Unchained - Bits + Bips: Iggy Azalea, $MOTHER, and Celeb Coins: Is This the Top of the Crypto Cycle? - Ep. 662

Episode Date: June 19, 2024

A few weeks after its launch, Iggy Azalea's MOTHER memecoin is still in the spotlight. Host Joe McCann, who recently had dinner with her in New York, gives the inside scoop on how Iggy’s $MOTHER came to be, plus her plans.  Also, Joe says Iggy is so bullish on Solana because it’s fast and cheap… but James Seyffart counters… nothing can be fast, cheap, and good. Except ETFs. Guests Phil Bonello and Kelly Greer delve into the role of venture capital in crypto, and more particularly into dynamics between liquid hedge funds and massive token generation events. And James tells a mind-blowing story about how one ETF and obscure SEC rules could cause whiplash to the prices of Apple and Nvidia stock over the next few months.  Plus, after SEC head enforcer David Hirsch resigned from the SEC this week, everyone gave their takes on why. Is Hirsch going to BlackRock, or was he scared about a potential lawsuit? Show highlights: 00:51 The real story behind Iggy Azalea's MOTHER memecoin and the controversy between Joe and Haseeb Qureshi 07:26 Why Iggy is bullish on Solana, and whether MOTHER is a hopeful case for crypto, reflecting the evolving relationship between entertainment and Web3 12:35 Whether the market has already topped, given the involvement of celebrities in the industry 15:32 Whether VCs are extractive to the overall space, and how liquid funds and token unlocks impact the performance of assets 21:17 Why venture funds and hedge funds have different approaches to liquid crypto investments, and how memecoins are changing the game for allocators 33:18 Why there’s a 0% chance that SOL gets an ETF this year 34:19 What the recent macro trends point to, whether inflation going down is sustainable, and whether rate cuts are coming 43:32 Why Nvidia's rapid growth is about to trigger a multi-billion dollar rebalance in tech ETFs, and how both $NVDA’s and $AAPL’s stock prices might soon seesaw  54:35 The theories about why the SEC’s chief crypto enforcer David Hirsch resigned from the agency (hint: it might have to do with the election) 59:52 Why James believes Ethereum ETFs will launch on July 2 and what amount of inflows the ETH ETFs might garner, esp. considering potential ETHE outflows Hosts: James Seyffart, Research Analyst at Bloomberg Intelligence Joe McCann, Founder, CEO, and CIO of Asymmetric Guests: Kelly Greer, Vice President of Trading at Galaxy Philip Bonello, Founding Partner at Plaintext Capital Learn more about your ad choices. Visit megaphone.fm/adchoices

Literally today, one of my teammates at Asymmetric asked me, is this a top signal? And I'm like, Zoom way out. Hi, everyone. Welcome to Bits and Bips, exploring how crypto and macro collide one basis point at a time. I'm your host, James Safer, Tradfai Archmaster, Lord of Bloomberg's End. We're missing Alex Kruger this week because he had a flight get canceled and couldn't figure out a way to actually join us today. But we have two guests. Also joining me, obviously, is Joe McCann, Lord Commander of Asymmetric and Master of Bunk.

And then joining this week is Phil Bonello, High Stewart of Plaintext, and Kelly Greer, Lady Greer of Galaxy. We're here to discuss the latest stories in the worlds of crypto and macro news. Just remember that nothing we say here is investment advice. You can check unchained crypto.com slash bits and bips for more disclosures. Yeah, so let's dive into this. First, we're going to start with something with our more seasoned veteran unchained podcast counterparts over at the chopping block talking a lot about what was going on with Iggy and celeb coins and all these meme coins and things. And Joe, Joe and Haseeb gotten a little

bit of a battle on Twitter. So I'm just going to pass this over to Joe. Why don't you lay the groundwork of like what we're talking about here and like what your biggest issue with the way it was being discussed? And then we can get into our own opinions because I have nuanced takes here. I think I differ from you in your view of the space. Good. Good. Yeah, look, so, so yeah, like last week, you know, the guys at the shopping block had a discussion around celeb coins and Iggy. And I kind of took offense to it. Iggy's a friend of mine.

And also, it wasn't true. A lot of what was saying, you know, kind of called out to see online. And we got into a little, a little spat, which we have since squashed. So me and Haseeb are good, just so everybody who is concerned about. that. No, there won't be a karate combat fight between me and Haseeb. Sorry, guys. It's not happening. But to set the stage with everybody, if you're not familiar with what's been going on with the Gia Zelia and her mother coin, she launched a token about three weeks ago, kind of out of nowhere, and it really took off. It got, I think at one point up to like a $350 million market cap. It's

trading like roughly $150 million market cap right now. But one of the reasons why I wanted to kind of share the story behind it is I think a lot of people are misinformed or confused about what is going on here. So you guys may recall Caitlin Jenner launched a token and it rugged for $6.5 million. And it wasn't Caitlin Jenner. It was this known scammer in Salana named Sahil, excuse me, who reached out to Caitlin and her team about, you know, doing an advance for some cash. We're going to do this token and whatever.

Same scammer reached out to Iggy, and Iggy passed it on to her manager. He took a look at it, kind of had a conversation with the guy, but ended up calling Caitlin's manager and seeing like, hey, what's the deal with this guy? And they're like, well, he just rugged us for $6.5 million. And we've contacted the FBI and et cetera, et cetera. And they're like, we can't find him. And he's like, I'm texting him right now. Like, you know, so anyway, naturally,

Iggy wasn't going to do anything with this guy at that point. And so he found out that she wasn't going to be working with him. What a surprise. But he decided to then tweet a pre-sale token for the Iggy coin. And he raised like some idiots put $500,000 into this in like a matter of a couple hours or something. And Iggy was about to launch her mobile phone network called Unreal as well as a product called Dream Vault. So she had been working on this for over a year. And it was coming up to announce this, launch this, do a bunch of press, et cetera.

And she was concerned, rightfully so, that some scammer is going to tarnish her reputation and brand by launching some token that she has nothing to do with. So she said, I need to launch my own token. And they were like, well, how do we do this? And one of her team mates was like, I can help, you know, this thing with Pump. not fun and the ability to basically launch a meme coin is like or a token is is trivial at this point and they uh so they stayed up all night and like going through like the concept and the creative and she's the creative behind all this she actually is the one behind her Twitter account

people think it's a team it's her like it's 100% her and also if you look at the stuff she tweets like could you imagine being on her on her team and tweeting some of the stuff that she's tweeting it and be like am i going to lose my job by saying this there's absolutely no way it's not her And she's super active in a telegram, et cetera. So they launched this mother token. They have no like real, you know, I'd say level of expertise as it relates to crypto. She's been in Salon her for a while. She's been privy to the space.

She's actually quite knowledgeable on it. And the token took off. And then they started to figure out like, oh, wait, we can actually integrate this into Unreal mobile. So, you know, this mobile virtual network operator Unreal, she announced and you can use the mother token to pay your cell phone bill. She launched this thing called Dream Vault as well, just kind of like a shoppable celebrity gift list app slash site. Use mother in there as well. And so what's interesting to me and why I think it's important to set the record straight on this is that there are plenty of grifters and celebrities that historically have done, you know,

pump and dumps or rugs or whatever, whether it's through NFT sales or tokens or whatever in previous cycles. This is not that. This is the furthest thing from that. She's, she's never selling a token. She hasn't sold a token. She sees this as like a way to bring a lot of her fan base into crypto as well as bringing culture and entertainment to Web3, which has been kind of my hypothesis for a long time. I've mentioned it in the past that once culture really adopts a new technology, it's kind of here to stay. And so I met up with her when I was in New York last week at her launch event. Then I went to deal with her on Wednesday night.

