The Wolf Of All Streets - FOMC Update | FTX To Repay Users | ETF Update | Crypto Town Hall

Episode Date: February 1, 2024

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

Morning, Mario. How are you doing? Good, Scott. How are you? Can you hear me? Yeah, I can hear you. Sound good, me? How are you today, Scott? Yeah, as you know, it's been kind of a rough week, but doing pretty good today. You're speaking to me today, so things are going to only get up from here. Yeah, I know. Ran is traveling to Dubai today. Doing more good news.

Yeah, exactly. Ryan is not here. I'm here. Simon is here. William and Matthew are here. Your favorite speaker, Matthew, is here as well. That is true. He is my favorite. And Simon's here on the day that we're starting to get some actual

bankruptcy resolution, which has been his lifeblood and breath for the past seemingly years so uh i'm sure that uh yeah and simon didn't even just say the other day he said hey we'll do that update soon so maybe uh today will be a great day i think for that since it is our uh title title here uh for sure so that i'm excited to hear about that i think a lot of closure for creditors of both Celsius and FTX. Ironically, Simon, I think it's kind of interesting that because it dragged on so much and the market got so much better, it actually, even with all the fees, probably ended up a more favorable outcome,

right? Well, that depends if you value your wealth in crypto or fiat. So it's a bit of a scam, really. Well, it's a huge scam if you value it in crypto, obviously. I mean, as people might not know, but FTX creditors are getting the headline, right? Full payback, but it's full payback in dollars based on the value of your crypto when they declared bankruptcy, which is like $16,000 Bitcoin or something, right?

Yes. Or $16,000 Bitcoin or something, right? Yes. It was $16,000 Bitcoin when they declared bankruptcy? Yeah, because remember, they crashed the market. I mean, that was literally the bottom. It was sub 20. I don't know the exact number. I don't want to quote it wrong, but yeah. So yeah, you're getting paid back in quote unquote full

based on the value then. But I will say, you know, listen, everyone knows at this point, it was a Voyager and a Voyager creditor, and we got paid 30% of the value from July, right? So this is three times better than that. And then Voyager, of course, liquidated all their assets on every possible market dip.

So it was- Maybe, maybe Zach, Zach, you were kind of, we covered it very briefly yesterday because the news broke while we were on the space. But can you give us a general overview of the news yesterday from FTX, liquidating their investments, both crypto, which we saw in the first week of the ETF, we saw them dump a lot of their grayscale position and private market positions, right? They had this AI investment that did incredibly well, which is largely responsible for how they're able to make creditors whole. And, you know, they're taking a snapshot of the value of depositors assets as of the bankruptcy,

which was the bottom of the market. And they're making people whole as of that time. Yeah. When you look at that investment, of course, Solana up massively and they were able to actually convert GBTC from a discount to the actual value, net asset value when that closed. We saw very quickly that FTX had sold a billion dollars in GBTC. And that's a huge part of that as well. Just really speaks to, I guess, the difference between what lawyers and entities you have controlling the bankruptcy and then just sheer timing. Go ahead, Simon. Yeah, this really cannot be framed as good news.

I need to help everyone understand the severity of the scam. So imagine you have Bitcoin at FTX. They lock you in at the bottom of the market and say, now you don't have any Bitcoin, you have a dollar claim. So if you had a Bitcoin, you're now entitled to $17,000. Right. So Bitcoin goes up and then they can sell some of those Bitcoins and pay you back $17,000. In that process, the lawyers spend between $350 million and a billion dollars of creditors' money, client funds. So they're doing exactly what SBF does, but legally, because the US government has signed off that this is legal to spend client money.

And then any upside that your money was used in order to purchase is given to shareholders. And so the next subordinated creditor in line is actually probably the IRS. So the U.S. I'm sorry, nothing's being given to shareholders. Shareholders are going zero. Well, it depends if there's what's what's in between. So it goes, once you go to 100%, it goes to the next subordinated class. And then eventually it will get to shareholders if there's no other creditor class in between, depending on how high the assets go. Yeah, I don't, I wouldn't expect to see the shareholders of FTX receiving a penny here.

Well, yeah, but that would be if the IRS comes in the middle and takes the rest, right? Who's in between shareholders and creditors? If in the event that they try and pay out shareholders, I would expect serious lawsuits from the creditors. Which will come, but it's completely legal because they've already said that there's a bunch of different classes and the shareholders are going to be in the queue. It's bankruptcy code. It's law. It doesn't matter what the creditors want to sue for. That's actual bankruptcy code. That's the foundation of how

company debt structures work. The bankruptcy process is just a scam in general, Simon. I mean, I obviously agree with you. I'm just thinking maybe it's because I'm scarred by my own process, but I'm thinking relative to what the outcome could have been. In that regard, it's good news for the people who are getting back more than they would have. It doesn't mean that they're getting back what they should. What you wanted was your assets, because then you can have the whole upside rather than giving the upside to the next subordinated class. Even in Voyager, you got your 30% in kind. So you can't. Yeah, to Zach's point, I think you are speaking on behalf of the majority, Simon.

