbitrary and capricious and be sworn at on an election year. That's the best strategy.

I don't think that they have the same case that GBTC had. I just flat out don't think that they automatically win something like that. They're structurally different too as assets because I agree generally listen, I agree generally with Rand, but like proof of work versus proof of stake, what do they do with the Ethereum once they're holding it?

Are they allowed to stake it? I think there's a lot more questions around it. It doesn't matter. It doesn't matter. There's a ETH futures ETF that is approved and exactly on the same argument on the fact that there was a Bitcoin futures ETF and the SEC lost that case, they're going to go to court.

And then they're going to go to court. And I don't know if the judge is going to take it too well when they say, look, he has precedent. This happened on the Bitcoin case. How can you decline an ETH ETF? On what grounds when there is an ETH futures ETF? You can't. And I think, to be honest, I don't know the American law system,

but I believe that the judge would actually get quite agitated at the fact that they're taking this chance and not approving the ETH ETF. Yeah, but what are the ramifications of that? You know, you got more in your camp, by the way. I'm just saying I do see that there are some differences and dave has laid them out i see we're having uh some shuffling of guests here i don't know how dave just got dropped but uh we're gonna figure that all out but yeah ran i mean i i did it was very very clear and by the way i mean a lot of us have been sort of beating the uh eath drum for quite a while here that it looked like it was sort of in the process of bottoming i've believed that for a very long time for a lot of reasons i think i i think it's here to stay like everything else and i think we're gonna people

are gonna be very very surprised at the upside that that comes with it i guess now what i'm curious do we think that yesterday's uh hack the insanity around that. I mean, I can only tell you anecdotally, right? We had four times as many people on a show about the SEC getting their Twitter account hacked than we have on the day of an actual approval. Did yesterday take the wind out of the sails of this entire conversation today? Certainly from a trading perspective. Travis, go ahead. Yeah. conversation today, certainly from a trading perspective. Travis, go ahead. Well, yeah, I mean, you know, you kind of took a little bit off of price. I think you took a

decent chunk out of open interest. I mean, you know, the report from Marcus at 10x Research last week was really the crazy like, you know... Matrixport. That was the Matrixport thing. Yeah. Yeah. Yeah. Matrixport. Yeah. I mean, I mean, this guy, you know, in a way did the market a big favor because it really cleared the decks and the market was quite overheated at the moment that he released this report, which was not based on anything and certainly, you know, appears to just be dead ass wrong, but caused a huge wipe in open interest and funding, reset a bunch of things from a technical perspective, just allowed everything to look a lot better. And then we kind of just got like a little miniature version, I would say, of that yesterday. And now we're kind of, you know, we're trading a little bit off the top of the range.

And I think it is going to now move into parsing through the actual inflows and then the initial inflows into the ETFs and then further parsing through how much of those are like, quote unquote, new flows versus... Yeah, people just exchanging their bitcoin for the etf like that's what blackrock people are talking about blackrock has two billion but it's two billion of people primarily who have bitcoin and are willing to basically flip it into the etf yeah yeah but people that yeah people don't really know what that like bifurcation is going to be right like? Like it's like, is a hundred percent of the, you know, people have been thrown out this 2 billion number that BlackRock has.

There's a hundred percent of that. They've already bought the Bitcoin, 80%, half of it. Is it 2 billion that they've already bought? And maybe there's another couple hundred million or half a billion of new buying that they're going to do. And then like, what are you going to get an aggregate from everybody else outside of BlackRock? And that's just a bunch of conjecture. And this is the same type of conjecture that we've been doing now for seven months in, you know, one of the slowest catalysts, probably the slowest, strangest catalyst path I've ever seen in the six years that

I've been doing crypto. I've never seen something creep. It's like the Bloomberg ETF bros have had us hanging on this thing since BlackRock filed the ETF in the second week of June. It's been the dominant news factor. And it's been incredibly supportive for prices. Prices have more or less had a complete inability to have a real pullback since the middle of June. Just look at the Bitcoin chart. We've had no real pullback since then because this catalyst has kept this market bid throughout the whole period of time. And then I think that's why you have people so quickly turning to ETH at this moment, basically. And I think people trying to use the ETF approval and BTC and the volume, the buying volume as basically exit liquidity to then shift over to the ETH ETF.