And the ideas that she has are incredible. But she was telling me the story about all this kind of stuff. And it's just truly unbelievable, right? Like, they weren't planning on launching a token to be associated with these two products. And yet here we are seeing like actual utility with this token being integrated, as well as like this fervent community that is now actively involved in, in mother. And so, like, for example, she, I think she's the highest grossing content creator on OnlyFans. She canceled her account, push them all to the Telegram chat, right?

Like, she is very, very much committed. And if you think for a second, like, you know, if somebody's made, God knows, tens of millions of dollars off OnlyFans, would they just, like, cut that off if they were just going to, you know, rug this token at some point? To me, it just seems foolish. And so the other thing is, she's very bullish on Solana, which, no surprise. It was so hilarious because, like, where I'm at dinner, she's like, it's fast and cheap. Like, hello, duh, why wouldn't anybody want this?

Did you soul pill her? How did she get bullish on Solana? No, she was in Solana before I even knew her, right? And that's what I'm getting to is that one of the things that I've been saying for years now is that, like, Normies don't care about max decentralization or if you can run Ethereum's full note on a raspberry pie. They actually don't give a shit. What they care about are like great experiences and things that are fast and cheap.

It's very, very simple. And that was her assessment. She was like, why would I want to use this thing that's like super slow and expensive when I could just use this thing that's fast and cheap and gives me like this awesome experience? That is the case for most people. And she just happens to have 70 million plus followers on our social media accounts, right? So from my perspective, like, this could be the first like real, you know, pop culture

adoption and promotion of Web3 and crypto. to the masses that actually is not some stupid NFT project, right? That is actually bringing utility into the products that she's actually bringing to market. And she's evolved her career. I don't know if she's officially retired from music, but she's very much focused on the things that she's interested in from her business perspective, whether it's the mobile network to this Dream Vault to other projects that she wants to be involved in. And no surprise, this Lonic community has adopted her and welcomed her with open arms.

And so I think it's just important to understand that there are always going to be grifters. Ethereum had tons of these in the last cycle. Salonah will have tons of these, this cycle and potentially other chains. But this thus far, and from what my understanding is with my conversations with her at dinner, is like, she's really all in on this. And we'll see if this plays out. I'm pretty confident that it will. Yeah, it's funny.

We always use this term when we talk about ETFs. We used to say, like, at most things you get, things are fast, cheap, or good. And you can usually get two out of the three. So it's funny you said fast and cheap because I guess we'll find out in the next couple years how good Solana actually ends up being long term. But we know where you sit on that. But ETFs are the one of those rare exceptions in finance in our view that is all three at once. I'm glad you're setting the record straight on that narrative, Joe,

because we're so used to getting hurt in crypto. So, like, we instantly think that someone who means Wall is a grifter because they have a big following and they're using the tech. And it's, this is like, this is like a case for hope and she's going to do great things for the ecosystem, presumably. And we need to stop having that, like, Twitch reaction that this person's going to grift and rip us off. Yeah. And look, I mean, it makes sense, right? It makes sense. Like, it's happened so many times with, I mean, I think it was ACON, like, was going to launch a token for some country that didn't exist or something.

It was crazy. Right. But like, you know, eventually pop culture and entertainment and that entertainment industry is going to find a way to start to incorporate their artists and their fame and celebrity into things like Crypto and Web 3. And I feel like this is like this might be it if it isn't close to it being it. And in addition to that, like all the major sort of talent managers like CIA and William Morris and UTA, I remember I met with U. like a year and a half ago and they were talking about like we're trying to figure out our Web 3 strategy for our artists and you know obviously the markets were pulling back and there was a bunch of stuff happening stuff had happened that was gnarly but this is a real thing they just need to figure out like how do we do it and their area of expertise is entertainment and

culture not technology bleeding edge technology that has a lot of economic value associated with it Yeah, I mean, I think a lot of the pushback that's been going on, like, the celeb coins stuff is just a symptom of the market being like sideways to down for the last three and a month. Like, people don't know what to do themselves. So, you know, everyone has pitch forks out. Oh, yeah. But like the amount of attention that the celeb coins have gotten and the negative energy

that's gotten relative to like the market relevance is pretty ridiculous. The meme coins, the web coins, whatever I think is a good example of just permissionless finance. Like people can launch whatever they want to launch experiment, however they want to. to experiment and, you know, some will work, some won't, and some will be scams and some will do great things. So yeah, and look, I mean, I think that I think that's right, Phil also that when, in 2021, when markets were just going straight up, like, everything, everybody was chill with everything. They were like, you know, there weren't these like, these like philosophical debates and, you know,

moral platitudes being put out there on the internet when, when the markets were just ripping. I think the other thing you're seeing as well, and I'm clearly biased here, but Solana is ushering in a lot of this new type of activity and experimentation. And a lot of folks that have been in the industry that have massive Ethereum bags, unfortunately, don't like that. And so they're going to bloviate through blog posts about what is or should be or should it be. And it's like, to your point, Phil, it's permissionless.

Good luck. This stuff's going to happen whether you like it or not. I think the other cause for concern is we're used to a huge celebrity getting involved with the space as being a top signal. And there's a lot of hesitation on where we are in the market cycle. So I think I know Joe's answer to this. But like the screaming question, everyone's mind is, is Iggy entering now the top? And that's causing the adding to the stress. I kid you not.

Literally today, one of the, my teammates at Asymmetric asked me, is this a top signal? And I'm like, Zoom way out, right? Like how much stuff has happened in the past, you know, six months of this year thus far that could be considered a top signal. I mean, after the ETF actually launched, like the GBT selling was just hammering the price. I mean, there's tons of things that could have happened or even like in April when the market was puking. You had mass liquidations.

People would say that was the top, right? Like my view from a macro perspective hasn't changed. We have an election year, rate cuts are coming. Global liquidity picks up in the sun. summer. We're not even close to liquidity cycle topping. Like, if you zoom out just a little bit, you'll see that like feels like we have more room to run. A celebrity determining the top for an entire asset class like crypto, like come on, give me a break. I'll just say what you talk about with the top, like you talk about 2021. I come to my, I think of like celebrities like

Parasilton shilling NFTs on like late night shows. Like I don't see Iggy Azalea on like late like regular TV, regular media talking about this stuff, at least not yet. And then the other thing I would say is like, I kind of think this negative initial reaction response, like it's almost like a positive autoimmune type of response from the industry. Like it makes sense. Like you should be extremely skeptical of this stuff. Like I get it covering just like finance and like if I cover anything Ethereum related, the Bitcoin people are down my throat saying I shouldn't be covering a shit coin. And then I have Ethereum people. telling me that I'm just a Bitcoin maxi and I don't want like the Ethereum

METF to happen and so on and so forth. So I get I get the initial autoimmune response but I guess we'll find out like over time exactly how I'll say I'll say this James like the thing that I tell people that are brand new to crypto especially with when they join like Telegram I'm like look by default assume everything is a scam period end of story just that is your mode of operating it's a scam. So if you have that default setting for how you're engaging in crypto, like, no surprise people are going to be skeptical. And I think that's actually healthy, right? Like, I don't open PDFs that people send me over telegram. That's how paranoid I am, right? So I think it's healthy, but I also think it's like

important to like, I think to Kelly's point, like, maybe somebody is actually doing it the right way. And let's give them the benefit of the doubt or suspend disbelief beyond looking at it. because the reality is, like, this thing got $350 million market gap. If it was a rug, that was a really good time to take profits. And it didn't happen. All right. Let's change. It's kind of not that dissimilar to a topic.

