Bitcoin ETF Breaking Records with Eric Balchunas

Transcript

all right yep I got my cough going on so I'll just mute when I can all right thanks bangas Nation it is Thursday January 11th and the reason I give that day is it's an absolutely momentous day the Bitcoin spot ETFs just got a this happened yesterday and the markets went live with many of these ETFs today uh we brought on Eric balchunas who I'm about to introduce and and talk to you as you'll know he's one of the main analysts ETF analysts who've been predicting the spot Bitcoin ETF and

updating the bankless community about where it is in the process and he I think quite accurately predicted he said many many months ago that with a 95% certainty we would have a Bitcoin spot ETF in January and indeed now we do so I grabbed some of his time he's on the circuit today talking to uh many different organizations but I want to get a market reaction on uh the ETF how it's doing so far check on volumes also want to talk to him about which products might be winning and uh like whether they're meeting expectations or not and all of the other details that have come in last minute so I'm going to get with Eric we're going to have that conversation keep you

updated on the latest with the Bitcoin spot ETF and celebrate this momentous occasion in just a minute but before we do we want to thank the sponsors that made this episode possible including our number one recommended crypto exchange that's Kraken go check him out Kraken knows crypto kraken's been in the crypto game for over a decade and as one of the largest and most trusted exchanges in the industry Kraken is on the journey with all of us to see what crypto can be human history is a story of progress it's part of us hardwired we're designed to seek change everywhere to improve to strive and if anything can be improved why not Finance crypto is a financial system designed with the modern world in

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Bitcoin ETF and now here it is markets have just gone live gonna check in on that with him Eric how you doing good uh a little tired Running on Fumes buted these are great these are once in a while situations um so I enjoy the excitement I've been covering this stuff for a long time and there's long stretches of just normaly so the past uh week in particular has been really exciting um but tiring yeah I bet it's tiring I how does this match for excitement of other ETF launches in in kind of your career in your history um this one definitely rings with Bido which was the Futures ETF um but then we've had like remember when Arc Mania was going on there was a lot of um that was about a year where

Ark was just doing things that were unreal like Supernatural kind of Feats that that's kind of an exciting and then I'm always excited by Vanguard uh I've been covering them for a while they're almost like a uh like a slow moving aircraft carrier so they're not as jumpy or exciting but what they're the size and the sheer Mass I find exciting and I cover them a lot so um there's definitely areas that are exciting but um this is really unusual in that it's sort of like two worlds colliding um and you know obviously a lot of the data uh that we have on the terminal it's cool it's interesting to see them up there now and trading um so the first day or two is big over the

next couple weeks though this will die down they'll be like the volume will settle the excitement will settle so we're we're kind of we're peing off you know my my engagement on this is probably at the peak the last two days it's probably going to start going this way over the next couple weeks yeah that makes sense and and your engagement on uh crypto Twitter is that you've become I think a mini celebrity of sorts on crypto Twitter and that's got to be somewhat unique you probably don't get that sort of uh public reaction with um the Vanguard uh ETFs May maybe I'm wrong about that but I I know the crypto Community is is pretty loud at least on the social media oh yeah so I went to the bogleheads conference in uh like after my book came out a year ago and um

some people had read the book there so that will be known in sort of that audience a little bit but not like this and they don't they're not a lot of those people are not on social media when it comes to social media yeah this audience very engaged very um vocal and creative uh and funny um so it's fun I mean I totally enjoy it um but yeah there's really nothing to compare this to to be honest all right so so this was a little bit weird I want to get your take on this I I don't know if this happened you were you were on air somewhere live but this happened on Tuesday the sec's Twitter account appeared to announce that the ETF the spot Bitcoin ETF had been approved it it turned out that um as they said that their Twitter account was compromised

this was maybe a hacker or some some other person who got into the account and and posted some misinformation like what is up with that have you had time to digest that how bizarre is that to happen at the 11th Hour um really bizarre uh I was ex my initial reaction was it's accurate because I again I never thought that particular Twitter handle would be compromised it just didn't cross my mind then um the the graphics you know I maybe I didn't read it close enough um when I go back and read it I'm like okay yeah there's a couple things on there but kind of looked legit at first glance and I was expecting them to announce everything exactly 24 hours later so I thought may I thought okay well maybe