But what Zach said is, you know, it depends on what assets you are holding. I'm sure there are. I could be wrong, but I'm sure there's plenty of coins on there that are down. It's just that the bulk of it is Bitcoin, Ethereum, Solana, presumably. Right, Zach? I mean, that's what you're saying. Yeah. But there's also, I think, a lot of stables on there, right?

And so people who had money sitting there in stablecoins, they're going to get 100% of that back. Yeah, it just blows my mind. Once again, this is from my own personal experience. But the two guys who are the outright frauds, SPF and Shinsky, their creditors ended up with a better result than the Voyager bankruptcy case where Steve Ehrlich is happily sitting somewhere. I won't say happily, but still in his house, living his life with no sort of claim against him. All he did is give a really, really terrible loan, presumably.

For sure. And one thing you could say about that, I'm not sure that I'm endorsing this, but look, all the money they spent on these top flight lawyers and fiduciaries to make sure they could claw back as much money as possible, maybe some of that was money well spent because they had this result. Some of it was definitely done- For FTX and Celtics. Yeah, I agree. That's what I was saying. It really depends on the entity and the lawyers that you had. I mean, if you look at the Voyager committee, they approved deals with both Binance and FTX that fell through that were, you know, you're talking about nine, 10 figure, whatever deals, eight, nine figure deals that was spent just to do those and have them completely fall through.

They could have liquidated assets on day one and people would have gotten what Celsius is getting now after all this, right? 75% to 77%. No. So again, the headlines are so misleading. So today in Celsius, they just released the final numbers. They still managed to make another 600 million disappear from the balance sheet relative to the plan that was actually approved, like just a little rounding error of 600 million. And again, if you get out before 100%, you are significantly better off than if you get out above 100%. So this is not good. This is giving your assets that your money was used to purchase to somebody else, even though it was your assets. And so, again, it's the illusion of thinking in the face to creditors to be framed in that way. Because if you, again, if you got 34% of the value of our assets in July of that year, which have doubled. So effectively, based on current portfolio value of your theoretical assets, which is what you're talking about, having the upside, we got 15% back, 17%. Yeah, but remember, with Voyager, it was just crypto.

There was crypto and a loan. With FTX, the client money was used to make all sorts of YOLOs and VC investments and all sorts of things and buy property in Bahamas and all sorts of stuff. All of that should be for the benefit of creditors to make up for their crypto loss if they got out before 100%. But the fact that the bankruptcy are using it to settle with all creditors and say, you get that much less of your crypto as long as you agree that this is a settlement, and then we'll give the upside to everybody else. It's not good news. And no political clawbacks. Exactly. We know a lot of that money disappeared magically into the ether of the politicians' hands

and has not been demanded back. Go ahead, Dave. So first, I want to say something that I almost never say, which is I 100% agree with Simon. The thing that's really fascinating about this, and no one's talking about it, but if we actually had a regulatory regime, you know, around, you know, in the developed markets, whether the US, Europe, et cetera, where it was remotely close to what people think should be, then what would have happened instead of it being in bankruptcy law is client assets

would be a client claim on assets. So like when if a broker goes bankrupt, I mean, you're virtually it's almost impossible to lose your equity. So let's say you own, you know, the BlackRock ETF and you bought it through Schwab and let's say something horrible happens and Schwab goes bankrupt. I mean, it seems virtually impossible, but it could. Those shares are held in street name and honestly would be ring-fenced away from the bankruptcy court. Now, in this particular case, the fact is those assets were stolen, and so it would have to be looked at as what was stolen.

But the simple fact is that a regulatory regime where client assets were ring-fenced would stop this from happening. And the fact that the SEC and Elizabeth Warren and so many other people in the United States have been so anti-regulating crypto because they don't want to legitimize it, the fact is one of the first things you get by an actual regulatory regime is ring fencing of client assets. And that's pretty close to as bipartisan and hard to argue with as possible. But nobody's pointing it out. So Simon's point that people who owned, you know, look, I owned some too. So, you know, Bitcoin, Ether, whatever, are getting screwed in favor of the people who own stables or have dollar-based things is absolutely accurate.

But it's important to understand that in a proper regulatory regime, this wouldn't happen. Yeah, so important what Dave just said. So think about this. The terms of service in FTX, when you deposited at that exchange, SBF had no right to touch that money or Alameda had no right to touch it. And that should have been custody. Now, in the other bankruptcy cases, like BlockFi, Celsius, and Voyager, there were segregated parts that were set up. So we had two settlements. We had those that had funds in custody because

the regulators basically came after Mijinski and he set up a custody service because he didn't have the license to do it. People got a much, much higher recovery from the other creditors. Now, in the FTX case, this all should have been custody, which meant that if the lawyers were doing their job, they would have argued that this is property of the estate and therefore it should return to them as the property that they received that was used with those funds. And then all of the upside would have gone to creditors. did instead is they found a way of getting out of bankruptcy faster, making people feel good because the price of Bitcoin went up, and then we can make them feel 100% whole. And then we can give the rest to the next subordinated class. And if the regulators had actually defined this as custody, which it was by terms of service, and the lawyers had actually argued what was the case in

