Bitcoin ETF outflows and what ETF investors are actually doing

Transcript

Bitcoin bare markets are not just measured in how far they've gone down. They're also measured in the length of time and we're still pretty short if you you consider the bare market to have begun around that October 10th start the selloff. What's up everybody? It's LG Ducet here and welcome to the Milk Road Show, the daily crypto show that didn't think we'd get a sequel to Crypto Winter so quick and so soon, but understands that when you live your life a financial quarter at a time, all you really got at the end of the day is family. Today is June 3rd, 2026. Guys, it's been less than 48 hours since I recorded with Jamie Coots and crypto has taken a major tumble. Or rather, Bitcoin has.

Yesterday, we woke up to 69,000. And we were later greeted by an even more dire price of almost 65,000. All this on the heels of Michael Sailor selling to prop up his dividend, which has perhaps started the inevitable cascade we all feared following a monthsl long rally. But today, we're actually going to look at the real data of what is going on with Bitcoin and all our other deer coins. We will talk about ETFs, Hyperlquid, and SpaceX with James Seaffort, senior research analyst at Bloomberg. Today's episode is brought to you by Cape, the privacy first mobile carrier, Nexo, earn interest, borrow and trade crypto, and Koshi, where your takes finally pay out. James, welcome back man.

>> Thanks for having me. Happy to be here, LG. >> Okay, so you you get like a front row view of all this kind of stuff, right? You get you get to see front and center when there's money moving in and out of these like of these ETFs. And what I want to know from you is did you know this was going to happen like last month that we were going to take another tumble? Like what what has the data been telling you in the last couple days? >> Yeah. No, I had no idea that this was going to happen. So, uh I wish I could say that I did, but I obviously didn't. And yeah, I mean, Bitcoin specifically, it started its losing streak or outflow streak, I should say, a couple weeks ago. We're on 12 trading days in a row uh of outflows. So totaling nearly 4

billion for the US spot Bitcoin ETFs which is pretty aggressive. We haven't seen anything quite that bad. Uh and if this continues it's going to be a record for outflows. >> Wow. So you you're telling me that we are seeing record outflows from the ETFs right now for Bitcoin or or Bitcoin and like ETH Salana and everything else? >> Really? It's it's just Bitcoin over the last like you know like I said I think it's a 12 day streak. I don't even know if I would call it a record. I guess like over a 12-day period, it's probably a record. I haven't done the exact numbers, but we're at 4 billion over those 12 days for the most part. And you go out another uh week or so and you get to another almost billion near 5 billion. So, it's not a good look. But

again, we saw 9 billion come out from October through the end of February. So, I mean, these ETFs, I've said this with you guys before, um the way they grow is like usually it's a few steps forward and then a couple steps back. Few steps forward, a couple steps back. Right now we've been now we've basically just gone sideways from the octo from October. Uh you know what what whatever happened with auto deleveraging October 10th all of that. But as you can see we're kind of been sideways since that October number. Uh we're obviously down. We're not quite at the lows where we were at the end of of February, but uh yeah, it's not it's not looking good. We were we were getting close to reaching a new all-time high towards the beginning of May. Uh and now as we get back into June, we're now near the lows of where

we were at the end of February. So yeah, not the greatest low. >> Guys, listen. We are at a very crucial point in time right now. AI stocks have ripped. They're going to keep ripping. Our analysts on the AI side are up like literally 100% or more on quite a few calls. And crypto is about to boom again. Or at least it feels that way. If you want all the insight on what we're buying, what our analysts are doing, what's on their watch list, all of that is in Milkroad Pro. So join at the link below. And this what we're looking at right now. Is this specifically Bitcoin? >> This is just the Bitcoin ETFs. Yeah.

This is >> just Bitcoin ETFs. Okay. Yeah, just want to be clear with that. Okay. And is that is there you know I kind of I I said in the intro that maybe this is uh people realizing that Sailor will finally have to sell or something like that. Is that if you had to attribute a cause to that? Is it is it the fear of that or is it just this is this is the cycle of the market? What what do you think is kind of causing this this receding? >> So I think you're crazy to say that that didn't have any impact here. Um but also if that had if he had sold a little bit when Bitcoin was in a massive uptrend, I don't think it would have even been a blip, right? All the positive news we could potentially hear about clarity

don't matter. Uh so Bitcoin, it's a very technical asset. You have people who are technical traders on here all the time. We got up near that 200 week moving average 83 whatever whatever that number is and we just come going down. Bitcoin bare markets are not just measured in how far they've gone down. They're also measured in the length of time and we're still pretty short if you you consider the bare market to have begun around that October 10th start the selloff. Um so it's just takes time. We've been going sideways and so I think there's a whole host of reasons why this is it's never really one thing. I know like I work at Bloomberg, right? So we're a media company and I always have reporters like why is the number down?