There's been a lot of talk online about whether VCs are extractive for the crypto space. I guess I'll turn this over to you, Joe, to kind of intro the feelings here. And you go first and then we'll turn it over to the other guys to give their feelings. Yeah, sure. So, I mean, Steve was involved in. this one too, right? What a surprise. So this guy, Arthur, Zero X on Twitter basically posted something to the effect that, like, you know, big VC fund raises are likely value extracted for the space. Unless they earmark like a significant percentage of that for liquid tokens,

he goes on to say something like, you know, you should assume every big VC fund will eventually extract three to four X the capital they raise from the market, eventually from their, quote, infra investments. So that was, I think, the kind of the impetus for this discussion that took place. And Haseeb had kind of responded with like, you know, it was something that I actually agree with. So kudos Haseeb. How different the sentiment of the reversal is here is like back in 2022 when, you know, the large funds like A16Z paradigm and even Katie Hans fund were raising billion-dollar plus vehicles, it was like heralded by the industry. And I remember 2020. two, very different time than 2024.

But, you know, this is not necessarily like a zero-sum game. And furthermore, you know, he goes on to say that there's, you know, it would be nice to see more institutional liquid funds coming on as well. Asymmetric is one of those. And we agree. We would love to see a lot more of the institutional like liquid hedge fund style vehicles come into the space. So I'll kind of turn it over to you, Kelly, like what are your, what, from your perspective,

like, what do you think about this, this discussion? Like, where do you sit on it? What are your thoughts? Yeah, I mean, I think, again, this goes back to the context of where we are in the market, right? Where ALTS across the board can't catch a bid with the exception of mean coins. And I think it's all sort of interlinked, right? So you have these VCs doing massive fundraisers. And I think the skeptic of that would say that, you know, they invest in these infra projects who create massive TGs and that ends up in sell pressure in the market.

The issue being there that there's, as of right now, a fixed amount of capital and liquid funds that are there to buy it. So Galaxy run a database called VisionTrack that measures fund AUM and crypto, right? And they have the measurement on liquid hedge funds and crypto AUM at the end of March at 20 Bill. So if you have these estimates on Twitter of like 40 to 50 billion of alt supply coming unlocked in the next two, three years versus 20 billion of liquid funds caught there to buy the bag or to trade liquid strategies, that creates a really difficult and challenging market dynamic. I think that's the reason why, and I turn this back to probably Joe and Phil around, like, how you continue to outperform the market as a liquid fund with that being the supply demand dynamic of tokens, right? Like, I think that forces more players into derivatives. We continue to see more derivatives volume across our business year over year, like almost doubling, I think, because that's where there's more alpha. And I also think it's why you see more volume and activity in meme coins. It's kind of like a response to, I have no business trading these alts anymore. They're down only.

They can't catch a bid, even revenue generating projects to an extent. I'm going to play in the alt casino and I'm going to buy options. And that's sort of, I think, the barbell for liquid funds right now. But I'm curious what you guys think. Before what you said a term that I would TGE or I couldn't, I didn't get what the, you said in the acronym that I actually didn't know what it was. Token generation event. Okay.

There you go. Yeah. Yeah. So that's, that's project reaches. face to launch the token, they, they dropped their TGE. It's like the IPO. Yeah, got it. The IPO.

I'm not, I'm not enough in the, uh, the crypto world yet to, to know all the acronyms. I'll turn over to Phil. He was definitely going to say something. Yeah. I mean, I think we've kind of reached almost a tipping point, uh, as far as like, you know, like the venture versus liquid fund dynamic. Um, and I, and speaking to allocators, I think that this is true as well.

For so long, money has just, been pouring into the venture fund landscape versus liquid funds because the marked market isn't as stringent, right? And so like you can you can buy into these, you know, seed deals and then in maybe a year or two, you have token generation event. You can sell into the market. So like the allocators aren't going to see that same sort of volatility that they might see in a liquid fund. And so you've just seen venture balloon. And I think that there's just, it's maybe a little saturated at this point. And so I think we're going to start to see. and Arthur's tweet was, I think, symptomatic of this, and probably a sign of where we're going to be headed soon is allocators are going to start to allocate to liquid funds instead of, like, these venture vehicles.

Again, like venture vehicles are also looking to allocate to some of these liquid tokens as well, right? So, so like it's kind of an interesting dynamic where they had these close-end funds might be 10-year return period, but they're also going to be buying public markets. assets. So I think this is just a dynamic that has to kind of wash out through the market and venture venture funds made too much money in 21 and that created an environment where they're going to continue to raise for a period until it stops working. And I think we're sort of coming to that. So I think it's just kind of a market dynamic that needs to wash itself out. Yeah, I mean, I agree with a lot of what Phil's saying. And so, you know, first of all, Kelly, basically described asymmetrics hedge fund.

Yes, we do trade with Galaxy. They know a lot of stuff we trade. But yeah, Duran and meme coins favors our strategy. But I think there's a couple things to kind of underscore here carrying on to what Phil was just saying. I think a lot of people don't understand the business model of venture funds. And so you start off with venture fund. One, you know, takes you whatever a year or two years to raise the money.

and then you deploy it over the course of like two to three years, but by the time you're close to being done deploying, you're already doing venture fund too, and then you repeat until you get to X number of funds. The beauty of this is that you take a 2% management fee the entire duration of that fund. And so if it's a 10-year vehicle, which most venture funds are, let's say you raise a billion dollars,

you know, 2% of a billion dollars is $20 million a year times 10 years is $200 million in management fees for having a pulse. That's a pretty good business. business, right? And so to Phil's point about 2021, I mean, God bless, these guys, multi-coin, Parodon, they all made enormous amounts of money for their LPs and have all subsequently raised additional funds. And I'm not suggesting that multi-coin or paradigm or A16C that their business model is management fee-based. But like, let's be clear, if you can raise another billion dollars and clip $200 million of fees of the course the next 10 years, you're probably going to do it.

Right. And that is absolutely symptomatic of what happened in the last cycle. In addition to that, you are seeing a lot of these VC funds start to buy, you know, locked tokens, right? These, we've seen, we've talked about the FTX sale of Solano coins. You know, it's no surprise that Pantera owns a big slug of that now. Well, why? I am completely speculating, but I would, I would assume that, hey, we can lock this up for X amount of time. and on a marked-to-market market at the current price and clip management fees on that, right? Like, pretty good business.

And so, you know, selfishly, I absolutely want more people to be allocating to liquid hedge fund strategies. We've been very fortunate to have a pretty solid performance over the course of the past couple of years. And we've seen inbound candidly explode over the past few months based on that performance. and we've been raising a lot of money for our liquid hedge fund strategy. The key, I think, is for a lot of these allocators, and I think Phil was looting this, or maybe Kelly,

was that the volatility of these liquid hedge fund strategies, if you don't know how to manage risk appropriately, or if you're an allocator that's expecting, like, all right, if you're down 5%, like, you're going to, like, clip everything and de-risk. It's like, that's like five minutes in crypto. And so part of the challenge is, like, educating a lot of these allocator that are used to tradfai, that have very tight constraints around the vol of the product, the sharp ratio, what they're targeting in that regard.

