The Wolf Of All Streets - The ETH ETF Launches Next Week! | Crypto Town Hall

Episode Date: June 26, 2024

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Good morning, everyone. Hope you're all having a wonderful Wednesday. Pretty much just me again, I think, because both Mario and Ran are on the set of Killer Whales, the Shark Tank of Crypto being filmed, Killer Whales Season 2 being filmed in the Batcave. I think they did it in the Batcave from the last Batman movies, if you guys saw the recent ones. To be honest, Batman, a lot more entertaining than that show. So they should probably find a new set. Just kidding. But you guys see I'm setting the tone for all guests to mock Mario and Ran relentlessly on this show while they're not here to defend themselves. So, um, in fact, I might take comments from the audience, uh, and bring you guys up later. If you would like to say negative things about either Mario or Ren,

just kidding. We love them. Uh, killer whales. It's like, it's going to be an awesome show. I know Scaramucci is out there. I know George,

they all point daily guys. Wendy. Oh, I think all of them, uh, participating. I hope, uh,

for the sake of crypto, that that becomes very, very popular. But here we are on Town Hall. FTX repayment vote. Gensler hurts Biden. BTC reversal. I think first maybe we can dig into the market side, which is the quote unquote BTC reversal. A lot of people, I think, were kind of watching that 60,000 area for reaction and got it.

Bitcoin dropped as low as about 58,500 or so two days ago, then bounced and sort of got back into the bottom of that trading range it's been in. I still take the position that this is the fully expected, utterly boring summer doldrums that we see in every halving cycle. But people seem to have their own takes on that. I think that maybe the bull market's over. I've heard a lot of different opinions on this. Lou, man, you've been here a long time. Anything that's happening in the market right now, concern or even on your radar at the moment i have to imagine that you're in the it's all fine camp yes uh thanks for having me scott yeah i mean it's totally all fine um you know the we all knew that eventually the mount gox bitcoin uh were going to come and

you know so that's not new news and yeah everything is that's going on in the world the reasons that we're all here are just getting more important and more important every day i agree and to me i just don't see that maybe this is a blind spot or an echo chamber right now for crypto looking at it zoomed out in it's of 2024, I would say I would have expected major antagonism from the United States government, still narratives of terrible regulatory uncertainty. Shoot, if we go back six to seven months, we would have said we wouldn't even have a spot ETF. I see nothing but tailwinds right now for this space, right? Bitcoin is becoming a political issue largely

politically popular with the voting base we have a cooling of regulation we have an ethereum spot etf launching next week like where are the bearish signals for crypto right now i completely agree with you i mean you know the there are some challenges obviously when we're down at this price you know we're seeing a very high level of selling from all of the miners because they're barely covering their costs if doing that at this price with the admin. And so there are definitely some things that are creating additional sell pressure. But the buying pressure is just going to continue to build and build. Yeah, the miner selling. We talk about the summer doldrums and the halving cycle and what happens every single

four years, anyone who's paid any attention knew that miners would be selling three months after the halving or two months after the halving. And that that's part of the cycle. And part of the reason we have these summer doldrums and sort of this down boring part of the cycle, right? I mean, miners are- Exactly. To be insolvent, they need to get liquid to survive until prices go parabolic, they hope, obviously, right? If they stay down too long, then they die.

It's kind of the natural calling that comes with the Bitcoin cycle, one of the beauties of the network and mining and the way that it works. But that's not a breaking story that miners are selling two months after the halving to remain solvent. Exactly. Yeah. And one of the things people realize, you know, that even Bitcoin, you know, which is

the greatest performing asset over the last 15 years, is down, you know, more than 49% of the time, days. So the amount that it's up isn't, you know, on a daily basis or weekly basis or monthly basis isn't even, you know, greater than the amount that it's up or down. It's basically the same. Yeah, there's an amazing stat. I wish I had it. Yeah. I don't want to misquote it. But it's like eight days a year, Bitcoin like makes all of its gains. Exactly. That number is, but you know, more than 90 eight days a year, Bitcoin makes all of its gains. Exactly. That number is. But more than 90% of the time, Bitcoin is sideways and boring. I mean, right now, I just had Matthew Siegel from VanEck on my YouTube show this morning. And he said that even with this move where we dropped below 60 and had this kind of $4,000 or $5,000 candle on the day,

Bitcoin right now is less volatile than Apple stock. Meta, like literally the largest companies in the world, are more volatile than Bitcoin. And that's with the stock market at effectively a sustained period of historical lows of volatility. Exactly. And you didn't even mention how volatile Nvidia is. And by the way, I think Matthew is one of the smartest guys in crypto. He is like my favorite person to interview. You just get out of the way and you get like 47 statistics you can use for the next six minutes. Exactly.