Like what is going on? And it's like very it's not very night. It's not uh they don't want to hear like there's more sellers than buyers. there's it's often like a cacophony of reasons why something is happening and and Bitcoin is a very momentum driven asset and right now momentum for the last few weeks has been downward. Um so naturally we're going to see outflows for the Bitcoin ETFs. But I will say like if you look at these flows, we're still at 55 billion in net inflows roughly since these things launched. Like the bit the Bitcoin ETF holders and the crypto ETF holders in aggregate for the most part, they've been diamond hands here. like it's it's really like the this call is coming from inside the house from the seller's point of view. Obviously, there is some selling on these ETFs, but for the for a lot of it is really like know

the ETFs are just a piece of the pie. They're not determining what's going on with price. >> What what do you think? Okay, you're you're right and and maybe I fit into that journalist category of be like, why is price up or down? Please, James, tell me. Um but that is what we want to talk about on the show especially you know uh when things look like this when we have these major moves or or pretty s what feels like a pretty significant move. Do you based on your experience at least with Bitcoin ETFs which are you know um just over 3 years old here at least in your chart is there a bottom to the selling you know what I mean because even what you said is very that's very important right it's like listen there's still 54 billion plus of inflows like that's still a lot of money that's still

parked in ETFs for Bitcoin so coming down from the top is not huge but do you do you think we could go way lower here do you think a lot of more a lot more Bitcoin is going to flee I would be inclined to say no. I mean, I I don't think we're going to see the end of flows, but I don't think we're going to see like the flows get, you know, cut in half is my gut instinct. Obviously, I can't know the future, but what I would say is for the most part, a lot of the fluctuation in inflows and outflows, a lot of it tended to come from the basis trade. I don't know if these outflows in particular are from the basis trade, but those tend to be hedge funds that are it's almost like the funding side of PERS. It's that they're looking at the

basis yield. What they're doing is they're shorting the futures market. And when these ETFs launched, it was hard to like basically get that basis, the basis, the difference in the price of the future that's going to roll every single month. And the underlying spot market, when we're in a roaring bull market, those those yields, that basis yields can be north of 10%. And it's virtually risk-f free. So, what they'll do is they'll lever up and enter into those trades. And to get the spot side of that trade, right, because you have no basis risk as the Bitcoin ETFs are holding spot, and they're going to settle at whatever the price is of the future at the end of the month, there's like a almost a risk-free yield. um from doing that that yield has completely compressed largely because like one the market is in a roaring bull market so

you can look at funding rates on per it's kind of giving you the same idea and so when that goes down to near zero a lot of money comes out so if you look at in like the middle of April funding or the basis yield actually went up so we saw a lot of money come in >> the other side of it is when you look at the holders of these ETFs one those hedge funds that tend to be hotter faster money but like the people that are buying these products from our point of view are likely right sizing it in their portfolio, right? They're not putting it in like a lot of the listeners here probably who are like hardcore crypto Bitcoin believers that have it 50% of their portfolio. Most of the people buying the ETF, it's like part of their retirement account or it's

just like a two or 5% slug in their investment brokerage account. They're not putting this in massive portions. So that's part of the reason why they're able to stay in longer, we think, because people are right sizing it and they understand it, right? Bitcoin goes through 50 to 70% draw downs every four years. A lot of times 50% plus intra period. So like I think people who came in understood what they're getting themselves into. But obviously right now the last couple weeks really does not look good. >> Right. Okay. So you're telling me that it's like the people the people well are those people going into the ETFs? What are the people taking out of the ETFs though? Who would that be? Is that still kind of like is that is that the same kind of people? Because if it's people just stacking for their retirements and