With crypto, it's so different that getting them to understand that is very difficult. Because a lot of these folks at these allocators, like, why would they take the career risk of allocating to a crypto hedge fund that has, you know, could be up 50 one month and down 25 the next? that is like a level of volatility that is very difficult for people's stomach, let alone the manager and LP investing in that. Yeah, I think to that point, that's interesting, the allocators, if you're in the hedge fund bucket and the hedge fund team is looking at a liquid crypto fund, the volatility doesn't fit into the paradigm that the hedge fund allocator is used to. So then that decision goes to the venture team. And so the venture team then looks at the hedge fund and they're not used to they're not used to allocating to a hedge fund. They're more used to allocating to a closed end fund of some sort.

And so like there's just like a weird mismatch between like allocators like venture and hedge fund allocators who are looking at liquid crypto funds. So just just real quick. Like obviously performance is one thing and speaks for itself. But like your strategy is innovative. how do allocators respond when the strategy right now to give returns is like we said just now, like it's in memes and it's in volatility. How do you get them comfortable with that? Or do they, is, is meme investing now native to them because it's sort of sprawling across all markets?

Yeah, I mean, I'll try not to victory lap this too much. But, yeah, we were first really. Yeah, you're really teeing me up for this. one, Kelly. Are you working for his marketing team? She is not working at asymmetric. We are very glad she works at Galaxy. So look, I mean, it's not a surprise. I wrote about this many, many months ago. Like we were kind of, I think, the first institutional fund to actually, you know, allocate to a meme coin because it was the right call. And I think like a lot of this is market dependent. We made a bunch of money in 2023 on Bitcoin, right? Falls were in the 30s. buy vol when it's cheap, all of a sudden you have a regional bank crisis, VAL gets turbo bid, guess what happens to the value of those options contracts? They go up a ton, right?

And we could see the same sort of thing happened this year with just Bitcoin. The reality is because of what's happened on, on Solana and the activity around meme coins and how trivial it is to create them and trade them and the rise of telegram trading bots, these types of things like meme coins are here to stay, whether you like it or not. And turns out that Dogecoin, outperformed every one of these intellectually argued L1 infrastructure plays of last cycle.

It was like top, I think, five or six coin in 2021, right? Like, it's a literal dog coin, doesn't do anything. And it outperform. And so as an investor slash trader, like, your job is to generate returns for your LPs. And if your LPs have a problem that you're buying a dog coin, yet you're printing them money, maybe they shouldn't be an LP, right? that's kind of our perspective on it is like look at what the market is offering you if the if the market is suggesting to you that hey there's a lot of opportunity to to make money in investing in trading

and positioning against meme coins as a portion of the portfolio then you should absolutely be doing that yeah i think there's an there's an interesting point i think probably in december when when bonk was really taking off where it went from like there might be a risk in investing in meme coins there's to there's a risk of not investing in meme coins. And we said this internally, like, allocators are going to start to ask us why we're not investing in meme coins, right? And sure enough, allocators started asking, like, are you going to be buying meme coins? And meme coins at the end of the day are they're just brands and they can turn into full

functioning products. And you've seen that with Bonk, right? Like Bonk actually does have products that built out of the brand. I think it's like totally legitimate to invest in meme coins. and allocators, I think are warming up to that. See, it's not just me, guys. It's Phil, too. I want to stay on this real quick.

It's like, this is so interesting to me because I deal with accredited investors and qualified purchasers, the type of people that can buy your fund. And like, I can't imagine those types of people coming to me, coming to you guys and being like, are you investing in bonk in these meme coins? Like, what types of investors are you guys dealing with? Like, that just doesn't compute with me with like the people I'm used to talking to like on my Bloomberg terminal. It's amazing how quickly people's perspectives change when price goes up.

Okay. Yeah. That's a really good, succinct answer. Yeah, look, I mean, the only thing I'll add is like,

so in May we closed, this is a nine figure fund of funds. And they asked us point blank like, you know, do you like, we know that you bought bonged, this and that like what percentage of your portfolio is in meme coins? I'm like,

well, it's completely market. dependent, right? Like, we change our portfolio based on what our view is and what the market is is kind of telling us. I met with these other guys that are X-Tradfi guys. They're in the late 50s. One of them ran like a multi-b dollar credit fund. The other one ran like some event-driven ARB fund. So, you know, they've made a bunch of money. They've been in finance for a long time. And they asked me the same thing. How much of your performance or your portfolio is associated with meme coins? And my answer is always the same. It's market dependent, right?

If, for example, I didn't believe that Bonk had long-term staying power, I probably wouldn't be owning any Bonk. But to Phil's point, like, it's evolved into an actual, like, projects that with real products, probably worth holding some, right? And so this is, you know, again, like, if you understand how the organic evolution of what happens in crypto as a trader, you should be trading things that are going to make you money. And meme coins are absolutely in that. bucket, there's going to be all kinds of iterations and experimentation around meme coins. And when we're seeing, the thing with Iggy in and of itself is like an actual celeb coin that has real utility. These are the types of innovations that we should expect. But as a trader, you can't miss these opportunities or you're going to underperform. And in fact, I ran into,

at the Coinbase conference last week, I ran into a guy who runs a fund of funds as well. And he told me point blank. He's like, Joe, I'm so stoked that you guys were able to like pull away. he's like because a lot of the managers that that were in are kind of stuck. And what he means by that is is that they're stuck in investments that are not performing, but have really good academic and intellectual horsepower behind them. I realized I just said a credit investor and qualified purchaser and didn't really define them for the audience. So there's probably some people out there that don't know. But essentially like in hedge funds, you can't just invest in a hedge fund.

You need to have a certain net worth or a certain amount of income or be an institution and these different things. And those are the two acronyms usually is that or quib qualified institutional buyer. But just to clear that up. And then also last one question for you, Joe. So right now you're saying it depends on the market. I guess what's bag is bigger right now for you, your mother tokens or your bonk tokens? Can you answer that? I can't give you a secret sauce, dude.

Come on, man. No, look, again, the way we look at it is like the macro actually, and then we could probably pivoted into macro after this, but like the macro is our guiding principle for how we view the broader market. And then it's, then the question is like, what's the best way of expressing our macro view through crypto? And so from a macro perspective, like Q2 historically, worst, worst performing quarter for Bitcoin. We had a view that Q2 would be choppy, if not down, given that the run up that happened in Q1. And so we've been partially more defensive this quarter, even though we've definitely had levels that we've gotten long at.

because we want to own certain assets at those particular levels. How does that relate to the portfolio construction with meme coins? It's just another asset that's going to provide a level of beta to the portfolio. And to be clear, they swing like crazy, right? So if you have a enormous bonk position like we do, you can understand that the P&L vol is pretty high. We're comfortable wearing that P&L vall because we have a longer term view where bonk is likely headed.

and we want to be participating in it from that perspective. The more like newer idiosyncratic stuff, whether it's mother or it's when or these other types of tokens that are recent in the meme coin space, we can trade in and out of those as we see fit relative to the risk constraints that we have on our portfolio. Wait, just closing the loop, James, no one's asking you for a bonk or a Doge ETF at Bloomberg yet. People do ask about Doge, XRP and Solana ETFs. I literally was talking to a client today asking, like, are we going to get Salana future

are we going to get a Salana ETF this year? And I can unequivocally say there's like zero percent chance you get a Salana ETF in 2024. And I think even pretty slim in 2025. But you said 10 percent for ETH. Remember? You had a 10 percent chance for that. This is very true.