other cases, rather than just letting them get away with this, then it would have been a completely different outcome. And they're just trying to buy you off because they know that. They know that if that gets figured out, then everyone would just take their money and run and settle. That's what's happening here. Absolutely. Fred? Yeah. Hi, everyone. I just wanted to add two things, which is I half agree with Simon. It's a total slap in the face to creditors, but it's a huge hug in the chest for the attorneys that were raking in fees over this entire thing. And, you know, that's just the way the bankruptcy code is set up in the U.S. I mean, it's written into the law that attorneys get paid first. But what's more important, I think, and I don't know if you all covered it earlier, either last week, but this whole news story about FTX being made whole or creditors being made whole comes on the heels of an appellate court reversing the bankruptcy judge saying, hey, when you decided that all the good old boys that were appointed internally on FTX to run through the numbers and make sure

everything checks out, that was totally fine. When there were tons of creditors saying, no, this needs to be independent and disinterested, the appeals court said, yeah, that's an easy call. That was one of the easier calls you make on an appeal is that you should have had a disinterested examiner go through all the numbers. And so what's going to happen there? I mean, if they're like, oh, everything's fine, bankruptcy over, creditors are going to be made whole. But you have this appeal decision that just said, no, you need to have somebody else run through the numbers and take a look. That could throw a whole wrench into everything. I'm not a bankruptcy expert, so I don't know how that's actually going to play out.

But that's a bigger wrench, I think, that people aren't talking about. Simon? Yeah, sorry. But that's also the other part of this. This is the losing battle of it. So let's say that you want to fight it. So the lawyers are spending client money legally in order to fight you. Then you have to pay the money in order to fight the lawyers that you're now paying twice. And you ain't going to win because they've got the unlimited budget of your money. And so you're

spending money that you then have to apply to get back. And those lawyers will fight against you to get your bill paid at the end of it, using your money that is in the case. So they know that. So literally, you can just get away with blind murder in these cases. And the whole process of appealing what you know to be right, will cost everybody more than the actual benefit to it. And they know that it's just such a it's such a problematic process. Totally, totally agree. James, I saw you had your hand up before. I don't know if it was about this.

Yeah, no, it's all right. I was just going to say, I was just going to quickly say, like, I agree with everyone's frustrations. But I mean, this is just this is the way it works. This is law. This is the rules of the land. I guess when you do a Chapter 11 bankruptcy, things get dollarized. And I mean, if prices went down, you would be better off now. But obviously, I tend to agree with pretty much everything everyone said here. It's just, this is the way things are done and have always been done. And there's not much we can do about it as far as I'm concerned. There is one more part to it, which is what Dave said. If the regulations had been set up correctly, then you wouldn't have a dollar claim. You'd have entitlement to your assets. And that's the situation here. And so the lawyers didn't argue that. The UCC should have argued that. Because then you would have entitlement to those assets, rather than a claim. So it's not actually just the way bankruptcy works. It's a regulatory failure as well on top. And lawyers

should be and lawyers should be arguing or should have argued for that. You can't argue for a regulatory change in court, right? No, it's not. It's not a regulatory change. It's custody. Because implementing the UCC is a regulatory change it's custody uh because implementing the ucc is a regulatory change no no there's what what we're saying here right is because it was meant to be custody now that would have been defined as custody by any normal regular financial institution but because these things were illegal banks then it relied upon the lawyers to argue terms and conditions and substance. And that was argued for the custody providers in Celsius. It wasn't argued for the custody in FTX. And so there's three sets of case law for that already in these bankruptcies, because regulators didn't actually have a qualified custodian regime for these crypto businesses,

but they argued it through law and terms. Yeah, I'm just my point is, I think that's the broader problem is we need better qualified custody rules for crypto. I mean, and it goes beyond the entitlement to assets. It's very unclear what a qualified custodian is for crypto, the normal categories of who gets to be a qualified custodian don't fit neatly into crypto because it's meant for cash and securities. We need functional regulations. And I don't remember who was saying it before. The problem is the United States government generally doesn't want to legitimize this industry. And so we don't get those regulations. But I think the real problem here is at the regulatory level more than... look, I think the liquidators in this case

did a pretty decent job calling back what they could. Obviously, this is not great. Obviously, it would be a better result to get people back the value of their Bitcoin and crypto tokens. But, you know, I think that change is really better implemented as policy. Mario, you were jumping in before. I don't know if you had something to ask yeah not about ftx can i get your permission to ask another question thanks scott james we talked about the etf yesterday um and the latest numbers as well can you just give us an overview we've got matthew here as well and dave you were in the space yesterday just give us an overview of the performance now. I think we had the first day, the outflows from,

essentially the outflows of GBTC are kind of slowing down. And we had the first or second day of net inflows this week. So maybe a quick update on the numbers. We also had one of our speakers yesterday come up. I think it was Juan from Bitwise or someone else. I think it was Juan who said that where the performance excluding GPTC puts it at the top 20, potentially top 10 best performing ETFs ever based on the numbers within this time period. So maybe you got some more insight into this. Yeah, I mean, so we're at four consecutive days of inflows now.