that's not really something where they would they would just actively take things out so quickly right to the two. >> Yeah. So the people taking out are almost certainly like I said anyone who was doing the basis trade I in April it became slightly more attractive. Some of the money that came in in that spike on that chart you were looking at likely had to do with basis. >> There's obviously like I'm talking about long-term holders here advisers and people putting in their client portfolios. They tend to be longerterm holders. So >> they're not going to hold it. But there's day traders in here. Like this is the ETFs are for everyone. anyone can use them, right? So, the bulk of it is going to be in people that are more long-term oriented, but there's plenty of trading that's happening these things all day long, every day. Options

trading, lever trading, you name it. So, it you you're you're can't really know exactly who's buying and selling. But, we do have the 13F reports, which I do look at, and the biggest sellers of the Bitcoin ETFs. Granted, this was through March, so we don't have the data uh for the second quarter yet. We won't have it until I think August, but we know the data of like what institutions held these things and bought and sold through the end of March. And the biggest sellers were hedge funds. Advisers did sell a little bit, but for the most part, the biggest sellers for the Bitcoin ETFs were the hedge funds, which is the opposite for Ethereum. The for Ethereum, it was advisers that sold a lot.

>> Oh, okay. Interesting. Does it do you think the Clarity Act has a has an impact here? >> 100%. I mean, on Bitcoin itself, >> probably not. It's probably the least impacted. I think Bitcoin is kind of set in what it is. You know, digital store value, it's kind of very simple. When you start getting to DeFi protocols, Ethereum, Salana, all these other things. I think clarity is going to have a major impact. But if you're just looking for catalysts like to get us out of like the momentum crushing of a bare market right now, clarity could be something that happens. I know it's supposed to go up for a vote at the end of the month after Junth. Um, so that could be like a potential positive catalyst if it actually goes through.

obviously won't be good if it doesn't go through. But um yeah, I I think of most people, especially traders, when they think of crypto legislation, I don't know how many of them are thinking like, oh, this is going to be more impactful long term to things like hyperlquid and Salana and Ethereum versus like crypto, Bitcoin, good thing to crypto, buy Bitcoin. So, it could be just like a strong catalyst shortterm for Bitcoin itself. But overall for the crypto market, anyone saying it's not going to be impactful, I think is just lying to themselves. Got it. Uh maybe we can flip. I don't know if there's anything else you want to cover on on on the majors. Um I think that's always, you know, you kind of told us a little bit about the basis trade. Um I want to flip to something that's doing really well

and we covered it a lot on the show, which is Hyperlquid. Um which also had a lot of ETFs launch in the last couple weeks. Like you you're the overseer of that. We have Bitwise on the show regularly. They launch their um their ETF which has done well. And I believe you said that Grayscale is also is going live today. Um, how much does how much do ETFs contribute to something like Hyperlid which has exploded and and been one of the own the very few green shoots of of this year and of honestly of the last like two months. >> Yeah. I mean, if you look at the green shoots, it's what there's a term that I've seen people throwing around for the four people. It's it's Hyperlid, Zcash, Near, and uh V um I'm blanking on the >> Venice. Yeah. So, but as far as this is

going, we don't have a Zcash ETF yet. We have a B&B ETF that just launched and like you mentioned, hype is the most successful launch of any thing that's happened in the near term, right? Um, so, uh, we had 21 shares launch the first product, T- Hype, THYP. Bitwise launched a little bit after BHYP. I think they're the now the largest. Uh, Gayscale is coming in with uh, a whole bunch of seed capital. they launched today, but T- Hype and B Hype from Bitwise and 21 shares have taken in over 141 million uh just in it's not they're not even really a month old yet.

So granted, compared to the billions that we saw into the Bitcoin ETFs, it doesn't sound that crazy, but when you rightsize it for the market cap of Hyperl, it's actually impactful. Uh and I think the narrative, like one of the problems with ETH and some of these other coins, the narrative isn't that simple. hyperlquid. It's still a little complex, but you know, the the burning mechanism, the fact that fees are going back to decrease supply, almost like a share buyback program for people in Tradfi who understand this, I think it's an easy narrative to explain to people who are advisers uh and traditional type investors. Um, so I'm very interested to see what we're going to what happens with these uh 13F reports that I'll get in August to see who who owns those three things, but it'll be very early.