And that trade is just so straightforward. It's just an incredibly straightforward trade. And the people that I talk to that I would consider, you know, domain experts around the regulatory situations on ETH ETF say thats say that for the reason you said, for the reason that you've got ETH futures and ETH futures ETF, that that is basically going to force the SEC to approve spot ETH ETFs. And we can argue about the timing. Is it second quarter, third quarter, fourth quarter? We can argue about the timing, but you know second quarter third quarter fourth quarter um we can argue about the timing but that like uh it's it's going to happen and so there's a trade there and then you just look at the chart eth btc is at the bottom of the range it looks like you know like

google google wick off jump the creek like just google that and pull up that chart and you can see that like the and look technical analysis you know you can say whatever you want to about it but it does look like eth btc is like about to like it just started to jump the creek from a wick off perspective it looks like it's gonna absolutely rip i mean i've been posting the weekly chart literally for months but i mean it's the fourth time it's been oversold on RSI on the weekly chart, which, uh, you know, a lot, a lot of people use it. So they get support. Uh, it's got bullish divergence, everything, like you said, and then you get this sort of event, uh, yesterday where it's surprisingly quote unquote moves up, but now you also have a bullish engulfing weekly candle potentially. But, but yeah, I think in all of that aligns, uh, I don't want to butcher your

name. Is it Omid or, uh, Omid? Go ahead. Omid is good. Yeah, perfect. I'll take it. Just some interesting historical perspective on new Bitcoin related products being approved. I remember vividly in 2017, if you call that rally towards the end, was really fueled by the announcement that we would get the CME futures. And remarkably, the opening print on those futures was the all-time high for something like two years. And then again, in the last bull cycle, the Bitto ETF was approved. I'm pretty sure it made its high within a day or two of starting trading. Bitcoin itself, I think, made another higher high, like maybe five, 10 percent higher later. But the ETF itself didn't because of the vagaries of the changing shape of the futures curve.

So who knows if it will repeat again, but there is precedence on Bitcoin related products topping out as soon as they launch because the market so anticipated them. Yeah, I would definitely strongly argue that that's apples to oranges, though, in my opinion. Two very different points in the cycle. I mean, I think in December of 17, when they launched Bitcoin futures, correct me if I'm wrong, but I think Bitcoin was up like 13x year to date at that point and when BIDO was launched in November of 2021, that was the exact time that PAL came on and said it's time to retire the word transitory and then embarked on the most rapid tightening campaign I believe ever. So it's just a different point. We've never actually seen a market where there's been a major institutional player come in at the beginning or a structural shift happen at the beginning. They always happen at the peak of exuberance, be it, you know, a large company taking a position or a country like El Salvador making an announcement or the launch of an ETF,

it always happens at the very peak of a market. This is the first time that we have potentially the opportunity to see what happens when a structural shift and particularly an institutional structural shift happens to precipitate a bull market. And so it not only is a new experience in terms of where this is happening in the market, but it could change the shape of the way the bull plays out entirely. It could lengthen it. It could reduce its volatility. And I think as a result, we need to think when, you know, if you're looking to take a position or to trade, there may be an advantage now to thinking about things more through the eyes of an investor than through the eyes of a trader. Up until now, crypto has been very much a trader's market because volatility has been high and it's been led by retail.

But with an ETF, a U.S. ETF, there's going to be far more influence for institutional, longer term and high net worth individuals. And that generally pushes the market more towards wealth preservation rather than highly speculative trading. And that changes the shape of behavior in the market. Completely agree with that. Completely. I mean, the emergence of a liquid options market around Bitcoin is likely going to fundamentally and drastically change volatility for Bitcoin. I mean, the ability to buy puts and sell covered calls

and the magnitude of size that that will likely be occurring in is just going to change it forever and probably pretty quickly. Yeah. And I think people are probably underestimating how much we're going to start seeing the same kinds of pinning that we've seen in S&P 500 volatility because of the excessive use of the options market for short-term exposures that's going to impact how we see pricing around strike levels there's no question uh john i'll ask you another question scott do you remember the numbers of the expectations for inflows for the etf i think it was like 200 million. Yeah, it changes every day. It changes every day.