In five minutes. Yeah. He actually has all the data. So maybe that's actually a good pivot and we can get everyone else involved here. Seems very, very quiet on the Ethereum spot ETF front, considering it's supposed to launch on Tuesday. Why are we not talking about this, guys? I mean,

the Ethereum spot ETF, you know, Gensler, Balchunas from Bloomberg, these guys saying they will likely launch on July 2nd. VanEck, I had Matt on this morning because they announced that they were going to, at least for initial period, do zero fees on their Ethereum spot ETF. Zero. Zero fees for investors on their ETF. We saw this huge bidding war on fees for the Bitcoin spot ETFs when they launched, and it's been hush and nothing here. We have Gengler saying the process is going smoothly. I mean, it looks like odds are these things are going to launch next week. Maybe it's just we're not at a fever pitch on the crypto narrative right now. I mean, Matthew, listen, like you're obviously an RIA, like you're talking to clients or creating products. What are you thinking? Why is it so quiet ahead of the Ethereum spot ETF launches right now. I definitely think it's a mix of, you know, the summer doldrums, like you mentioned, Scott,

I think that's a really important thing for people to remember, especially because people like do stuff for the summer, and they go out and touch grass, like we're all supposed to. So like, there's actually just lower volatility from trading on the whole. And I don't think that this is something to be concerned about. I do love the fact that Bitcoin is staying less volatile than the stock market. I think that that's really something that people should pay attention to. From an ETF perspective, one of the challenges that we're seeing from an RIA and sort of wealth management perspective, I was just at a conference pitching some different models and funds that we're trying to structure last week in New York,

getting people to understand Bitcoin is hard enough as it is. So going down the rabbit hole and saying, okay, here's Ethereum, here's a programmable asset. All of a sudden, they're like, what does that even mean? So being able to try to tell people what a programmable asset is versus Bitcoin, which is a store of value, is a really different conversation. And getting past the, oh, this is all a scam, there's no store of value, like people getting over the digital asset mentality is a really, really big hurdle. So going further down and seeing an ETH ETF, okay, great, that's fine. And as Matt pointed on the show, on your stream earlier, even at 20%, or some of the uptick that they're talking about is going to have a pretty substantial move on Ethereum. So the challenge is just the overall narrative from a tech perspective.

And I wouldn't even touch a Solana ETF from a discussion perspective. You heard him. Did you watch, Bill, right? Because I said I'm under the impression, like laughingly, I said, you know, in Canada, probably, you know, that we've seen a filer, 3IQ, I think is your name or something like that, has filed for a Solana ETF. And I sort of laughingly said, well, we're obviously not going to see that in the United States. And Matt from VanEck says to me, deadpan, you might be surprised, Scott. I was taken aback when he said that um mostly because it sounded very like confident agreed in what he was talking about but his other point was or I can't remember was you or him that made the point that it was like I can't go I can't go to a wealth manager or an

institutional investor high net worth individual and say you need to you need to diversify into crypto and bitcoin is your best option the minute I go and say oh but need to diversify into crypto and Bitcoin is your best option. The minute I go and say, oh, but there's other options, it becomes a much more different conversation. Why do I need to go even deeper down the rabbit hole when I can just have Bitcoin? So I think that those ETFs are really kind of just like candy. They're just kind of lipstick at this point

to just kind of say, oh, we can do these cool tech things. But it'll be really interesting to see from an ETH perspective, whether this gets adopted at the same rate as Bitcoin or in a sort of peripassu way. Yeah. I think, you know, from speaking to you, a number of RIAs, obviously other people on this show, it seems like the easiest pitch for the Bitcoin spot ETF so far has been less about crafting the narrative about what Bitcoin is, why it matters, talking about fiat money and the Fed and things like that. It's simply been, hey, this is what having 1% to 5% of this in your portfolio does for your Sharpe ratio.

Something that TradFi investors understand. That's been my pitch to people who don't care about Bitcoin, even if they don't like it. I say, listen, here's the math. If you add this to your portfolio, it's idiosyncratic. It's the holy grail. It's uncorrelated. That's what you want in your portfolio. Even if it goes down like it does right now when other things are going up, at least it's not correlated. So I would have to imagine that the initial pitch by these same people for Ethereum spot ETF is etfs is going to be hey now that you're in crypto with the bitcoin spot etf you need to diversify slightly and maybe you look at the market and you say you should be 75 bitcoin spot etfs 25 ethereum etfs i haven't actually looked on at the math on what that does but those numbers are just based on what we've seen

internationally where they do have Ethereum products. They get about 25% of the flows. I think Matt Hogan from Bitwise, we had him yesterday, but there was an article today that said he thinks we do 15 billion or so in the first 18 months on the Ethereum spot ETF based on those ratios in other markets. Do we believe, guys, anyone on stage can jump in, but do we believe that that number is roughly accurate? Let's say 25% interest in the Ethereum spot ETF versus the Bitcoin ones. Do we think the numbers will be that big? That seems actually on the higher side to me. If we're talking about the flows, because I think we've had years of, of awareness, you know, mainstream awareness of Bitcoin, at least the name recognition i think

ethereum is a lot bigger curve mike what do you think i mean do you do you think these are going to perform particularly well well i think with bitcoin you had a particular construct around the carry trade that it was a lot of the flow that was going into the ets was using it as a proxy to buy spot and sell the futures forward when the drop was you know as high as 30 you don't have that same carry trade in ethereum so it'll be interesting to see what the flow is materialized to but it will definitely be lower because with you you don't have that carry trade and you know it looked like probably half of the inflows maybe even more into the bitcoin etf were're for that carry trade.