they just want to get ahead of this drop it as a PR situation and then do all the the back fill with the documents later that way people aren't just like hitting this on their website and crash their website like I could see that and so I was like all right it's like an early Christmas present you know it's like getting a present on Christmas Eve now they're approved I thought that was the whole plan so then you find out what happened crazy um just ironic hypocritical a little bit because you know they they're supposed to be into security and then like uh the looks like the ex security PE uh safety people put out that it was you know they didn't have two-factor identification or author what's that called authentication so I don't know um that's a little egg on the

face for them for sure on top of this whole gigantic delay on this stuff and then uh um you know they have their own issues on that but that was a curveball some people started to go wait a second they're going to have the FBI investigate this is what they're gonna use as an excuse some people thought Gary was so maniacal that he did that on purpose so that he could then reject them and he has and he also had the staff working for three weeks straight you know uh around the clock so he could just go well we did so I I had to deal with a lot of people who had these theories right and I I just I was like it doesn't make sense Gary directed all

this work I'm just going to stick the obvious and it turned out to be right yeah absolutely and so of course spot Bitcoin ETFs were approved the following day I guess you know officially not by hackers the the way this was approved was interesting so there were three Commissioners this a total of five Commissioners who I believe vote on these sorts of uh decisions three were for and two were against and I'm wondering did did you have a chance Eric to read some of those statements so Gensler was in the for Camp okay Hester Pur and another commissioner were in the for Camp there were some other two other Commissioners who were in The against Camp did you read those statements from gendler and Pur I mean from my perspective on gensler's statement was if it felt like he was really dragged into this Kicking and Screaming

particularly because of the the courts you mentioned kind of the grayscale uh court case but what was your take on the statements coming out of uh the Commissioners for their individual votes here um you know they were all on brand you know p was on brand I happen to think like her give the people choice and even gendler though uh in the approval hinted at well look if you're going to do it this is probably the best way which is what we've been saying all along if they ban crypto fine like outright but if you're going to let all these exchanges exist and like micro strategy stock and like gbtc um an ETF would be a more pure deal for something that tracks the price I

mean it's just just a better option so that's where as an ETF person I knew that the whole time so he kind of like discovered what we all knew for like eight years um and I I went to the SEC first ever Investment Management conference uh about four or five months ago I was invited there to speak and I remember um him speaking at at the beginning and he went through all these things like the advisor world the broker World crypto and he had all these ideas for like how to regulate them and he got to ETFs and he didn't really have anything he's like good industry runs well he didn't have any problems with it so even he can't find anything wrong with ETF so when it was my turn to speak Gary had left so I was just speaking to

the other people at the SEC and I pulled up gbtc percent premium which is all over the place and then I pulled up the percent premium of the ETFs in Europe which is like boom because the Arbitrage and I said just you guys should trust the ETF more than you don't trust crypto it sounds like he kind of arrived to that place uh with the courts nudging and I'm happy he did the two antiv votes I first of all I didn't think there'd be a vote I was slightly wrong well I wasn't wrong I said there could be but there could also not be the two anti votes is interesting you'd think Gary would have met with them I there's a very strong possibility that Gary met with them because they're all on the same team they're all three Democrats

and they were like G's like we're doing this we have to but you guys write the anti you can go full throated with the anti that way we're on record saying we hate this okay and then because we know the other two Republicans are going to vote Yes so off to vote Yes I'll be the Swing Vote but at least we'll have it won't be like some majority thing like we lost our mind you guys do the not I don't know if that's true that would not surprise me at all because at the end of the day this was all baked in Gary was going to have to vote Yes because he again he put everybody to work for like two months yeah the uh the statement that surprised me the most that like you said Gensler was on brand um felt like his arm was being

Twisted Hester Pur was just like we should have done this 10 years ago that we should be a merit based uh regulator uh caw's um statement actually you know kind of surprised me took me back a little bit because it was very anti- um crypto and I wonder what the future for for some of these Commissioners is obviously at some point in time uh Gary's going to vacate the chair so uh it'll be interesting to see the Dynamics play out because we've got maybe some more ETF products that we want to get out there Eric if they'll allow it I mean we've got ether in the future we'll talk about that in a in a second but one thing I want to talk to you about is how are we doing so far tell me about volume uh I know you've got some tweets out