So for the spot Bitcoin ETFs overall in the US. But there is some offsetting data to look at. If you look at the CMA futures market, the open interest in that is down 31,000 Bitcoin. You can think of that as a 31,000 Bitcoin outflow. Then if you look internationally at crypto ETFs, both in Europe and in Canada, we're over 500 million in outflow. So it's hard to know exactly what's going on. Net net, the U.S. spot Bitcoin ETFs have taken in about 1.5 billion since they launched on January 11th. Undoubtedly a smashing success.

I mean, I've been looking at trading volumes, flows, spreads, premiums and discounts. I mean, everything is improving since January 11th. Pretty much every single day is getting better and better. The volume numbers are going down, but they're also getting more disparate. They're getting more evened out, I guess you would say. For the most part, GBTC was dominating volume, and that's not the case anymore. They are still the dominant leader for the most part, but we have iBit from BlackRock and FPTC from Fidelity that are kind of catching up. So from a traditional finance ETF specialist point of view, this has been an absolute smashing success for pretty much every single one of these issuers. We have,

what is it, eight ETFs over $100 million as it is already. And they're all trading extremely efficiently, very low spreads, very minimum premiums and discounts, like pretty much anything you would want in a successful ETF launch, you have it for eight to nine of these things. And even you could even argue for all 10 of them. Matthew, anything else to add on the performance? First, I'm not sure if you guys have the numbers on how that compares to other ETF performances. Is it in the top 20, top 10 of all time? I mean, if you take the collective newborn nine, as James and his team refers to them, it's the fastest ETFs in history to reach a billion dollars, record-breaking performance collectively. Right, James? Yeah. So, I mean, they did it in two days,

but you obviously, part of that is some of that money probably came out of GBTC in some regard. That said, even if you don't include the whole group and you just look at two of the ETFs, IBIT and FBTC, they are the fourth and fifth fastest that we've ever seen reach a billion dollars. They're nearing in on $3 billion now. We have IBIT at $2.8 billion, FBTC at $2.5 billion. And like I said, we have a total of eight of these guys over $100 million in assets. So it's likely that we'll see that they're not going to be liquidated or closing these things anytime soon, as far as I'm concerned. And the trend is right now that, as you hinted at, GBTC outflows have slowed a little bit. And so have the inflows. But for the most part, the inflows have to offset, like I said, every single day,

the inflows to the spot Bitcoin ETFs, the newborn nine has more than offset the outflows to gbtc or from gbtc yeah i'm just looking at the outflows as a chart here the outflows are the lowest outflows we've seen uh except the first day of trading by gbtc and so it's sitting at day 14 sitting at 188 million so that's uh yesterday i guess um i mean that's a good point that James makes about the open interest coming down some of the outflows from the European ETFs. But nevertheless, the net flows into these US products are now, you know, taking more than 100% of new Bitcoin supply. You know, what we don't know is how much of that is is cannibalizing kind of spot buying on Coinbase. I did see one Bitcoin OG on Twitter who tweeted that he was selling his coins in cold storage and buying the ETF for the for the convenience.

I don't know how how common decision that would be. But, you know, if this pace is continues, then Bitcoin price is going to is going to have to go up at some point because you can see the GBTC outflows are slowing. And it's encouraging that the funding rates have come down. Some of the froth has come out of the system. We didn't make it to that mid-30s level that everyone had pinpointed. Continue to see stablecoin market cap growing. That represents buying power for Bitcoin, Ethereum.

Stablecoin market caps up 10 billion in the last three months. Most of that's Tether. But I noticed a Japanese publicly traded fintech company, GMO, just announced two Solana-based stablecoins, Yen denominated and USD denominated. PayPal, I know they're getting some bad press for laying off like 10% of their workforce yesterday, but the stable coin is now 300 million outstanding, seeing good transfers on there. If there's a weak part of the market, it's Bitcoin miners, which continue to underperform on our work. They still look kind of expensive on a market cap to proven reserves ratio, at least relative to the last six months or so. And then like Ethereum and L2s, ETH made what looked like that capitulation bottom versus Bitcoin right around the launch of those ETFs.

It's since given back about half those gains. And Ethereum L2s are really underperforming. Matic just laid off 19% of their staff this morning, despite the huge, well, not huge numbers, but big growth coming out of Farcaster, the social media platform, which is built on the Optimism stack. that hasn't helped, say, OP token. So it still seems to be quite a bit of, you know, bearishness around ETH and its EVM peers. And what's your stance on an ETH ETF, James Matthew? Has that changed at all over the last couple of weeks? Nothing's changed. I mean, this is extremely unpredictable, uh, regulator who's willing to flout, uh, laws and norms to achieve political outcomes. So it's very hard to predict,

uh, what they're going to do in, in May. James, I just wanted to add, I was talking with the SEC on Monday via public litigation. We've got a case against them on whether ETH is a security or not or in the Ninth Circuit. And, you know, they can, as you said, they can change their mind tomorrow on a dime. But as of Monday, they said, we haven't made a decision on Ethereum being a security or not. We don't have to make a decision. We can do what we want when we want. So that's their official position. Again, it can change on a dime. And technically, you don't have to be a non-security to be in an ETF. But that was kind of an update as of Monday. That's awesome. That's interesting to hear, I guess I should say. I mean, I'm of the stance and I've said it on these spaces before. The SEC's positioning over the last few years is that they are not going to call ETH security.