But, you know, you're going to get inflows and support it for the space, but it's just not the same dynamic that you had with the Bitcoin launch. Interestingly, that trade, you know, we've talked about this here before, but like the, they won't call it a stable coin, that's the terminology, synthetic dollar, Athena, you know, that has been championed

by Arthur Hayes, is effectively a dollar-based stable point type yield-bearing asset that's based on that carry trade for Ethereum. And the interesting part about it is it's the same trade as the way that they're earning that yield, but also with the underlying asset staking, which you will not be able to do, obviously, with the ETFs. But there is a structure there for that cash and carry sort of basis trade with Ethereum that actually is arguably more compelling if you're staking it because you earn that extra yield there. But you hit on a salient point, which is you're not going to stake it through the ETF. It's unclear how they're going to stake the ETF, but it would support more of just doing it directly in crypto as opposed to the ETF. And, you know, one of the

big limitations that you have with ETFs is DTC doesn't allow you to margin the crypto assets. So you can't get a reg T margin against it, which is a huge issue. So, you know, it's a point to look at. But I think there's a lot of compelling reasons to just buy ethereum outright versus going into the etf that's literally my next question i also think go ahead oh i'm just going to say yeah i think what i haven't heard people really talk about is also the challenge that institutional investors are going to have with ethereum that around how do you value Ethereum? You can value Bitcoin by comparing it to gold and seeing what share of that market is it going to get, how much is it going to grow that market. But there's really still no construct today to value Ethereum.

At least it's broadly accepted. I mean, I think the way you think about the value of Ethereum, if Ethereum does what it's supposed to do, which is disrupt the financial infrastructure, all the plumbing that's out there, it's the value of ETH is the present value of all the fees that are going to be paid into Ethereum. And those fees would move from, for example, Visa and MasterCard to Ethereum. We know what the market capitalization of the infrastructure and the intermediation is. And so I think there is a salient way to look at what the value of Ethereum could be, but a significant amount of execution that has to happen to manifest that. Guys, I'm not sure if someone's speaking. I got kicked off and now I couldn't hear Mike.

So if I'm interrupting, I apologize. Matthew, can you test and let me see if I can hear you? Yeah, no, absolutely. Everybody was muted, so I think it was just quiet here. We want to make it as awkward as possible, which is kind of the goal here, especially when I'm posting alone. I was just going to make the point that I really am concerned about this as a financial instrument and not necessarily from a value perspective, because I think Ethereum is going to grow in value.

But I think that this is going to be sort of a flop. I think that we won't be able to recreate. This is like when you try to recreate a vacation. You have this amazing vacation and you're like, I went to this place, had this great food, did these amazing things. Let's try it again. And then you realize that that was just like a one time thing and it becomes very difficult to remake an amazing vacation. And I feel like this is going to be the same kind of thing where they're going to they're going to try to. I got an email today saying Grayscale saying Ethereum investing begins with the Ethereum trust like ETF. Like, no, that's absolutely not true.

Ethereum investing starts with buying the actual token. And I think it's also really a bad sign that they're starting to offer this for free. What was it VanEck saying? Oh, we're just not going to charge anything. Like they realize that the fees are going to be such a race to the bottom, like they were with Bitcoin, that they're not going to be able to, to actually make any money by selling this as an asset and having fees on it. So I just think that's a really bad business model. Yeah, and Matthew, the flip side of what Matthew was sort of saying about that you hinted at before, which is that unlike Bitcoin, where billions of inflows doesn't really move the market, if we see even a fraction of the inflows from Bitcoin, it should move the

Ethereum market much, much more because the market cap is so much smaller. The flip side of that is that when the Bitcoin spot ETFs launched, GBTC was roughly 25 billion, I think, something like that, right? And we saw obviously the sustained outflows of GBTC, people who were taking that discount trade, putting pressure on the market for quite a long time. Seems that not that many people are talking about the fact that ETH, the Grayscale Ethereum Trust, which I would assume will see similar outflows, is $10 billion. That's huge. I mean, if you see, you know, half of that outflowing,

then you would expect there to be tremendous selling pressure on the market, at least initially. I mean, don't you agree? $10 billion is very, very significant relative size to the market of Ethereum. Fred, you're giving the thumbs up. You agree, obviously. I do. Before I said anything, though, did you hear that Rand is taking an hour longer than all

the hosts in makeup to get ready for the shooting? Well, yeah. I mean, if you've ever seen his face without makeup you would understand why um i i agree with you and i think uh one of the one of the reasons that the ectf is kind of just bumping and kicking along it's just how weird it's been in the way it was approved because remember you know it was no one's going to approve this thing and then all of a sudden like at like at the last second, oh, we're doing this. We're going forward with it.