You got me there. You're saying there's a chance. So for Salon of there's zero chance in 2024, literally zero because when you file it, you need 240 days. So we're into 2025. So absolute best case scenario, somebody files for Slaught an ETF tomorrow. And I think it's 260-ish days, actually, once it gets the red all set and done. So you're looking into late Q1 at the absolute earliest.

And I really don't think that's going to happen. But we can go on to macro now rather than me pontificating on the odds of a random different coins, ETF projections. So yeah, we got unemployment's not looking great. It's going up a little bit, which is ironically one of the, those things where bad data is good data for the markets and rate cuts potentially. Inflation is coming down slightly from the last data point we've gotten. I guess I'll just turn it over to you, Kelly.

Like, how are you viewing the recent economic data we got and how are you viewing the macro picture as it relates to crypto and tradfi and all that? I'll let you start. I preface that I'm not a fund manager. I LARP as a macro economist at best. But I mean, obviously, I think we all agree. We all do. We all do.

This is a podcast of LARPERS in the MacGER. Awesome. Except for maybe Alex, but he's not here. We all agree, I guess, like, you know, rate cuts good for risk assets, good for, you know, fixed supply assets, like Bitcoin. You know, inflation going down, obviously good for all of the above. But I'm like, I look at these inflation numbers and I'm like, I was assaulted by a headline on Bloomberg over the the weekend about how beef prices are soaring and as a consumer you should be eating pork all summer. So I'm like, this was a great data point. It's hard for me to tell and I want to know

your guys take of like how enduring is this. How much are you buying into the inflation coming down narrative? Is it driven by, you know, oil prices getting pummeled the past few weeks, et cetera? Yeah, I mean, I don't have a really strong view on how enduring the, you know, downward inflation pressures are, but I think the rising unemployment, inflation coming down, at least in the last month, good readings. It seemed like we were going to enter this goalie-lux period where we were going to have an economic slowdown. So inflation worries were going to subside, but recession worries weren't top of mind yet. So we were just going to have a rip in all assets. But it turned out that just like equities, equity indices are ripping and, you know,

Crypt is kind of sideways to down. I think part of that is the Fed came out relatively hawkish last week. Other central banks are relatively doveish starting to cut. And so I think that's putting upward pressure on the dollar. I think we probably need a breakdown in the dollar for Bitcoin to break out. So it's kind of a weird period. The Fed is, I think, playing this kind of game of chicken where it's like it almost wants to be wanted again.

And maybe we're going to see a little bit of pain, but I don't know exactly how that shows up. That said, you know, the sentiment in crypto right now is so atrocious, it seems like, VAL has come down pretty substantially as well. And so typically, like when sentiment is this bad, it seems like no one's paying attention. When ball is compressed, it's typically a good time to be paying attention and to be getting long. So it's kind of a mixed bag for me right now. Yeah, I mean, from my perspective, I think, you know, I've been pounding the drum on this for a while that I think rate cuts are coming, which is oddly non-consensus unless you're the CIO fixed income at BlackRock. So good to know I'm in that company.

But the last week, like the CPI and PPI data that came in was definitely light. And the irony was that the CPI print came out the same day as the Fed. And a lot of people looked at the Fed dot plots, which for those of you that don't know what the dot plots are, it's basically like they do this every quarter where they kind of forecast the number of, you know, or where the interest rates will be at some point in the future is probably the easy way to describe it. So dot plots came out and suggested only one rate cut for this year, whereas in the previous dot plot, three months prior, there were three rate cuts. The issue is that the CPI print wasn't factored in.

into the FOMC's projections. And although Powell said at the press conference, somebody had asked him like, hey, did you guys make your decision based on the CPI print that just came out? He said, you know, Fed members have the ability to change their, you know, their perspective or their forecast, but most don't. And what that says to me is they did it. And as you have like this type of lighter economic data coming in on the inflation side, it is giving the Fed firepower to actually justify rate cuts.

Our view has been September and December are likely going to happen. I think there's also a non-zero chance that you see a maintenance cut in July, right? The markets aren't pricing that at all right now, which is a pretty asymmetric trade, in my opinion, that if you continue to get weak economic data like we've gotten, there's another CPI print ahead of the next Fed meeting, for example, you're going to have claims jobless claims data this week. You're going to have continued employment data ahead of the next Fed meeting.

There's a pretty decent chance that if this data continues to trend lower, as well as the revisions to trend lower, the Fed has the ability to actually make a maintenance cut and actually surprise the market. They have done this in the past. One thing I do want to point out

though is last week, there was the NFP or was, I don't know, a week and a half ago, whatever it was, the NFP print that came out where the headline was really high. And so, So people saw that. They're like, oh, employment is totally fine, but it's actually like, well, wait a second. Unemployment data ticked up. The unemployment rate ticked up.

NFP was a boomer of a headline. But then when you look into the data as it relates to the household survey, there's a chasm between what is in the NFP versus what is in the household survey. And so I think over the past 13 months, based on what the household survey says relative to NFP, there's a difference of like three million jobs. And that is crazy. And even Jerome Powell said publicly that there's a good chance that the NFP numbers are not correct, which in and of itself kind of tells you something that the head of Federal Reserve is not believing entirely the NFP numbers.

That was wild. Yeah. And that is like pretty stark to see something like that. And, you know, myself and others have been kind of joking but also serious on Twitter about like, what if I told you it was all made up, right? It's kind of made up because if you look at something like the household survey data, it does not match what's happening with NFP. And in fact, there's a million fewer jobs from the household survey relative to what they have peasing. So where are these jobs coming from? Well, you could actually point to illegal and legal immigration. A lot of these

jobs get double counted in the NFP model, the way that they calculate things. And so from our perspective, or my slash asymmetric perspective, like we think the employment data is actually rolling over. And if you look at a lot of the revisions, you're seeing that. In addition to that, you're seeing a lighter CPI print, a lower PPI print. You're seeing, you know, the kind of budget-conscious consumers getting deals from McDonald's and Taco Bell and Target and all of these companies that are dropping prices. I mean, we talked about this a couple weeks ago, James. Like, that's deflationary. And I think even today, Rick Reeder from BlackRock came out and said, if you remove shelter from the inflation calculation, like it's actually below 2%.

And that's pretty material. Now, granted, shelter is a big piece of the CPI. I don't want to discount that. But if you remove that, other aspects of the economy are actually below the Fed's target. So you add all this up. It is an election year. Global liquidity is going to be picking up in the second half. It's hard to see a scenario where the Fed actually isn't cutting rates at least twice in 2024.

Yeah, I have the odds of rate cuts here. looks like there's the markets are pricing a decent chance that they cut in September, which I guess we'll see what happens with the data that comes out over the next three-ish months. But I, that seems surprising to me. But I guess we'll see what happens. The other thing is I would say is all the stuff you were talking about, Joe, that's basically been the goal since inflation spiked up after COVID. So, I mean, yeah, Goldie locks and no real recession like Phil was talking about would have been

great. But I mean, like, Powell was talking about we're going to force us into a recession. Like it's the only way to stop inflation. So we might head towards there. Let's, I guess we'll fingers cross. I don't want anyone to lose their jobs. But yeah, the markets right now are pricing at least two cuts, more than two cuts by the January part, the January meeting, which is January 29.