like we got we just got in at the end of March, we just got the numbers that change from the end of 2025 for Salana and for example and yeah, I mean I'm expecting the hype numbers to be good. The when these things launch, you often see like a spike in volume and sometimes it pitters off like it pitter patters away. Uh and the volume has been strong across both of the products so far and I expect Gayscale's product to likely do well as well. Um so yeah, this is the best launch I would say in crypto since the Salana and XRP ETFs launch. The way we build wealth is changing. Stocks, savings accounts, real estate, that playbook is getting rewritten in real time. Nexo is the platform built for what's next. It's an all-in-one digital wealth platform where you can earn interest on your crypto, borrow against

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Wow. Let's just look I we don't have a chart actually for those but I think if we can even look at this one uh which is for Salana which is is you know currently sitting I think around 1.6 billion. So to give you context there and hyperlquid's market cap is not that but their fully diluted value is is actually I think has like briefly surpassed Salana or is kind of sitting there roughly. Um and again they have a lot they have a huge token supply that they've bought back that they don't know that hasn't been announced what they're going to do with it. Right. Right. So, taking off the market, but we don't know what that is yet. But let's look at even I think even just look at the timeline, right? So, these Salana ETFs launched.

Whoa, whoa, whoa. I clicked on the wrong thing. Took me your Bloomberg side. Uh, so even like let's look at this timeline, right? Like, uh, you're say how much how much are we at for hype ETFs? 15 million. >> The hype ETFs were unique because we had Rex Osprey, which we don't need to get into the weeds. They had a way that they were able to launch these products before the official 33x spot products went out. So they used like a Cayman subsidiary. They were actually holding spot uh Salana alongside like other Salana ETFs that were available in Europe. So they had like a way of getting stake Salana exposure before the SEC fully approved them because they went through this back doorway almost similar to how Bitcoin and Ethereum futures ETFs launched long before the

spot products. And then we saw these things launch in October. Obviously you can see that ramp up after that first thing I'm pointing out. And right now if if you if I told you that this was the flows were going to look like when this thing is like 60% down since it launched, 70% off the highs, um you I would I would never have believed it. I mean this thing has taken in over 1.6 billion uh so far since uh the first one launched and we've taken in 350 million year to date in this like absolutely brutal bare market for ETH price. I mean for Salana price. So yeah, again this is just showing that like goes back to what I was saying with the Bitcoin ETFs.

think these holders there is no basis trading here. The basis has been virtually zero. It's non-existent. Uh it was never existent because these things launched after the bare market started as far as I'm concerned. And we can look at like the futures open interest and gauge how much might be happening. But this is just long-term people putting this into their portfolio at likely right-sized allocations. They're going in um at, you know, 1 2 3% allocation to something like this. And the other thing I would say is back to those 13F reports. We know what institutions did. technically institutions sold from the end of 2025 into Q1 into March 31st. Uh but obviously there was enough retail and other people who don't have to file 13Fs that came in to offset and then some the sales from institutions.

>> These numbers I I have a question actually about these numbers even something like this we're looking at Salana 1.63 billion. How is that number how is that monetary number calculated because as as the price of Salana changes how does that work? >> Yeah. So this is only the dollars going in or out to the products. So we can check to see basically every single day I look at the net flows and I add it up to each other over time, right? So these charts are just the net money going in and out. We're not looking at the price performance because that will alter things. You can look at AUM over time and that'll go up and down with price because the only way to change AUM is either money going in and out or the value of the underlying going up or down. This is just pure is money going

in or out. Uh and as you can see >> for the most part more so than any other crypto section right now money has only gone in. >> Right. Okay. Okay. Got it. So for something like that like Salana that's like money isn't even really coming out. It's it's the the growth has stagnated a little bit but it hasn't hasn't been removed drastically. Uh at least not yet or who knows what'll happen there. Exactly. >> Um >> right. So even something like Hyperliquid is it, you know, you're kind of noting that it has really outperformed, especially from an ETF standpoint in like a really brutal bare market um environment, especially last couple weeks. It's like as you know, Bitcoin tumbled from 83K down to mid60s now. Uh you still have something like