And it's still unclear if the damn thing is going to be a security or not. Or is only the Ether in the ETFs, that type of Ether going to not be a security. And you're going to see the outflows with, you know, the Grayscale products, just like you saw with you know their um their gbtc and it's just a little underwhelming because and weren't you telling me that or everybody that uh when you were in vegas and talking with all the ra they don't even know what a theory is they had no like a one in a hundred hit rate at an ria conference and that was the day it got approved i was there yeah but you got that guy's hat which was a a nice win. I've got that hat somewhere. It says Dow 40,000.

I think it's pretty sweet. I literally took it off his head at a craps table. Guy's like 85 years old. It's amazing. Gave me his hat. Lost money, but he gave me his hat. William, go ahead. Yeah, I wanted to ask you the question about Ethereum's value.

Well, Ethereum is valued based on being the primary development platform for anything that's related to Web3. It's ground zero for blockchain technology innovation. And if you want to track and look at metrics, there are hundreds, if not

thousands of dashboards and explorers where you can see Ethereum and anything related to Ethereum. And we have to start to think about what I'm going to call the greater Ethereum ecosystem. It's anything to do with Ethereum and L2s and L3s and anything around it. And that network is growing laterally.

And it's the only one that's growing this way. So, suffice to say, I'm very bullish on the prospects of, since we're talking about the ETF being imminent, it won't be very difficult to value Ethereum at many different levels. So, yeah, it is second to Bitcoin, but it is different and it is still undervalued based on the overall activity that's going on in that ecosystem. Dave? Yeah, I mean, there's a couple of cross-currents here.

I mean, the first is, you know, the relative size of ETH to GBTC. It's pretty close to in line. So the real question then is, is what is the makeup of the investor in ETH? Are they people like me who wanted to, who bought some of it instead of Ethereum because I like the discount and thought it would outweigh staking rewards? Yeah, okay. So people like that will sell it and buy Ethereum to stake. Is that going to push the price down? No, because it's heads.

Is it people who just bought it because they thought they could buy it cheaper and now they're going to sell it because it's heads. Is it people who just bought it because they thought they could buy it cheaper and now they're going to sell it because it's up? Maybe if the price goes high on the launch of the ETF. I mean, I think it's a definitely possible sell in the news event, but only if it rallies from here. Certainly not from this range where we're at now maybe it goes over 4 000 okay fine uh so when you look at that being dumped you have to ask yourself where and then the other people who own it are people who uh who that's the only way they could own it in which case nothing's changed yeah it'll go out of you'll see outflows from et and into uh other products you know the the black rock or bit wise or whatever so you know thinking that BlackRock or Bitwise or whatever.

So, you know, thinking that that's going to create a dump on the market, I think is quite frankly insane. It doesn't understand, it doesn't look at market dynamics, thinking that there are, that there could be a few billion dollars worth of sales for people who are going to look to buy Ethereum and take it off exchanges and stake it and get the yield. Yeah, you yeah, the smart people who own ETH, that's exactly what they're going to do. I just told you my strategy, so you kind of understand it. Now, the problem with that is it creates a taxable event. So you've had to hold it. You have to be willing to take the long-term capital gains. And so I'll have to

think through what the holding period is, et cetera, et cetera. But because of that, it's not nearly as much selling pressure as you guys were talking about. Now, that said, in terms of the ETF itself. But would you sell it? Listen, you're playing the discount. I don't know. I'm going to have to look at the capital gains tree. What's more important, taking a 20% haircut now and staking for a few percent yield for the long term? Or just saying, it you know i'll

yeah you can't answer that question because we don't know the fees right i don't know the fees and we don't know the price and we don't see when yeah when gbtc came in with 1.5 percent everybody else was sub 20 billion well we knew that they might have learned that but the reason that I've been, you know, your GBTC sales are, I mean, look, you know, I use the strategy of saving Bitcoin and spend in fiat. So my GBTC buy has been what I've been using to spend, you know, this year or so. But it's sold, it's dribbled into the market. But I'm not unique. I mean, maybe I'm not. I the market, but I'm not unique. I mean, maybe I'm not unique. I don't know whether I'm unique or not. What I can say is that there are lots of ways to play Ethereum. And, you know, there's lots of stuff, there's lots of cross

currents here. Like, for example, some of my favorite commercials like ever, now they're web commercials. I haven't seen them on TV yet, but I'm sure they'll get there. Those Bitwise commercials with big finance and Ethereum, for anyone, people who haven't seen it, you should pin those. They are absolutely great. There's at least two. The one that big finance is sleeping. The second one, I think, came out yesterday or Monday. But the important thing is they're making it an easy story for this generation.