They've allowed the CME futures for Ethereum to operate as commodities futures, which if they if they wanted to, they could have pushed for them to be securities futures, which would have given them oversight into the CME Ethereum market. They did that a couple more times with options on the CME and other futures related to Ethereum. Then they approved the Ethereum futures ETFs. So my stance is, broadly speaking, that the path of least resistance, I'm with kind of what Matt was hinting at. We have an outline here of how these things should go. If you don't miss the forest for the trees and you take a step back from a high level they probably should approve these things that said everything that red and matt just said kind of comes back and if the sec really wants to

there's ways they can probably delay this step kick this can down the road more um there is no court case in front of them um that said i do think it happens within the next two years, year to two. I would say probably it would happen by the end of 2025 at the latest in my view. So our odds, I need to write this. I need to do some more work on correlation analysis between the CME market for Ethereum and actual spot Ethereum. So I'm going to be doing that over the next week or two to really fine tune our odds. But we're probably around, we think it's more likely than not that they will be approved this year. That said, there's plenty of opportunity in ways that

Gensler and the SEC can kind of use political reasoning. And even if reasoning that won't hold up in court, it can delay things further. But overall, my view since this past summer has been the SEC is kind of like pivoting in their, their sites from being on Bitcoin and Ethereum to just basically like, I think they're going to, they're not going to wage war against Bitcoin or Ethereum. Like I hinted at, if they wage war and start to call Ethereum security, they're going to have to go against the crypto industry in some regards and

also CFTC, which I don't think they want to do necessarily. So I think the path to least resistance is likely that they'll approve these things in May. But we're only at like 60, 65% odds if I had to put a number on it. So I think if you want to understand the SEC's current posture on Ethereum, you get a pretty significant clue in Gary Gensler's statement from the Bitcoin spot ETF launch, which is, listen, we don't like this. It's bad. We had our hands tied by the courts. I think at this point, the SEC realizes it's probably a losing argument to claim that Ethereum is a security, basically for the reasons that were set out in the 2018 Hinman speech.

Courts have seemed amenable to that reasoning. The CFTC has certainly jumped on that reasoning, even though I think the CFTC is probably going to fight the SEC on stable coins and that's going to be a separate battle. But on Ethereum, I think the SEC basically has conceded as a legal matter that ETH at this point in secondary market trade is not security. The reason why Gary Gensler is so reticent to say anything about that in congressional hearings and the reason I think they are not going to roll over on this and just come out and say it absent a court ruling is that not about Ethereum itself, but they don't want

to signpost here is an SEC approved way to go from being a security to not a security. Because the minute they do that, every other token is going to try to make exactly the same argument. And, you know, it's going to make it a lot easier for them to do that. Whereas if there is a, you know, maybe sufficient decentralization is the thing, maybe it's not, maybe utility tokens are a thing, maybe it's not, that's a much better battleground for the SEC to fight the important battles it sees against Coinbase and Binance and all the tokens named in those lawsuits. And they don't want to, it just makes their life a lot harder if they come out and say, we endorse the Ethereum is able to become not a security theory.

Dave? Right, Matthew? Yeah, I was just going to say that one other thing about the potential for a spot Ethereum ETF is that if it were to be approved in the same trust structure that the spot Bitcoin ETFs were approved, we don't see any way to pass along staking rewards to the end buyer. So it's probably a less attractive product for the end user. So before, that's actually a really important point, but I wanted to go back to some math. So I'm sitting here looking at my CoinRoute screen. And one of the things that is unarguable post Bitcoin ETF, there have been a few effects. We were talking about the CME. The actual correlation of the CME futures to spot has gone dramatically higher since the ETF. Now, why is that true? It's true because the volatility

of the spread from spot Bitcoin to spot futures has dropped dramatically. It used to be, I mean, literally the week, two weeks, three weeks before the Bitcoin ETF, you would see movement from somewhere around, well, it depends on the day because it's a fixed point in time, but you would normally see, you could have 100 basis points in variance of how the spot, how that that that spread would move. Today, there's there's 12 basis points in variance. It's literally not quite an order of magnitude, but on average, about half an order of magnitude less variance in the spread. That is extraordinarily meaningful. And that is incredibly bad for Gensler's case, because effectively, the Bitcoin ETF, by normalizing the way markets work,

creating less speculation in the future as people doing it in the ETF, etc., means that it becomes a lower volatility instrument, which is literally the opposite of what he was hoping to see. It means that when you go to court and you want to argue on the Ethereum ETF, it's like, well, wait a minute. Last time we did this, this is what happened. So yeah, it might very well be that the Ether ETF doesn't have quite the correlation because of the speculative flows. But the absolute reality is that it's very conclusive that allowing ETFs will allow that futures product to be less of a speculative vehicle and create less disruption. So that's really important from the perspective.