this morning and this is emerging in real time but at the time of recording here what uh what does volume look like and Benchmark this with historic volumes for other ETF I'm about to refresh my spreadsheet just for you I'm going to give uh a totally updated numbers here there's a lot of numbers flying around so there this is called the spot Bitcoin ETF rate correct so if I include just the spot Bitcoin ETFs uh if we include gbtc we get to$ 2.7 billion dollar traded so far in volum that is enormous if we kill gbtc because it came over with volume so because I track new ETFs all the time and when a new ETF launches has nothing

going for it it's like a little newborn being shoved into the Amazon so to me gbtc is not a real new ETF so I'm really looking for 10 and they have 1.5 billion so they've already smashed as a group the world record which was held by BTO at a billion in the first day of trading volume the world record for what ETFs or just crypto ETFs no total wow BTO had the most volume in the first day right at one billion so it's beating like gold 2004 type ETFs well keep in mind a billion wasn't the same back in 2004 if we adjusted for inflation I still think it would be beating it but gold would would look a little stronger

Gold's big claim to fame GLD rather was it was the fastest ETF to get to one billion it did in three days wow and that is impressive in 2004 numbers but and that was always like the Joe deasio record uh of of ETFs that's the guy who had a 57 game hitting streak that no one has broken since the baseball player it's like one of those Sports record like then nobody will break it and that was that dagio record but then BTO got there in two days now we have um the group is probably going to beat all of those records the question is will one of them beat those records and ey shares looks good um we're looking at $566 million that's over half a billion so

the day is about half over so we could have a bit of a oh I'm sorry I bit sorry about that I'm looking at the wrong number I bid is at 713 million already that's the winner so far it's probably a near lock to pass a billion probably by 2 2:30 p.m. once it passes a billion it's broken the volume record and in flows tonight all of this will probably get converted to flows in the first two days so my guess is I give a 80% chance that bit ibit breaks bto's record alone throw in the group you have like a doubling of the breaking of the record so all good signs the only caveat all this is that this volume I don't know how much of it is like actually like this like uh unmet demand that was

like oh my God I'm buying this versus these issuers lining up their clients and their investors saying hey buy our fund on the first day um we'll find the answer to that at over the next couple days and next week in particular but nothing wrong with lining people up and having a big splash it's good for everybody it you know the ether Futures were also in my mind because they were total flop they traded a million or two2 dollars in one in the all of them together so a million or two they traded in one day and think about this I shares alone is already at 700 million in a day that's incredible so this is a a record smashing ETF launch then for for Bitcoin I guess Wall Street and these issuers

have got to be happy with this performance right and um maybe it's so who's ey shares who's behind ey shares and how is how how are some of the big entrance like uh Black Rock doing for instance well black Rock's the one at 713 million so they are leading that's black I shares is Black Rock same same thing I shares is like the um brand name for their ETFs Black Rock does other things besides ETFs but the brand name for their ETFs is ey shares they actually bought that ey shares from Barkley so they didn't make the name um so Barkley thought of the name ey shares uh but if we go to a sword here I'll tell you who's number two um number two on this is Fidelity um FBC at almost 500

million so Fidelity could actually break the record of Bido but still lose to I shares who breaks all that so do these do these first do these first days matter at all does this kind of set the precedent usually with ETFs about who's going to win so is the like the winners of the first three days likely to kind of be the winners five years from now yes yeah wow so oh yeah the first couple days are really important um the only thing I would say that's a cave to that is that I shares Black Rock which is ey shares a couple times they put out ESG ETFs and they they totally loaded up those ETFs with like a billion or two in the first day and although the number didn't grow gradually like this it was

more one chunk and then those didn't do much after and so I want to see volume the next couple days uh to really get an eye of of of this but most of the time I mean again I there's an art to this I would say at that the the way way this day closes will be a great foreshadow for where they all are in a year wow uh and how about bitcoin price so you know some have talked about this being as kind of a sell the news type of event um we saw Spike up now at the time of recording anyway we're at um I believe 46k for for um Bitcoin so a little down from kind of the highs I think I I I opened up my screen today expecting to see some kind of huge

selloff because everybody was like the news selling the news selling the news selling the news well the news was yesterday so I I don't know why it didn't sell it's weird so then I put that out and it immediately started selling so um which is perfect um I own that but I I was just I was a little surprised because after BTO launch there was somewhat of a selling of the news now that was a really that is still the top actually that was like top of the cycle back the top of the cycle 20 yeah 17 maybe we'll be there now but what I I've been asked a couple questions about this though the 1.5 billion that's in the spot Bitcoin ETFs today all that's going to be buys like they have to buy Bitcoin with that money but the gbtc