Let's be blunt. This generation wants to see, wants 30 seconds to know why. I mean, elevator pitch, that used to be a thing, right? You know, people who are going to do a lot want to hear a little to see whether they want to dig in deep. We have an entire generation of people who put their money based on elevator pitches that they happen to hear and the elevator pitch for ethereum is exactly what william said now these people aren't going to dig in all that deep to throw a few hundred bucks in but there are millions of them so you know i was under the impression that this generation only needed you to post a solana address from an anonymous account on twitter to send 30 million dollars in yeah well

i mean which is one reason why an etf is is is attractive to the vast majority of people because they don't understand that and and the way you know that is because people keep trying it it obviously keeps working because there are morons out there but in any case what i'm trying to say is is that bitcoin you actually have to understand money and economics and Austrian economics or something and money printing. And we can make great memes out of it, but the average person has no freaking clue what that means. So like, well, what do you mean the dollar, the dollar is what it is. Ethereum is something they've been trained to understand. It's like, you got to get in now.

It's right. It's just going to start. And oh, by the way, this could be the next next game or the next, you know, the next, uh, Google, the next, this, the next, that they, people understand that. So I don't know how big of a launch it will be. I do know it will be pretty there. The difference is, is it'll be, it's much more for the masses. It's easier for people to understand. So I'm torn on, on how big it will be, but I think it is interesting to understand that we, and it's, it's a lot interesting to understand. And they're not necessarily going to be getting the big asset allocators, which take six months, a year. I mean,

we're just starting to see that in Bitcoin. I mean, that's the reason Bitcoin's trading over $61,000, when every crypto technical trader that I know, and I basically became the lone voice of optimism on multiple spaces with you and whatever. And I've been saying there's too much underlying demand for it to fall far. Yeah, maybe back down to test 56, maybe. But I really figured it was going to stay right here unless there's a big event. Because there's big natural bids from big investors. I think Ethereum is more the cyber hornet type crowd from the normies.

And I think it's just a different dynamic. And so we'll see how it goes. It is not good for it to happen in the summer, though, because, you know, it's like so. So, as I said, lots of cross currents don't know how to evaluate it. I will say we have a lot of clients trading the Bitcoin Ether ratio on our platform. I mean, yes, you know, it trades. You can trade Ether BTC directly on Kraken, Bybit, OKEX, Coinbase, you know, others, Bitstamp, whatever, you know, Binance, obviously. You can trade it together. We have others who are using the perpetual swaps and doing it synthetically for lots of reasons because there's some juice in the trade. But it's a very robust market, and there's a lot of people trading it.

And, you know, William, I know you asked me a question. I literally just got into my vacation house. So I was just setting up. I didn't turn on my computer until like two minutes ago. So anyway, it's a robust market. It's right back down to the middle of the range of its range for people who follow it from really 0.05. It dipped to 0.048, but not meaningfully, to 0.06. It went to 0.062, but not meaningfully.

It's really been in this. And right now it's 0.05476. So it's right in the middle of the range. So the market is basically as indeterminate as me. I'm sorry for not giving good alpha advice, people, but we're still in the summer doldrums and, you know, we'll see how it all plays out. DC? Yeah, I just wanted to add to that because I thought it was super interesting. Dave, you mentioned that Bitcoin is harder to understand than eth like i consider myself to be

a part-time degen and adding to william's point on on l2s on eth i mean like 46 minutes ago another l2 launched which is called blast and i mean that's the entire point and idea of ethereum right if you invest in an etf like the entire use case and the technology of ETH is kind of lost. So in my opinion, it just makes much more sense explaining Bitcoin as something that is not within like the left, extreme left side of you, the extreme right side of you. It's not political. It's not like it's not in our current financial system it's something else it's based on energy in my mind that just makes much more sense to explain to people than ethereum because it's like honestly i play around with eath like

probably six to eight hours every single day and it's super tough to explain and everything that is going on it's a lot yeah yeah actually, I don't think you're wrong, but I think there's some nuance there. So I think if you want to technically explain ETH to people, it's a lot more difficult, obviously, than explaining Bitcoin. But I think Dave's point is people of this generation understand, oh, it's a tech platform that you can invest in now. And if you leave it there, that's an easier pitch. You know, the next Amazon is easier than the next gold, right? I mean, I don't want to put words in your mouth, but I think that that's kind of what you were alluding to. I think once you get into the weeds, yeah, you have to explain gas fees and how to transact and layer twos and all the, you know, complexity, it's way