It's also, just for Mario, because he always likes to know these things, the fact is one of the best signs for an impending bull market is low volatility and less speculation because generally when there's more speculative froth, that's when you think you're topping. In this trading range where we are, we are seeing a spring being coiled is all I will say, and that's worth the discussion for another day. But I just wanted to make the point for the lawyers, look at that difference in correlation, and I'm quite confident that that's going to continue. And I think that's going to end up in courtroom arguments as well. James? Yeah, I mean, so I that what Dave just said, I haven't actually looked at it. I need one of the things I want to look at. So I'm fascinated.

I can't wait to go actually look at the numbers because I'm a bit of as 2020 was, look, trust the ETF wrapper in the ecosystem around the ETF more than you distrust crypto and DeFi, which is kind of just same judges in a very similar situation after getting his hand slapped pretty hard by that same DC circuit court. And just try to argue like little minutiae differences between the way that the CME market works versus the Bitcoin CME market and these other things. Like it depends, like does how politically motivated is this? Is Gary going to be okay taking another loss in court? Or is it just easier to be like, all right, we know how this is going to play out. And I'm just going to, I'm just, we're just going to approve these things. I tend to lean towards the second part because it just really is not a good look to take those losses in court. Like he doesn't want to talk about it in interviews. He says, we're going to

listen to the courts. You can see it in his voice. It's not something he really wants to do. So that's why I go back. I'm probably never going to be below 50% unless we see some serious changes. But we'll also have more information based on what the SEC is doing in the coming month or two. There's going to have to be some comments that come back in the next two months if these things have any shot of getting approved in May. And that said, one thing that we were talking about with Bitcoin is these things could get approved in May and there could be a gap between when they actually list, which wasn't the case with the Bitcoin ETFs, but theoretically still could be a case for spot ETH ETFs. So there's another way that they can kind of kick the can down the road. So there's a bunch of options that

the SEC has at their disposal. Anyone saying they know exactly what they're going to do is lying to themselves, in my opinion. So, James, I think for the reason you just said, Gensler's not going to want to fight the correlation argument or the market surveillance fight. Like, I think that one is, you know, that one's lost. I think there are two differences with the ETF. One is what we already talked about on the securities law side. I think we've covered that pretty well. But then there's this third difference, which I honestly don't know how good a legal argument this would be for a rejection. But I think it's practically important, which is the difference between a proof of stake asset and a proof of work asset. And I think there are all sorts of

question marks about governance on the Ethereum network if you were to have huge inflows to spot ETFs, where overwhelmingly it's going to be custodied by Coinbase and overwhelmingly it's going to be within this ETF wrapper from a small number of issuers. And what decisions those parties get to make or the people who hold the shares of the ETF, and then what to do about staking or staking rewards. Are these things going to be yield bearing instruments? You could do that through an ETF, but that gets weird. And are the dividends in kind? Are they reinvested and held by the ETF? I think there are just many more sort of practical questions around ETF wrappers for a proof of stake instrument that the SEC,

I think, could theoretically use to draw a distinction between this and the situation with the Bitcoin spot ETFs. I think that all makes perfect sense. I like what James said last, which is that nobody can tell you with any conviction what's going to happen here, which I think makes reasonably handicapping it in the 60, 65% to make a lot of sense. I wish we still had Mario. I wish we still had Simon here because we didn't really dig into the Celsius bankruptcy. But, you know, I guess we can do that on another day.

Anybody else have any thoughts here on the... Maybe on the... Yeah. No, no, maybe if anyone could give a quick recap of the fomc meeting uh yesterday as well um i know there's nothing too exciting it would be good to give a very brief overview i've got here i just opened it up um our guy the kobasi letter should have invited him give a quick summary i'll read out a summary and anyone wants to add to it be a good final point to discuss before wrapping up the show. So Fed leaves rate unchanged. That's

the fourth meeting they leave it unchanged. They do not expect to cut rates until, quote, greater confidence inflation is moving to 2%. So I'm not sure whether that means that structurally high inflation is not a thing and we're being too hopeful. Number three, highly attentive, in quotes, to inflation risks with economic uncertainty. Number four, job gains have moderated but remain strong. Number five, job gains have moderated but remain strong. Number five, upcoming policy will be based on incoming data. Six, Fed sees evolving outlook while balancing risks. So essentially what Kobasi is asking there,

are they backtracking on their pivot? I'm not sure. I think everyone's got different perspectives on it. Scott, have you gone through that? Were you listening to the meeting yesterday? No, I was obviously predisposed. So, you know, the meeting, from my very brief understanding, and Dave, we talk about this like every Monday,