Yeah. I think the big worry after the meeting last week was whether Powell is going to sit on his hands like too long, right? And let things deteriorate. And so if you have like a shorter term perspective, like how do you, how do you want to manage that? Right? Because if if the whole perspective by Powell and Fed is like, okay, let's see, let's watch things

deteriorate and then come in and rescue the market, then there might be some volatility in the interim. I think longer term, though, like the path is like very, very clear. We're going to move on to essentially Nvidia. I mean, it sucks up all the all the air in the room and anything Tradfai world related. It's the AI darling. I actually have been writing about one fund to $71, $72 billion fund, the select sector spider technology ETF, ticker XLK.

And it has this wonky index rules. And not really that wonky. It's just that the situation is so bizarre because we have three stocks in one sector in the technology sector, Microsoft, Apple, and Nvidia that are all around $3.2 trillion in market cap. And essentially, there's all these SEC diversification rules that force you. to not be like overweight only a handful of stocks. Like you can't have more than a certain number of stocks above 50%. In this case, you have three stocks that would make up 60% of the technology sector in large caps in the United States. And there's all these rules that limit this. But the way this one

works, it says whatever the smallest one that is pushing you over that 50% hurdle, you just go and cap it at 4.8%. So for the last like six quarters, Nvidia has been growing like crazy. Like anyone listening to this probably has been hearing Nvidia. If you've been paying anything attention to finance. And it's just been growing up and it's a wading in the fund has been going up, seven percent, six percent, eight percent. And then every time it has a quarterly rebalance, it gets chopped at four and a, it goes down to four and a half. And I wrote in April, like, things are getting close to the point where invidia might pass Apple. And if that happens, invidia is going to get bought to the tunes of tens of billions of dollars. Right now, my estimate is

about 11 billion. And whoever is the lowest, in this case, it's Apple, which happened this past Friday, it was smaller on a float-adjusted market cap basis, which basically just means the size of the company and the shares that are actually freely traded, was Apple was smaller than Nvidia. So what happens is Apple's going to face $12 to $13 billion in cell pressure. And then Nvidia's going to have $10 to $11 billion in buying pressure solely due to this one ETF and this one wonky rule. And the best part is like, this could all flip.

if all the sudden, Invidia falls again, all of a sudden, you're going to have the exact reverse happen in September. The next day to September 13. So this rebalance is going to happen this Friday, June 21st. We could go through this. If they don't change the rules, we could go through the same thing where if, if you know, Apple manages the pass in Video or Microsoft or both by September, all of a sudden you're going to have over a $10 billion sales. So this kind of points to like some of the wonkiness and people complaining about passive investing. But I think it's just fascinating to look at the three largest stocks in the world are all here, $3.2 trillion, which we can get into, like, whether or not those valuations are real, I don't know how far down this hole you want to go,

but I don't know if you guys have many comments to add there. Yes. I mean, look, I saw it today on CNBC that they are going to be 20% of the XLK. And then shortly thereafter, there was some guest on saying, like, the path to $10 trillion market cap for Nvidia. You know, like, I know, like, we kind of like laugh about it. But that company is clearly a generational company. And I think more importantly, they have a really unique vertical integration for GPUs because they have with the Kuta CUDA, which is like the platform for developers to build on using their GPUs. That is like a, you know, that's kind of like Apple and iOS, right?

Like you got this really tight coupling there with developers. and the actual hardware, like, that's a really good business. In addition to that, I've seen chatter about in the United States that there's like this aggressive move to get as many electricity leases locked up as possible and warehouses or space to build these like enormous GPU supercomputers. So as a means of like national defense, right? And so who benefits from that? probably Nvidia.

You know, as it relates to crypto, like there's been chatter of our dollars going into Nvidia that aren't going into crypto. Maybe. I mean, it definitely has outperformed a lot of crypto. That's for sure. You know, are you buying out of a $3 trillion market cap and expecting to get a 3x on it? It's possible. Certainly possible.

But, you know, that a lot of, I think a lot of things have to go really right for Nvidia to achieve that level. On the crypto side, I would argue that you have to get a three-x on the crypto side, I would argue that you actually have way more potential upside versus something that's already, I mean, the equivalent is like, is Bitcoin going to go up 3x in like the next whatever, 12 months? It's possible, but it's unlikely. I would argue that, you know, alt coins and things that are beta to it have a better shot at it. Yeah, I guess I have more of a question than any kind of like answer to what's been going on. But like, do we think the flows into Nvidia are fundamentally driven or is it a

passive bid and like that's a self-reinforcing mechanism driving, you know, as it continues to become a larger part of these indices, more and more allocation gets driven into them and it becomes a bigger part. And, you know, it's like if there's already low float, because most of it is in passive, how much of a driving factor is that here? I don't even know. I was going to say, James, you got to have some info on this, right? Yeah. So ironically, Invidias actually has a relatively low passive ownership percentages. And the reason that Apple is technically smaller, so it literally came down to, so I talked about this, but float is basically what percentage of the shares are actually able to be traded and invested. And typically you take out any people that have held it

for extremely long periods of time. So like Berkshire's allocation to Apple is considered not part of the float. Any internal employees or internal on the balance sheet of the company are not considered to be part of the float. So Apple's float is actually lower than in video. is because of those things. And I can tell you right now what the passive ownership number is of Nvidia, but it's like the average stock in the S&P 500 has like 18-ish percent of its shares owned by passive.

It looks like that's roughly what Nvidia is too. So I think it can be a little bit of a flywheel. So what people often mistake in the ETF world is there's ETS that are technically passive, but they have like all these rules. Like we just talked about one of them. It should be just market cap base, but like it's basically just buying more. But also you have these momentum funds that are going to be chasing this. And then the same thing happens, a lot of the stocks that end up being the most

passively owned that like kind of potentially get distorted are the ones that like active managers don't really talk about. It tends to be like these reits and these utilities because they fit into all these different categories. They fit into like small cap, high yield, real estate, all these. If you fit a bunch of different bubbles and you're like a relatively small company, all of a sudden your passive ownership percentages goes up. Like there's a couple stocks right now that around 50% passively owned that you've probably never heard of. But these big names, they really are from what we can tell and what I can tell. I try to study this all the time.

This is one of the top questions I get. Active is mostly driving what's going on here. And if you look at the numbers that that Nvidia is putting out, it's not like they're performing and they're, I mean, granted, their multiple is going crazy. But they're also putting up quarterly numbers that are just like absolutely mind-boggling. A lot of it is probably because like some of these companies like meta and Google and you name it, Tesla are just buying tens of millions. millions of dollars of chips. I don't even think, do they know exactly we're going to do with all these

chips? I think people are just kind of like at this point, it's almost like channel stuffing. They're trying to get, it's almost like forward looking to try and get their hands on these chips. So that's my overall view. I'm not a portfolio manager, obviously, but I think some of the passive stuff is overblown. That said, there is this wonky stuff, which I really try to dive into and figure out when it's happening and call it out. So actually, you said CNBC report. I'm upset. I didn't get any credit, even though I was calling for it all last week and wrote multiple notes on it and Bloomberg wrote on it, but I guess they're a competitor to ours. So I got, we get no camera. Daggered me in the heart a little bit there, Joe. Yeah, that's my bad. I will say,

you know, some of the guys that I speak with in Tradify that work at hedge funds or PMs there, like, Nvidia is like crack rock for hedge fund managers. I mean, it is the purest momentum play. And also there's a risk, right? Like if you're a manager and you don't own any Nvidia, like your LPs might be a little upset with you. Like, what do you mean you don't own it, Nvidia, right? And so some of this becomes like this self-reinforcing feedback loop

where hedge fund managers are chasing momentum, chasing performance, and then Nvidia guides insanely higher even after another quarter of an insanely higher guide. Like, they have to participate in this. And I think fast money is absolutely driving a lot of the activity in Nvidia. And to your point, James, less than one fifth of passive bit is in Nvidia. Look at the price action in something like Nvidia.