They were very muted until about a week and a half ago. I think a lot of people were cautioning that it wouldn't be as successful as Biddo, which was the most successful of all time at a billion in roughly 48 hours. I think, Balchunas, those guys were saying a couple hundred million across all products. But then Matthew Siegel kind of dropped that bomb on spaces last week from VanEck saying that BlackRock had $2 billion lined up. And then we saw Bitwise already has $200 million. VanEck, people are proposing, has that much. So I think we're going to see a few billion. billion but you talked about the i think in your show i was listening to your show earlier and you talked about um the previous record was like what five billion in the first 12 months dave you you actually i think were the one who said it on my show it was you and matt we were talking so talk

yeah talk about what the yeah when the queues launched in 2000 i mean it was it was a billion in a day and a half and it was i think a week or two till we got to the five billion mark. It was quite quick. But I think that misses the point when we've got 28 billion trapped in GBTC. Right. I think we have to be thinking about this from an ecosystem perspective. And I will tell you, the issuers I've talked to who have money lined up, most of that money is coming from institutional players who are getting out of GBTC and remapping their exposure to something that's going to be cheaper. So that's not net new money into Bitcoin necessarily. But also, Dave, when we talk about... Grayscale is going to waive the fees, reduce or waive the fees entirely for big holders. They've got the ability to do that on an individual by individual basis. Sure, so that they don't get sued because people are trapped with cap gains. But I think there's no question there's still going to be net redemption out of GBTC. I could be wrong, but I don't think GBTC gets another $5 billion when this starts trading. Yeah, I think they're expected to go backwards. But Dave, I mean, to your point before,

when the Qs launched, yeah, they got to $5 billion, but it didn't go to $50 or $100. The numbers people are throwing out for this. And that was an asset class that's many magnitudes larger than Bitcoin, right? Right. Now, the counter to that is, look, the ETF market is very large, in particular, the advisor space. I mean, the number one asset gathering ETF last year until the last week of the year was JEPI from JP Morgan, which is a pretty boring fund, but that's the power of advisors throwing. And they pulled in $28 billion. That's real money. So could that happen? Absolutely. It requires people to start allocating, not trading,

but really allocating in those kind of advised accounts. That's going to take time. That is not going to be day one trades, right? So, I mean, we're talking to advisors on Friday about this, and then they're going to go to investment committees, and then they're going to come back in Q2 and make a decision. This is not instant day one trading. Ryan, you were saying something? I think that's, I mean,

I think we covered it. I think we covered that. And did we... Yeah, which we going to mention the tax implications, which we've talked about. And did you guys, I had to jump off for a few minutes after asking my question.

I heard the first answer regarding the, I heard Dave's answer before it got dropped off, regarding the ETH ETF and the ETH trade. Did we get opinions from the rest of the panelists on the likelihood of an ETH ETF after Bitcoin and whether there should be any correlation whatsoever? I think we somewhat covered it. I think we're good on that. What time are we going to get approved today?

I think after market hours. I'm in South Africa and the problem is that if it gets approved at 12 o'clock at night, I'm going to be up till six in the morning or seven in the morning waiting for you guys. So I need to know what time. Just give us, give us, give us. So I have a wake up number. I'll probably give it to you and Scott, if you guys don't have it for my team to wake me up.

There's like a new wall breaking down. You don't have a wife. And the problem is that if you have a wife, then the next morning you won't have a wife. But what happened to your pillow that vibrates? Do you still have that one? We could do the exchange. I do have that.