harder, way harder. So I agree. Yeah yeah and it moves so quick that's the other thing like it's everything moves so insanely quick in the world of web3 so in terms of i don't know an e-spot etf i just don't see why people would actually choose that over unless there's like a real unless they know there's there's a good trade it's worth answering that i just want to answer it quick you know quickly i mean you know it's funny. I've heard the same. I'm going to basically give the bitwise pitch, but so you understand it. So my beneficiary, if I die, is my wife. My wife will never, ever, ever figure out all the nuances of staking Ethereum and dealing with all of this. This is a crazy statement I'm about to make, but I know it's true. Until we actually have a regulatory framework in the United States for trading crypto assets, you're not going to see normies jump into buying and selling on Coinbase and staking and dealing with that because they're always going to be worried that they can't protect

their assets because our current rules don't allow Coinbase to protect customer assets in the event Coinbase has a hack and they go bankrupt. We saw it with the Kraken story last week. I mean, yeah, no one was harmed. That's fine. But if you're smart and you look at that, you go, wait a minute. If Kraken gets hacked by deposits, that's Kraken's money. But right now, the way the bankruptcy code is, because crypto is property and it doesn't have a protection such as SIPC and the way the laws work in terms of assets, in terms of look throughs, you cannot protect your assets on Kraken. Right. You just can't. It's not that Jesse doesn't want to. He does want to.

But the laws don't allow the exchanges to do so, which is one of the reasons that Gensler is such a fucking hypocrite. He knows that the current rules don't allow these exchanges to protect customer assets. And yet, he continually says, we can enforce existing securities laws. That's why I get so angry about it, because it literally hinders it. And yes, I know the answer as well. You can hold it in a wallet. Now, you start teaching a wallet to someone who, you know, there's a reason Apple won the iPhone wars, right? You know, so it really boils down to that. It's succession planning and lots of people aren't technical, et cetera. Now the younger generation, yeah, eventually everyone's going to be self-custody or a lot of people will and become

financially sovereign if the government allows them to. But, you know, there's a lot of that going on. But that's the reason. It has absolutely nothing to do with pure economics. Because pure economics says, buy Ethereum and stake it. Why the hell would you put money in an ETF that has multiple percent lower yield? Okay, completely understand. Got you. Matthew, go ahead.

It's a really interesting question when we talk about legacy ownership of crypto Matthew, go ahead. because the difference between what an LLC can do holding your assets versus you holding your assets is give you access to institutional grade custody that is insured up to a hundred million dollars. So what we've been able to do is take people's assets and insure them so that they don't have to actually worry about moving some of these assets. And they also get set up in trust and or I would say legacy capabilities so that people who are either the wife or the spouse or the beneficiary has easy access to these. So we kind of are trying on our side to make it the best of both worlds where you don't have to take an ETF. You can get native yield, we can get income, we can do these things for people, protect their assets, and they don't have to worry about it from holding it on

their own ledger or on an exchange. So I think those things are also going to be coming more and more as people realize that they actually don't want to hold millions of dollars of assets on their own in self-custody. That's a terrifying thing for most people in this space. Yeah, I just want to amplify what you just said, because you're right. But understand that the way the laws are going to ultimately end up, because it's not hard to see it, is there will be a class of firms called brokers that literally are – they're not LLCs. They'll be C-corps probably, but whatever. But there'll be corporations that can leverage on top of the insurance on custody on behalf of people to abstract it away. Now, eventually, will all that be replaced by online, you know, basically be able to simplify it for the average individual?

Yes. You know, there's lots of examples of that, you know, kayak.com, getting rid of, you know, the local travel agent, et cetera. But for now, there has to be a bridge to the average person because, you know, I formed three LLCs for different things and it's not trivial, right? It just isn't, you know, you may say it is, but it isn't. And so, you know, that is, that will happen. But I'll go back to my point, Matthew. I think that everyone on this- It's trivial for wealthy people, by the way. It's not trivial.

Well, sure. If you can afford to just have someone do it and the structure Matthew's talking about, it's trivial for wealthy people by the way it's not trivial sure if you can afford to just have someone do it and the structure matthew's talking about it's pretty easy yeah that's right absolutely okay so but that's not who we're talking about we're talking about the middle right where all the you know where a lot of a lot of the interest but but my point is is that it still requires uh some notion the world is certainly better if we have some notion of regulation. And there are a lot of people who won't even touch this stuff until that happens. And it drives me crazy, honestly.