Hyperlid outperforming. Is there any historical precedent for that in crypto or anywhere else where there there are ETFs for a product that launch and or or a company or or whatever and even if financial conditions or the contingencies of that market are bad that those ETFs outperform like that. >> Yeah. I mean there's always there's I cover the ETF industry right as you mentioned and there's always a pocket doing exceptionally well even if it's inverse products in a bare market right uh and a lot of these issuers know what they're doing when they launch these things. They're trying to time it. You have to file typically 75 days before. I mean I can't even tell you how many AI and space related ETFs have been filed in the last like 5 months. It is it is unrelenting where you're seeing tons of

launches. Some of these launches have come out and they already have billions of dollars. So yeah, I would say the issuers are smart and like they kind of go with the spaghetti cannon approach. So you have a lot of issuers willing to launch a lot of products. It costs a lot of money to file and launch these things, but if you just get one or two hits, it often pays for tons of other filings and they can build on each other. So, we're in a year of record likely record flows potentially and likely record volume uh definitely record filings and record launches. So, like we're ETF world is just popping off and there's always there's always bright spots and right now obviously like we mentioned in crypto, the two that I'm mostly focused on is uh hype and Zcash uh because I think they could get ETFs

in the relatively near future. Well, Hype obviously has one. Zcash has been filed by a few people. We just got B&B. We have another B&B ETF coming out, but that's obviously not doing as well. But yeah, there's there's always something bright to cover. >> What is the spaghetti cannon approach? >> Yeah. So, you just like So, for example, there's tons of like single stock ETFs. So, you just file and launch 50 of them. And if one of them gets to a couple billion dollars, it covers the costs of launching all those other ones. And even if some of the other ones it's almost like a venture capital or private equity type approach to launching product and investing because like when they are investing in these new you know startups vast majority of them go to zero. Some of them are okay and then like a small

percentage of them actually take off and become unicorns right and that's where most of the return comes from. And over the last few years that's kind of how ETF issuers have addressed this. They're much more willing to launch and then if there's no success to liquidate. So they're just throwing at the wall and seeing what sticks with investors. And honestly, it's it's pure capitalism because if there is no interest from investors or brokerages or what have you, you're going to be losing money. So like this is just a way to see like what the market wants and the market will decide ultimately what has value. >> So when you say you're describing what you said you just throw all these ETFs and hopefully some of them get a few billion dollars. How invol can you maybe explain how ETFs work to us just just for the novice approach? Is just like

when somebody when a when there are ETFs launching for a company are they involved in that ETF? Is that what you mean? Is that like when you're a company and you're like I would like to see many ETFs launched for you know so even in the case of Hyperlid like okay so they're not involved. So so Hyperlid is not they're not involved with like Bitwise and 21 Shares or any of those guys doing all this stuff right? Well, so there's probably foundations and things and like I know for a fact Grayscale there's there's some large holders that are helping seed the Grayscale product. We don't know exact details, but there's usually like some sort of agreement that's made for them to stay in. Um, but I like there's plenty of examples of particularly the crypto side with these firms, Van, Bitwise, uh, others who are like giving

a portion of their fees to help like developers or do things. I think Bitwise says they're holding hype on their balance sheet actually. Like so there's conversations that are happening with developers, but like when we're talking about broader ETF industry like there's no there not every issuer is talking to a company if they're launching a single stock levered version of their ETF or there's there's ETFs that are inverse versions of other active ETFs like Kathy Woods ARC like Tuttle who launched that probably wasn't having a regular conversation with Kathy Wood saying I'm launching a product that's going to short everything you do. Um, but like there might be some sort of conversation that's going back and forth, but for the most part, these are derivatives based and issuers are just, like I said, they're throwing spaghetti at the wall.

Um, they don't have to talk to anyone theoretically as long as they have proper things set up. >> So, do the issuers launch multiple ETFs themselves? >> Oh, yeah. Oh, you mean like that's because you said you said the spaghetti cannon approach and you said you would go and throw a bunch of ETFs. I was like, "So, one company would throw like would Bitwise throw multiple ETFs for the same?" >> So, in this case, it would be like Bitwise launching 50 altcoin ETFs like in in a couple of weeks, right? They're being a lot more diligent. Most of these crypto companies that are launching, they're being a lot more diligent about what they can and can't do. And part of it is being forced on them by the SEC because like the SEC is going one by one and making sure all the the SEC follows