That's fast money. That's people playing momentum. That's people chasing performance. I think Nvidia running and crypto running can coexist too, to the like, Nvidia sucking the air out of crypto argument. Like, crypto ran a lot in 2021 alongside a lot of ZERP phenomena as well. So, you know, you can have multiple, you know, massive bull runs alongside each other. The market structure in crypto is a lot different now.

And this is probably another conversation for another time. But like you have less unsecured lending this cycle. You still have broader ownership of crypto. But like you have a lot of old Bitcoin moving around getting sold potentially around 70K right now. And it's like once we sort that out and sort through that cell pressure, then I think, you know, the crypto bull run can continue despite whatever happens with this Nvidia run. Yeah, and I think to Joe's point about, you know, LPs asking, like, oh, why don't you own this or that? When things start moving, you know, that's when the questions start pouring in. And so Bitcoin's been consolidating for three and a half months.

So right now, no one cares about crypto. Then Bitcoin breaks out and it might go up 50% or whatever. And then LPs, again, are going to be asking, why don't you own Bitcoin? And there's going to be that fast money fomo fact. for Bitcoin, you know, it's the most reflexive asset, really there is. Yeah, I mean, I just throw this chart up here to show like what we're talking about. That blue line is Nvidia and this is market cap. I mean, this thing in 2022 was a $431 billion company.

And right now it's $3.2 trillion, just as big as Microsoft and Apple. And it's kind of crazy how clustered they all are right at the top there. So I just wanted to show that for anyone who's actually watching on the video and just listening to the podcast. It's it's kind of a staggering chart to behold. Does anyone have anything else on this topic? Or can we move, should we move on? Yeah, let's move on to the David Hirsch topic. Yeah, why don't you set us up here? Yeah. So, I mean, I think this is pretty, pretty new today. So David Hirsch, I think he was the guy, what is it? Yeah, the, he's the, he's the chief of the crypto asset enforcement division at the SEC.

And he resigned today after nine years on the job. So that's the topic. What should we discuss, folks? Let's go around with theories. I have two potential theories here mostly, but I don't, Phil or Kelly, do you have anything to add? Well, it initially was announced that he was joining Pump. Dot Fun, and I guess that that turned out to be fake.

Announced by Pump.comte. Of course it was fake. That would only happen in Defi and Crypto. I saw that and I was like, is this real? I think everybody's reaction was that. Like, this is the actual pumped up. Yeah, my reaction was not that. Oh, come on.

It's pumped on fun. Are you kidding me? I knew it was fake, but I partially like was like, wait, what are the odds that this isn't fake? I fell for it for a couple seconds. I'm not going to lie. I definitely did as well. What's your, what's your theory, Kelly? I think there's a boring answer here.

And he, like, I don't know, there's lots of ex regulators working for, large crypto companies to help them stay on the right side of history and I wouldn't be surprised if he shows up at one of them. Inevitable going to happen. I mean, when Gary Gensler either gets fired or resign, he's going to probably end up at like fidelity. Or dare we see that? Fidelity or BlackRock.

Until he can jump on another ticket for whoever the next Democratic nominee is would be my guy. I mean, look, I do think, you know, we kind of, I think we alluded to this in our last odd, James, about like, the political. landscape radically shifting with, you know, with Trump and with even Biden doing this kind of about face. And, you know, I think if we tinfoil hat this a bit, you could look at this and go, is this the result of some of the stuff that's happening in the Biden administration? It's not a stretch to assume that. I don't think we can know that for certain. But, you know,

you saw the FDIC, the guy basically behind Operation Choke Point 1.0 and 2.0, resigning a few weeks ago. You now have the head of the enforcement division for crypto resigning at the SEC. You have Biden accepting crypto as a form of donation money, which is insane, given everything that the Biden administration has done for the crypto industry. And also, like, I think there was something. leaked. I don't know if it was confirmed or not that he's like attending some conference or Bitcoin mining, something, something. I don't know. The point that I'm getting to is that

the 180 that's happening from the political landscape with respect to crypto in the U.S. for the Biden administration, and clearly Trump has been on board for a couple months now, doesn't seem unreasonable that this guy might have gotten the nod to kind of like, move on, but we can't actually know that for certain unless he confirmed it. Yeah, that's along the lines of one of my theories. Like, I was thinking maybe there's been a change at the SEC. Like, we can't keep going down this path and he disagrees with it potentially. And he thinks we should be litigating it.

That was one theory. The other theory was more along what you said. And then my main one is, like, I wonder if he, like, sees the writing on the wall. Like, what, what lawsuit has the enforcement agency one, aside from, like, the plain and obvious scams? Like, I think the courts are going to dictate what crypto policy is at this point, if unless the, the, the, the, um, the, the. unless Congress steps in, right? So from his point of view, like, he was leading the charge on what was going on with Terra,

you know, in that case, it's pretty much, I think that's done as far as I'm aware. And he was very involved in that. But like, at this point, anything he does is going to be extremely challenging courts, because it's up with the Supreme Court. They're losing left and right. Like, the writing is on the wall that this isn't, that what they've been doing wasn't the right way to go about this, which is something that everyone in this industry has been arguing forever, like just sit down with us, come up with some rules, give us some actual

guidelines that we can follow. But here we are. Sorry to interrupt, James. But didn't, they recently announced that they're reducing the Ripple settlement settlements, like 100 million bucks or something. Like, I saw some news that like the settlement that they're that they're floating out for Ripple is like not only $100 million when before it was like billions of dollars or something. I mean, to your point, James, sorry to interrupt, it was like they're taking L after L after L. And even the current administration is now like leaning in heavily into crypto. It's like, what's the point of someone like this guy staying at the SEC? Yeah, opportune time to just jump dip and go make a bunch of money somewhere else.

Exactly. I mean, even if it's not the Biden admin, we know for a fact, like it's right now you could argue whether or not the Biden admin is truly softening in crypto or they're just kind of like taking a small step back. We can say without a doubt that the Democratic Party as a whole in the Senate and in the house is definitely softening on parts of what's going on with crypto. So I don't even think that's up for a debate anymore. All right. Let's wrap up here. We're over an hour now. I guess the last thing to talk about was is my area, Ethereum. ETH. Everyone wants to know when they're going to happen.

I'm pretty sure I said on here last time that I thought early July was a good over under. We're sticking with that. We had her over under at July 4th. I don't know why. Belt, you just felt the need to move her over under to July 2nd because he really felt like if he had to pick date he wanted to move it up before July 4th. So that's basically July 2nd is our over underdate. What we know, all these potential Ethereum ETF issuers were told to file their S-1s or those documents to the SEC on May 31st by the whatever sometime on May 31st. They just got those comments back from the SEC recently late last week, I think Friday potentially. So that's when we started saying, okay, things are actually moving. But it did take them two weeks.