But I think that Matthew's point is incredibly true. Yeah, your average person doesn't want to have to think about starting LLCs to be insured on their assets. I think we understand that. Right. So that makes a lot of sense. Matthew, listen, you talked about kind of at the beginning that you're out talking to clients,

how you're structuring these things. What are you actually telling people as to kind of what's the pitch for the Ethereum spot ETF and where it fits versus the Bitcoin ETF? And how are you kind of structuring these? Our value add is really coming from the perspective of what we consider to be income generation, risk aversion. We're trying to lower the risk profile of owning digital assets by pairing them with high yield cash and or traditional

fortune 500 companies who are dividend paying or also building in the space. And we want to make it possible for people to use and enjoy the assets that they have. So a lot of the work that we're doing is now on wealth management to engage people who already made money in crypto on how to leverage that cash to either not trigger capital gains or to engage from like an income perspective and how to generate income from the assets they have. What we're also doing from the, that's kind of the bucket of people who already know about crypto in that sense. And what we're doing for the folks that are maybe wealth managers who aren't really sure about it or aren't really understanding of what this whole ecosystem is,

our ethos is really not to go with an ETF or whether it's Bitcoin or Ethereum, because we want to make sure we hold those assets natively. We want to make sure that we can... It's not an IOU. I don't want to be paying fees on top of fees in order to provide you a service. So it's probably not going to be something that we really advise about. But we would say, well, this means if they have an ETF that the market has matured to such a point that it must be an important piece or factor in your portfolio. And therefore, in your $100 million asset under management portfolio, can you please, for the love of all that is mighty, just have 1% of your allocation into a small bucket of cryptocurrencies, three or five or 10 of which are in the top set of tokens? And that's really where we try to position it. Makes a ton of sense. That's great. Fred? You just mentioned it at the end, Matthew. I was going to ask you, Dave, or anybody on the panel, really, like with the Ethereum ETF coming out, would that be able to piggyback on some of these other products? I don't hear anybody ever talk about them, but Grayscale has one, Bitwise has one that has the top 10 baskets of crypto. Obviously, Bitcoin and Ethereum are, I think, comprise 80% of it.

But Bitwise is, I want to say, B-I-T-W, and Grayscale is G-D-L-C. I mean, that's exactly what you're getting at. I don't know if they're just not available on every platform. I mean, the financial companies I use have them available, but it seems like that would be just a no-brainer to go into those. I'm going to sound like a broken record, and I apologize for that. But the reason is the Coinbase case and the Kraken case. And the fact that the SEC is alleging Solana and Matic and a bunch of other things are securities, which, of course, is completely ridiculous. Until we have clarity, it's just no one's going to start

or try to go through a process of a basket. The instant we have regulatory clarity, you're going to see multiple basket ETFs. You're going to see baskets of layer twos. You're going to see baskets of memes. You're going to see baskets of layer ones. You're going to see baskets of memes. You're going to see baskets of, you know, of layer ones. You're going to see baskets of, you know, things that claim to be money or whatever. And people will get very creative. If you look at the ETF landscape, you know, there are thousands of them. I mean, the Bitcoin ETFs actually are all in the top, several of them are in the top hundred in terms of assets and whatnot. But people get very creative with ETFs. I actually started my career in program trading, more or less. And we're involved in a lot of

index and basket construction. And I can tell you that people are chomping at the bit to do that, but they can't, not in the United States. And that's why. So they have to do it only for accredited investors and willing to take that risk. That's what Bitwise is doing. And obviously, Bitwise is at a pole position in that. But if you think that the Galaxy Index that Bloomberg publishes isn't going to have an ETF or set of ETFs based on it, the instant people believe it could be legal, then you're wild. I mean, of course, that's how the world invests. That is 2024 investing is passively investing in index funds. I mean, right. And that's the bulk of what people exactly right. So that's the point. I mean,

which is, by the way, one of the reason Elizabeth Warren has asked the SEC, and Gensler's gone along with it in these what are going to be futile lawsuits that are just costing Coinbase and cracking lots and lots of money. And they are basically no hopers at this point, you know, in the way that's going in the courts. And frankly, you know, with the Administrative Procedures Act and the major question doctrine, because Congress, the House at least passed the FID Act, I mean, they don't have a hope, but they're doing it because as long as those suits are active, people cannot go and expand the average normal person's access to crypto. It is literally, you know, when you say you're an anti-crypto army, they're not joking. And I don't care what cybersecurity person the SEC holds. Biden

is completely full of shit until he gets rid of the people who have orchestrated this policy. And we can go through that list of names on another space or if people really care. But that's the issue. So then are those the same? The product then that I was mentioning, do you think that's just a play where when we had the discount with GBTC before the ETF came out? No, I think that accredited investors have asked Bitwise or Bitwise has surveyed their clients and they said, oh, people want this product. And I think that thanks for asking this, Fred, because the challenge with those baskets and those index funds in general is that they all assume up and to the right, right? Like they assume that there's going to be asset appreciation