a disclosure framework. So, you need to disclose all the risks. You need to tell people what could go wrong. You need to tell people what would have to go right and all these things. So these perspectus documents are long as hell and they're explaining everything. There's unique things for every coin, right? Like Hyperlquid is different than Bitcoin and Ethereum and Salana. So the SEC isn't allowing these things to launch unless they sign off on all that language. When you're doing that for a stock, for the most part, all that's already done. So you can just file tons of them. We just had one brand new issuer launch, I think, 40 ETFs last week. Um to give you an example. So like there's some theme ETFs, there's some leverage single stock ETFs, AI, Space, uh you name it. So, a lot of these issuers, like I said, they're just

throwing spaghetti at the wall and it costs a lot of money. It's hundreds of thousands of dollars to file and launch these things and hundreds of thousands of dollars to keep them open every single year. So, so what's so what what makes an attractive ETF? Like, let's say I'm going to go I'm like, I want to launch 20 ETFs for SpaceX, which we're going to talk about in a second. In your experience, how do I how do I how do I make that ETF attractive versus what others do? You know what I mean? Like, are there specific features or languages or names or acronyms or something? like what what is kind of like the trick there to to have a successful ETF? >> Yeah. So, we look at it uh I mean the two real simple ways are be very cheap type exposure. People like if you're if

you're the cheapest, you're going to probably garner interest as long as you don't screw everything up else up and shiny. We call it shiny object. If the something is performing really well and there's tons of interest, there's going to that that attracts way more interest and flows that are going to come in. So cheap or shiny is the real simple way, but also it has to do with brand and marketing. Uh like every ETF issuer, particularly in the crypto side, they're not all doing the same thing. Like like Black Rockck for example, they've only launched Bitcoin and Ethereum haven't filed for anything else in the crypto space. They're very diligent. They're like we are the grown-up in the room. We are we are focused on these two protocols. Uh there are other ways to do it uh that are like more cryptonative.

Uh you know, you have Bitwise that I would consider there. Van kind of straddles that line a little bit. you have coin shares that are very specific going into these things. So, I don't want to rattle off all these different issuers, but like marketing and brand matters, too. But the real two big things are like you're hoping you strike it hot, right? Like if you're launching a single stock ETF or a coin, you're hoping that that coin is going to take off and you're going to be one of the only options in the ETF world for you to benefit from. Um, but but another one is just capitalizing on what the media is talking about. You mentioned SpaceX. I last I counted there was 23 filings for SpaceX related ETFs whether it was like levered covered call all these different things a couple of them were 3x levered

which the SEC isn't going to allowed. So I would say there's 21 ETFs that realistically could launch solely around the IPO of SpaceX which hasn't even happened. So these guys filed these products three months ago. There's filings for OpenAI Anthropic like it's a cutthroat industry. We call it the jungle for a reason. Um but yeah they're they're throwing spaghetti at the ball. So, anything to capture some of that inflow, right? Like that's basically like you're like this is going to be the biggest IPO ever and we just we'll do anything. We'll spend millions of dollars just to try and capture some of that, >> right?

>> Yes. >> And it'll and it'll be worth it for them to get, you know, however much they're they're targeting. >> And ETFs also tend to follow the Lindy effect, too, right? So if you get out and you are like even if you're losing a little bit of money but you have enough assets that you're not losing much and you can stick around and like that shiny object moments like you can start earning more money and then all of a sudden it starts being profitable longer term. So like there's like a balance between knowing when to cut your losers and also knowing like this is a good idea that will eventually have its time in the sun and you want to stick around for it. It's it's I mean it's pure capitalism is the way I think about it.

It's fascinating to cover and I'm happy I'm not in there because it can be very very cutthroat. >> Got it. Okay. I mean, I guess you're happy not you're not in there, but this is also what you cover every day. >> Yeah. >> So, you're like the UFC commentator of the you're you're like the the Rogan or the, you know, whoever the Daniel Cormier of uh of of the ETFs. >> Yeah. No, exactly. I I'm not the one that's dependent on some fund I'm launching g garnering millions of dollars so I can have a paycheck next month. But >> um of course >> um what is uh I mean you can't you can't give probably financial projections but I mean the SpaceX IPO is is and and the subsequent IPOs of of the other two major companies that are expected to

launch out of trillion plus uh which are open eye and anthropic. We cover this across all our shows. What is your kind of what's your take there James? Like this is this is a an unprecedented event of having these three companies launch at a cumulative like pre-market of over like $4 trillion which is insane. Like that's not you know a trillion dollar company didn't didn't even exist like 5 years ago and now you have this. What what what do you think is going to happen? Are they they going to be able to sustain that? Is there going to be a lot of ETF inflows? What what does that look like?