volume is probably outflows only right so they are kind of canceling each other out today so even though the volume is really good because there's activity you want volume long term it's good healthy sign this is a situation where you are having outflows from gbtc inflows and all these and it's netting out to probably zero so the other parts of the price of Bitcoin are probably people doing other things I don't know if the ETFs are going to move the price given that cancelling out of those flows today they're about even so anyway all this is um a little hard to totally read zooming out are are you a subscriber to the belief that this just opens up a big

pipe a big bandwidth of capital into Bitcoin and into crypto though like if you look at sort of the the next 12 months let's say because that's been part of the the bull case that we we could see this I don't know what's the size of this do you think we get uh Bitcoin to tens of billions of dollars inside of an ETF um well what what's your time frame let's do the next year 12 months yeah I mean gray scale's got 30 already some of that will leave but they'll probably be at least left with 10 by then so let's just X gray scale out they're a unique case will the rest have 10 billion I'd say yeah I shares is

going to is already going to be over a billion in flows tonight so and it looks like Fidelity is going to be half a billion um bitwise is at 56 million Arc at 177 again you add this up you're looking at a billion or two tonight already and so we have 11 months and ETFs are the vehicle choice for many investors so I would say 10 billion in non- gbtc assets is totally possible I wouldn't be surprised you throw gbtc and I think you go to 20 or 25 because gbtc again remember has 30 right now does does gptc just convert to an ETF it did it is that happened well it transitioned okay so transition but

you're not counting that as a launch even though it is still an ETF just because it's been existence for so long it'd be like um I don't know counting like it's like steroids or something I don't know it's not it's um I don't know I've just watched ETF launches my whole career and a true ETF launch again you're starting out with nothing in this pterodon and so I really discount how hard it is so if uh depending on the category like if um I don't know a cyber security thematic ETF gets like 10 million in trading the first day I'm like wow that's interesting because it's hard to get trading on the first day this is hyped up so I'm going to raise my bar for this but it's already cleared it in my opin

do you think we could flip in Gold ETFs what do you mean oh you yeah sure I mean it would take a couple years I think gold ETFs are like 90 billion I think so if with if gray scale is 30 now you're looking at another 20 but maybe gray scale see some flows like I said I I would look at that as a five-year goal okay not a oneye though so Eric last 60 seconds we have yeah I know you got to jump um final question is we got to we got to spot Bitcoin ETF okay how about the spot ether ETF you know markets are always forward looking and so we're looking in the future and I recall a time where you and James said maybe 70% something like that probability in uh 2024 how's your prediction now what do

you think we get this over under and what what percentage well James and I haven't put our our full our full forces behind investigating this but my my logic and it's probably pretty solid and from everything I've heard if they were approved ether futures they they kind of have to approve spot or they get sued they could get sued and maybe grayscale wants to convert their ether trust and is like look we don't want to you know just talk to them hey we don't want to sue you you have to approve these because the same rationale would apply if you you let Bitcoin Futures out you got sued and then you have to do spot Bitcoin you let ether Futures out well you I it just seems like ifof facto

they kind of have to do it at this point any coin beyond that definitely way more Up For Debate but I would be optimistic not like 95% at all or anything like that maybe a little over you know half maybe up to 70% that they will approve this also remember who was the first one to file and whose like um final deadline is in May Black Rock um Black Rock Black Rock has filed for an ethereum ET yeah so and like if if it was some random like no name issue I'd be a little more pessimistic but again they're not dumb you know they got this done you know they're looking at the next one um so I would probably hitch my opinion a little bit to Black Rock in this case um and they haven't filed any others there was

that fake xrp filing but if they did that i' I'd look at it more seriously but for now I'm just I think those this one and then The Ether and then I just don't see anything for a while amazing Eric thank you so much congrats and thank you so much for your coverage on the uh the crypto ETFs we'll be bringing you on to speculate more about the ETF in the future if you're willing so it's been great thank you so much yeah thanks for having me I'll talk to you later bye all right take care uh bankless Nation got to end with this of course RIS and disclaimers crypto is risky you guys know that uh you could lose what you put in but we are headed west this is the frontier it's not for everyone but we're glad you're with us on the bankless

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