over time. And what Dave is talking about, about getting creative, like I'm in this really great position right now where we're able to sort of operate without regulatory clarity, meaning that other bigger players are slower to get to retail investors. But what we also do is add hedging mechanisms to our baskets so that they're not just up and to the left, but they're insured up and to the left. So if there's issues that happen, or if there's short, you know, if there's downtrends in the market, we deploy or leverage things like inverse ETFs to capitalize on those gains. And you can take options or perpetuals or any other kind of leverage to basically hedge against the downside. And what we're really trying to build is sort of

insulated and risk managed portfolios, which you don't get on a sort of, you know, here's a cookie cutter basket of five, you know, five, five tokens that one of which is probably Litecoin. Not to throw shade on Litecoin, but they're kind of old baskets, basically. It doesn't seem like they're actively traded. Yeah, that makes perfect sense. Lou, I got to ask you, are you still on the road constantly? I want to know, it's kind of a pivot here, i know you have crypto mondays and every time i talk to you you're in a different uh country are the vibes still very positive generally everywhere you go last year was like horrid in the united states and then you'd go to singapore you know we talked about this when we were in singapore and it was like you know crypto palooza nobody people are like what bear market who the hell is spf and what are you guys

talking about and then you come here and we're all like depressed and crying in our coffee exactly it's it's night and day and it's it's weird um you're here in the us and you go around to different cities and it's you know people are very cautious here uh you leave here i think the last place we were at together was uh dubai um dubai was rocking um and wherever you go i think think, you know, after Singapore every year, I go to Crypto Monday, Saigon. And Saigon or Vietnam is the most penetrated country in the world. And what's the most awesome thing about Crypto Monday, Saigon? It's the only one I've been to. I've been to it twice where females were 40 or 50 percent of the people there.

And that's hopefully one day our future as well. There's a ways to go there, but we'll get there. Wait, you met a girl in crypto? Exactly. Real life one or an AI girlfriend? Well, 40% of the people there were female and know, were female and they all own crypto. They all, it was great. And you go and you see that and you go, that's an ecosystem that's going to kick ass.

I love that. No, I was kidding. But yeah, listen, when you go to conferences now, it's not as crazy weighted towards men as sort of the old joke went. It's actually quite, you know, there's quite a huge female population, obviously, in crypto, which I think we all encourage. But it's great to see that that's happening. I remember in the Axie Infinity days, I think, you know, when it became wildly popular in the Philippines, it was actually, I had read a stat back then, it was a majority of women that were playing the game at that time. Obviously, that was just to make money, not to actually play the game. But, you know, when you see real world adoption of things where people can actually make money on a daily basis, I think it becomes very weighted.

Yeah, great point. Great. So where are you off to next? What's the next big is the next big conference, Nashville? Is that the next big thing? I don't really stay on. No, before Nashville is ECC. uh nashville is that the next big thing i don't really stay on no but a lot of hype for now before nashville is uh eth cc which is generally in paris uh but this year uh it's uh because of the olympic it's in brussels when is that so you guys i'm getting my personal conversations um that's uh crypto mondays will be July 8th. And I think the conference is the 9th through the 11th. Wow.

Do you know how big that conference is? I'm just trying to get a gauge how, you know, because I think conference size and hype is the best gauge of where we're at in the bull market, to be honest, based on past. Yeah. I mean, to tell truth, I don't even get a ticket. I don't think I've ever gotten a ticket to ECC. I just go to the side events and the hanging. So I don't really have a sense of a number, but ETHCC is definitely in the thousands. My impression is it's the

second best ETH conference after Denver. Yeah, interestingly, I'm not sure if people saw, but Bitcoin Nashville, a lot of conjecture now that Trump may actually speak. I'm sure RFK will be speaking. He spoke at consensus. And I'm going to Nashville partially with his team. So I'm assuming he's going to be on stage. The minute I saw that Trump might be speaking, I booked my hotel before it tripled in price. There's like a full on rally there. I heard. Did you hear the rumor that he's going to announce-on rally there but i mean i i heard why did you hear the did you hear the rumor that he's going to announce his vice president's

there that's going to be michael saylor no come on see that's hilarious it's going to be mario and ran they're going to be his cabinets yeah uh yeah he hasn't announced he hasn't announced it as far as i know but i mean pretty wild that at a Bitcoin conference can now be compelling enough for you know viable presidential candidates to show up and speak you know we always had like you know Vivek when nobody thought he was going to win and RFK

has spoken if Trump shows up there I mean Nashville is going to explode really wild yeah alright guys I think we've covered everything we had intended for today. Thank you all for joining. I think Mario will actually be back in person tomorrow so we can mock him more relentlessly, I guess, actually, to his face. It's even better.

Fred, you get extra points for throwing in a Rand joke. I've been trying for two days to get all of our guests to say negative things about Mario and Rand. You finally took the bait. Appreciate it. Guys, we will be back tomorrow, 10.15 Eastern Standard Time. I'm sure we're going to just be hearing about how amazing Killer Whales is for Mario and Ran. That's all we got, guys. Thank you. Great conversation today. Bye-bye.