what's going to happen was exactly what we said we thought would happen, which is that, you know, they would not obviously raise or reduce rates. They would pause, continue to pause, but that Powell would be less dovish than everyone expected. There's literally no reason in my mind that they would pivot now. If everything's as healthy as they say, why wouldn't they just keep it at this level and remain delayed? So I think the fact that the market was expecting three cuts last year and a March cut, which is now being moved to a May cut, I just think they're going to keep doing

nothing. What do I? Your thoughts on the whole narrative of structurally higher inflation, just accepting that inflation will not hit 2%. Do you think it's a possibility? And did the speech give any indication of that? I'm not sure, David, if you listened to the speech, but maybe Scott, do you think it's a possibility anything's possible there's a lot of people much smarter than me who think that that is viable but i don't think that that's what they're saying i mean i think they're saying we want to get this to two percent and that's why i don't think they're going to cut dave you might i didn't listen to the entire speech i mean dave did you give it a more thorough list i mean look the words they're using are what you would expect them to do. I mean,

the market is basically pricing, you know, the one month, the six months is down like a quarter. So, and that sounds right. I mean, my thesis for all year, I have no reason to believe it's changed is they're going to do everything they can to go from restrictive to neutral as the general election gets swinging. And that's more or less what the market is saying. It's not surprising. All of that is true. The real question, and it is the question, is, is there something in the system that's going to break? Because it's not the stock market that they care about. What they care about is the banking system. And so that's the issue. Will there be something that's breaking?

Is the potential, I was reading this morning, the thought process of $1.2 trillion in unrealized losses in commercial real estate something they're going to need to paper over? That's really the question. Because at the end of the day, they care more about preserving the integrity of the system than anything else. They won't say that. That's not their mandate, but that is how they do. So, you know, we talk about it with James all the time. The second message is they need to manage the long end down. They just need it to be this way. So today, you know, they're happy to see the long bond, you know, up almost a point and the yield down, you know, three quarters

of a point, you know, it's a percentage of a point. The fact is, that's what they need. So none of this is surprising. You know, it's all kind of, you know, William Faulkner, sound and fury signifying nothing. I mean, anyone who thinks that anything changed yesterday, you know, they're crazy. Matthew? Yeah, Dave, those are good points. Like they've got a very blunt tool. The Fed has a very blunt tool with these interest rates. And there's very different things going on in the economy. I posted something on X yesterday. It was two charts that both go back 50 years. And one was the average rate that Americans are paying on their credit cards. It's at an all time high. And the second chart was the average interest rate that U.S. corporates

are paying on their liabilities. And that is an all time low. So nothing is bad enough to have the Fed change their blunt tool usage right now. But there is likely to be, I think, per Dave's comment there, like something will blow up. You had it yesterday with New York Community Bank overnight, a Japanese bank, Aozora, announced a huge loss from US commercial real estate. If that part of the economy gets to be enough of a problem, they're going to end up directing that blunt tool or more specialty liquidity mechanisms in order to stem that. And that's when Bitcoin will react, I think. James?

Yeah. I mean, when you look at interest rates, the argument for why people think they should cut is essentially that inflation is coming down, like all the numbers are showing it down. And nominal interest rates are the real interest rate plus inflation, right? So essentially, because inflation is coming down, their policy is technically becoming more and more restrictive, right? And they don't necessarily, we keep hearing about a soft landing, that's the ultimate goal. So this is like a little bit out of my realm of expertise,

to say the least. But I sit next to our rate strategists, and they've been calling more for a May, June, July cut, and they were against any mention of a March cut. So it's not a done deal yet, but they've been, they've been on that bandwagon for a while now. And I tend to just listen to them because they've been more right than they've been wrong. Um, but yeah, that, that, the argument for why people thought they should cut earlier is, is basically because their rates are de facto becoming more restrictive as inflation goes up. But as everyone else said, things are looking pretty good right now based on pretty much any economic metric you use.

Obviously you can, you pick, pick and point at like many different things here and there, but for the most part in the aggregate, things are looking pretty good. And I think Powell is just going to keep waiting to see when he really has to do something, but ultimately he,

there, there are going to be cuts in the next few months. Yeah, there will be to be cuts in the next few months. Yeah, there will be eventually. William? I just want to make one observation on where we are with the Bitcoin ETF. One number I'm keeping in mind is that right now it's about sitting at 3% of the total Bitcoin cap. And traditionally, ETFs take on about 14% of the segment that they are participating in.

So what we need to look at is how long would it take for the Bitcoin ETFs to reach that 14% equilibrium or average, let's say. And that means there is another $100 billion potentially out there or about 2.2 million Bitcoins to get there. So that's the question now is how long will it take to reach that number? That's what we should look at is the growth of the ETF shares of the total market. Cool. I think we've covered everything. Yeah, we did. It's been a slow part of the cycle, but I'm one of the few people. We're being slow.

I just find it really interesting still to talk about the ETF, so I'm happy. I don't know how it's low. We've got ETF inflows. We've got an FOMC meeting yesterday. We have FTX saying they're going to repay all customers. We had XRP. Some people say XRP was hacked, which it wasn't hacked, but we had the, I think one of the founders or the executives or the CEO.