I do have that. I'm not even allowed to sleep with my phone on because my wife is so scared of the radiation that the Wi-Fi brings next to my head. And you want me to leave it on with a wake-up number? Okay, man. I'm not going to fire her. I'm not going to fire her. Well, it's your problem then. Me and Scott will be talking about it

while you sleep and miss the trade of the lifetime. I think it's going to come around 5 p.m., 4 to 5 p.m., but it would be a pretty big shock if they do it before market, you know, during market hours and allow sort of that volatility for no apparent reason. I think they'll do it while the market's closed. I mean, especially after yesterday's train wreck. Yeah. For anyone listening, it doesn't know when that is, 4 to 5 p.m.

So right now EST is what, 11, 12? About 11. It's 11 a.m. 11. Yeah, 11. So we're looking at five hours from now. So cool. It's going to be a.m. 11. Yeah, 11. So we're looking at five hours from now. So cool. It's going to be a long night for me.

I do think it's like with what people are talking about with inflows lined up at this point. And, you know, you can bifurcate between whether or not the Bitcoin's already been bought versus, you know, you actually have to go buy the Bitcoin. And that will make a difference. But I think having like billions of dollars already lined up seems to me like it mostly takes off the table that Bitcoin is going to do like a big puke in the first couple of days. It could trade sideways.

We could do another Darth Maul and then maybe we could like leak a little lower. But like the idea that we're going to do like a down 15, 20% in the first week, which I think was my thesis. I think that was on the table until I heard that BlackRock had 2 billion out of the gate. And even if they don't have to buy another single dollar of additional Bitcoin, cause they've already bought it all. Just the headline numbers there, to me, seem like they're going to be big enough that it's going to take off the table like a big puke.

But isn't it, I think... Right, right, but just before you talk, I will ask you a question as you give your thesis. Can we even give a thesis when we have no idea what the inflows are going to be? Like, the market direction is going to be purely dependent on the inflows after the approval and nothing else that isn't that fair the approval doesn't matter anymore just the it's not just the inflows it's going to be the inflows and then parsing

through how much of those inflows are new buying versus bitcoin that's already been bought yeah and that's what's going to make the difference so look, I agree with Travis on the part that I don't think there's going to... There might be a puke because people are just exiting the ETF approval trade, etc. Then you've got 11 of the strongest institutions in the world all putting their sales team with one objective, become the biggest Bitcoin ETF or one or two or three as quickly as possible so that you remain in the race because there's no space for this many ETFs. Now, here's the interesting part.

Up until now, we've had a certain amount of money in crypto, and it's a very limited amount of money in crypto. And the reason why it's been limited is because of operation choke point. It's very hard to get money on the ecosystem. And if you look at the number of USDT in circulation, we've gone from a low of about 124, sorry, of stable coins on the market, you've gone from a low of 124 billion. And now we're at about 133 billion. So we've gone up by $9 billion. So just think about like, all this market action

that we've had from the lows, which was 124 billion, up until now has been an inflow of $9 billion. Now, when we get the, and all this money that has been, if you think about all the movement that we've had on the market, it's been a function of rotation from one ecosystem into another, plus an injection of $9 billion into the market. As soon as the ETF is approved, all of a sudden you get this new unramp because there are a lot of people who haven't been able to get money into crypto because of Chokepoint. You have this new unramp, but all of a sudden you can get new money into crypto.

All the money that comes in from the ETFs, barring the ch outflows of Grayscale into other ETFs slash the outflows of Grayscale total excluded every other bit of investment that comes into the ecosystem is new, fresh money coming into crypto. Now, if you go and do some mathematics and say, well, 9 billion of new inflows has caused this pump. And I mean, for all intents and purposes, I think we can say that $9 more billion will flow in pretty quickly. Just imagine what's about to happen. Cool. I think we've covered this enough, Scott. We're going to have another space probably in a few hours, so we should probably end this one. Not again.

What do you mean, not again? This is the ETF getting so we should probably end this one. Not again. What do you mean not again? This is the ETF getting approved. Oh, okay, yeah, not again. I left it yesterday. True. All right, so I think this is it. Anything else to cover, Scott? Ryan? I think we've covered what we know. Yeah, I think we've covered what we know. Ryan, you're going to have to

sleep in a different room. Yeah. Or not sleep. I'm going to wrap it sleep in a different room. Yeah. Or not sleep. I'm going to wrap it. Thanks, guys. Bye.