From what we know, the comments were relatively minimal. They weren't like drastic changes that were required. So that's a positive sign for things moving quickly. So yeah, we think end of June, early July, assuming there's no big hiccups and there's no other issues, that could be the date that we see some of these things get approved and ultimately list. And so do you think the trading will start around then or what are your guys' thoughts on that? Yeah. So it depends what the filing says. So usually what they're going to do here is they go through this process and they give them,

they grant them accelerated approval. So usually you file these things and then you have like a date on there or you check a box that says like some days after this filing will go live. What they're going to do is I assume I'd be very confident saying they're going to let everyone go at once. And the way to do that is you check a box that basically leaves it up to the SEC when you launch and the SEC can grant you accelerated approval and then you can list basically like the next day once the accelerated approval happens. So my assumption is that's the way this is going to work.

We're going to get those S-1s. We're going to see those filing documents. And then they're going to go effective pretty much that day or the next day. And then they'll begin trading rather quickly. Assuming everyone's lined up, but I can't imagine any of these issuers are not ready to go at this point. Like they've had plenty of time. If they rush through this the way they rush through the other stuff, maybe somebody could have gotten left behind. But at this point, everyone's got to be ready to go at this right now.

Yeah. Kelly, from your perspective, you know, bringing like the Galaxy institutional view here. What has been the kind of like, you know, sentiment either internally at Galaxy or with Galaxy's clients, as much as you can talk about, about the Ethereum ATF? Is it a non-event? Is it a huge event? Is it kind of no, you know, like middle of the road? Like what's been the sentiment around the Ethereum ETF approval? Yeah. I'll preface this with that. I sit in our trading group, which is separate from our asset manager who are filing for an ETF with Embesco. So this is purely from institutional trading counterparty POV. But I think, you know, the run-up that we're seeing in ETH now is because the expectations

were so low for the ETF and then we had this pivot, right? In terms of inflows and those being an event, it's, I think it's going to underwhelm relative to Bitcoin. And I think that's almost expected now. So it could be one of those where the expectations are so low that it could exceed them. like there's no staking yield in these ETFs. That matters a lot to institutions, right?

Like, you know, 4 to 7% yield, wherever it is, matters. And there's a lot more infrastructure from an institutional standpoint to do that yourself. So it'll be interesting to see, but I think the expectations are low. Hopefully they surpass it. And it gives more momentum to the space. That's a great point. Like it's almost no one thought it was going to happen. And so it outperformed and then people aren't expecting it to have a big showing, which means it might outperform.

I love that. I love that as a trade. That's a good idea. What about you, Phil? Any thoughts on like the Ethereum ETF and how you guys are viewing it and positioning around it? You know, like, so to that point on like, ETH didn't run up ahead of like the ETH approval, ETH did run up pretty well with Bitcoin on Bitcoin's approval, right? And there was underperformance relative to Bitcoin, but then basically in a single

candle, Eith reclaimed that, you know, basically that months, five months of underperformance relative to BTC. So I'm not sure that there's like a mispricing necessarily here unlike the expectations. I think the biggest thing I'm worried about is ETH and, what unlocks there will look like relative to to kind of the buy pressure. Obviously, GBT has kind of been a disaster with the amount of outflows that have happened. That's obviously, that's been offset with the huge amount of inflows, but I worry a little bit that there's not going to be enough inflows since it's like kind of, it's since the second one

to market to offset the amount of potential outflows from ETHE. Do we, have a view, is there clarity on what the pricing, what the fees will be for ETHE? We don't know for ETHE. We know that Franklin, who's the lowest cost ETF provider on the Bitcoin side at 0.19 or 0.19 percent, they're the only ones that filed with a fee. So we won't see the fee until those effective filings I was talking about. Everyone's going to keep it close to their chest. My assumption is everyone's going to launch right around the same fee they did for Bitcoin. For these issuers, they're not making like tons of money on this. Like it costs more money to operate an ETF that holds like digital assets than it does to hold something like

stocks just because the custodians cost more money. There's there's added process. So these guys aren't like making tons and tons of money. So I wouldn't be surprised to see the fees be somewhere in the same ball arc. I am most interested to see the answer to your question, Phil. Are they going to do the same thing they did with GBT? So they've GBTC, they took from 2% to 1.5% to, ETH is a 2.5% fee right now. Are they going to go to 1.5 again, which again is like a bigger drop off than what they did with GBDC, or are they going to actually do something different? Who knows?

I mean, honestly, everyone talks about how bad it was the GBT outflows were. I mean, GBTC has taken in more money in revenue for a gray scale at a 1.5% fee, despite the $17 billion in outflows or whatever the number actually is, than every other ETF issuer of those Bitcoin ETFs combined and likely is going to do better than them, even just for the first, you could take these funds, these five months, and then not let GBC collect another penny from their ETFs. And the money they've collected in these five months is probably more money than any of these other ETF issuer is going to collect for the rest of the year. I mean, obviously that can change if Bitcoin goes on massive runs or whatever, but if inflows

come. So it wasn't necessarily as much a losing strategy. It's just more, the other thing I would say is a lot of the money that left GBT aside from the bankruptcies and some of the people that were trading like the discount. There was a lot of traders out there, hedge funds, liquid hedge funds like you guys, that were buying it solely for the discount and they unloaded, right? But for the most part, from what we can tell, a huge chunk of the outflows found their ways back into Bitcoin itself or into other ETS. I've talked to multiple people who basically took money out of GBT and put it into another new ETF or put it directly into Bitcoin itself. So I think if there is significant outflows in ETH, it's obviously going to be a bit of a drag on the price. But the

amount of like, there's not billions and billions of dollars of bankruptcy estates that are in ETH in the way that they were with GBT. So I think the risks are slightly lower. Yeah. I think that's actually the most important point that like their ETH is not wrapped up in the same way in a lot of these bankruptcies the way that GPTC was. And now it's just like automatic cell pressure. Yeah. So I don't know, I'm pretty neutral. Like I think both of them in the long term are going to be like hugely successful

products. I think like crypto Twitter gets really obsessed with like which one's going to be better. And they're just, they're both going to be great. Once we can actually have these passive flows into crypto products in a massive way from these RIAs, like that's going to be. That's going to be huge. I was just going to say all the, my view is like very short term, right? And even if you set aside like the long term RIA inflows, et cetera, like it's bringing

in massive hedge funds to trade in their strategies and it's onboarding them into trading a crypto asset, trading the basis, et cetera. And that itself is also a force that that'll carry the industry forward. Yeah, I was just going to say, we have to end it on a good note. Phil said it's great for both of them. I'm like, well, that's, there's your answer, folks. I would chime in and add, like, my number is like, I think they see 25% of the flows that Bitcoin ETFs did, which would be a lot of money. And I think also money is like a dollar into an

Ethereum ETF is more likely to move the price of Ethereum a little bit more than a dollar into a Bitcoin ETF. And I've seen some studies out there. I haven't done it myself that kind to confirm that. So I think it'll obviously, it'll just depend how much money comes in and how positive it is for the price. Or I guess theoretically, how much money comes out of ETH, it could be the flip side too. But I'm with you guys. It's unquestionably a positive thing for the space to just, I'll be able to get access to those passive flows, no matter how small it is.

And we think they're going to be a huge success, though I'm a little more positive on the success rate of these Ethereum ETS than my colleague, but we'll deal with that another time. All right. Kelly, Phil, thanks for joining Joe and I. This was a lot of fun. We'll have you guys back on again sometime soon. Yeah, thanks for having us. All right, guys, thanks for joining us for this episode of Bits and Bips.

We'll be back in two weeks to discuss more about how the worlds of crypto and macro colliding. Until then, have a good rest of your week.