Yeah, Chris Larson. Got his wallet hacked. Oh, Chris. I don't know. It was Chris. Got his wallet hacked. So I don't know how that's a slow day because the market's not going crazy. I guess it's because I don't get the it was Chris, got his wallet hacked. So I don't know how that's a slow day just because the market's not going crazy. I guess it's because I don't get the adrenaline pump

from like the huge, oh my God, kind of news. I know you love talking about BitBoy. BitBoy stopped his show. I saw it in our back channel. Let me go back to our back channel. Yeah, I mean, I have a no BitBoy policy, but in this case, I'll crack one with you. I actually, I was surprised by it.

I don't really know the details, but I saw that he was winding down his show, which obviously is the new show because he lost control of the original company. I'm really surprised. There was one thing that struck me that I think is worth talking about. He said it was costing him, I think,

$25,000 a week to produce the show. I'm like, bro, I could produce a show for like five years with $25,000. Just turn your camera dude like you're good i know free that's what surprised me that's why i wanted to bring it up because he said so he said he's spending a hundred thousand dollars a week or a month in legal fees let me see how do you a hundred thousand a week on producing his show and i'm like dude like i'm in i'm literally i do it in my house i have a desk i just put on some lights behind me i'm like dude like i'm in my i'm literally i do it in my house i have a desk i put on some lights behind me i'm not saying the quality is so high but like

yeah i think he could still make a show happen where anyone could on an exceptionally low budget but do you think this is i've seen this apparently he said the 10 minute video has gone to 18 000 views we've got lawyers coming out let me have a look at his channel but i'm just curious in something like me and you are interested in because we're in a media game. But I'm just looking here on his views. So if you go to his videos, it's seeing the one 14 hours ago, 45,000 views.

A day ago, 25,000, 11,000, 3,000. The number is not bad. That's a very viable business. I think the question is probably if he's been, and I have nothing against Ben at all, to be very clear. We're just speaking of this as third, you know, from a third party perspective. I wonder if he just can't get sponsors because of all the volatility of the past, you know, few months for him. That's a very good point.

Maybe there's no path to profitability. There might just not be a path to profitability. Volatility is a very kind way to put that. I speak kindly of people, Zach. What can I say? It's just between me and you, Scott. Let me mute the audience. Okay, the audience can't hear us anymore.

How's his reputation now? Because I'm not too deep in the space as I was a year and a half ago. Has it improved since that fallout with the BitBoy brand or has it gotten worse? I don't think so um you know and that's just anecdotally from an outside perspective but i think that uh you know people probably struggle unless it's his core audience to you know view him as what he was uh before quite a few of these things happened this would have been good i will say i will say he sent one of the most legendary tweets in history.

Not, not that I'm praising this, but I believe he sent a tweet unimaginable to most human beings where he announced that he was divorced, getting his wife was divorcing him and tagged her. And then also tagged his mistress in the same tweet said he was going to remain with her, which I thought was pretty wild.

Holy shit, man. Okay, so I didn't know about that. Also, so for a person who doesn't want to talk about BitBoy, you seem to be following a lot of the news there. It's impossible to avoid. Plus, you've got your feed is all crypto. isn't it wasn't there as well um a um we had his mistress on one of our shows by the way i think when we were talking about his fallout um cassie yeah she i think she was one of our spaces but the the um it wasn't there also a bit of back and forth with him and ran something about children in thailand something like or traffic child traffic or something uh

god okay did you see that one yeah he tweeted something to the effect that ran was like the head of a child trafficking union i can't make this shit up but what james are you sure you're putting your hand up on this topic you're more than welcome to chip in i just wanted to comment on what will said about um about that ship has sailed that ship has sailed what what do you know about about 1.5 about just under two percent of the above ground gold so it's it that's where we're so we're bitcoin etfs are already above that cool i think this is it in terms of news by the way i just uh the people one was just too So Bitcoin ETFs are already above that. Cool. I think this is it in terms of news, by the way. The Pitbull one was just too interesting.

The rest was ETF-focused as we're going through our group. There's obviously the FTX news. And let me see if there's anything else we missed. We talked about Binance briefly. Zach, in terms of CZ, did you check when we'd be able to know when the hearing is? No, I don't know the exact date on that. Okay. I think someone said it was in March.

So we have Binance is sued by families of Hamas victims. Oh, yeah, my team tweeted about it. So Binance was actually sued, Binance, and I think it was two other countries. I can't remember. They were sued by families of Hamas victims. Apparently, Hamas used Binance to get to get some funding to get some donations wasn't a big amount but that's the allegation there but I think this is it so the news and we talked about Jupiter yesterday

Scott I'm not sure if you listen it was like a big airdrop of a dex like the planet it's got a really big red spot on it it's very interesting actually we want to my team was actually asking me yesterday if I connect him to Jupiter they couldn't reach out to them if anyone knows Jupiter they're the de decks that launched on Solana, please hit me up.

I would love an introduction. But otherwise, I think this is it. We can wrap the show, and we'll see everyone tomorrow. All right, guys. See you tomorrow. Thanks. Bye, everyone.