>> Yeah, I mean one I my first comment would be like we already discussed this is I can't see the future. So let's start with that and I would also say on the stuff we were just talking about the benefit of all that cutthroatenness that happens in this industry is the end investor and the end user. Um but as far as SpaceX Open AI and thropic go like from my point of view what I cover I cover ETFs and index funds and investing like for the most part we were just talking about all spot products right spot ETF products they're holding one single asset. I think one of the biggest categories of crypto ETFs is going to be basket products, actively managed products that theoretically, if you had one, you'd be in, you know, Zcash and Hype right now and and shorting Bitcoin.

But there will be products out there that do that. But for SpaceX, what's fascinating is all the major indices, the S&P 500, the NASDAQ 100, uh the Footsie Russell, the Footsie 1000, um they're changing their rules so they can add these things faster than they otherwise would. So the S&P 500 used to have like a 12-month rule. Um, NASDAQ I think was six months. It might have been longer. There's there's usually these longer time periods, but now NASDAQ is set to add SpaceX in just 15 days. The Russell just five days after IPO, the S&P 500, the bellweather of them all, the you know, as stout a history as you can have, is uh moving from 12 months to potentially adding within 6 months. So, all of them are bending their rules for SpaceX, OpenAI, Anthropic. And there's it's a it's this is so controversial in

my world. I can't tell you how many people are like debating this and arguing over it. And I'll just give you the two sides that I would say and we can get into them however however deeply you want. One of them is like you're changing decades old rules for these major companies. Like this is not the way to do things. Like you're breaking rules to bend to like get these exposures in. They're like uh SpaceX is trading at a 90 plus multiple to sales which is a crazy people saying it's overvalued. They don't want it in in an index. It should it should wait have to wait longer and all these things. Um, so that's the one side. The other side is like these rules were set up at a time when companies came public at like $100 million, $50 million in market cap, right? Like they're new companies. They

haven't necessarily completely been proven. They want to make sure they settle on the market. We're talking about three three companies that could likely come to market at over $1 trillion. Like we're not it's not even billions of dollars. We're talking trillions. Like these are going to be some of the largest companies in the world. Um, so that's the other side. It's like maybe the rules should have to change a little bit because if you want the broad market, you can't just not include three of the largest companies in the world at this point. Um, so there's like a give and take there. I could argue both sides. The one thing I would say is that aside from NASDAQ, the other major industries, they do something called float adjusted waiting.

So it's not just what's the value of the total company. They look at the value of total tradable shares. And so like these things are going to come out like SpaceX was they're targeting $1.8 8 trillion valuation, but they're only going to sell $75 billion worth of shares. So, it's a small portion of it. So, like it's not like it's going to come in and it's going to go into the these indices at the waiting of 1 whatever trillion. They're going to go in at however many shares they sold. And like that'll change and increase over time potentially as more shares are unlocked. But yeah, that's what's going on. That's what I'm paying attention to. And like if you just look at the ETFs and the assets tracking these indices, um we're talking about for SpaceX alone, 20ish billion of that 75 billion that will

have to be bought by passive ETFs within 6 months. Uh and it could be more. >> My god, you're listening to the Milk Road Show, which means you've got takes, strong ones, I bet. But where do those takes actually go? Do you tweet them into the void, argue them in the group chat, or do you try to express them by buying a stock? The thing is, stocks move on like 50 other things at once. And that's where KI comes in. It's a CFTC regulated prediction market where you bet directly on outcomes like Bitcoin hitting 100K, Fed rate cuts, GameStop buying eBay with a clean yes or no. We did a full deep dive on why prediction markets might be crypto's third product market fit moment. Check the show notes for the full report and claim $10 free when you trade $10 on Kouchi. James, I feel like we're going

to have to have you back on our AI show to kind of like inspect this after the SpaceX IPO happens, which is at at the end of this month, and kind of like break this down for us and kind of tell us what you're seeing and and even how do these get approved? Do do these ETFs are they going to get approved in time for the IPO? Is that how that works? >> So the the indic So it's basically you got to remember so the index funds, they track an index. So they do whatever the index does and they they do they try to trade and do everything as humanly possible to keep in line with the index, right? So the index what it does is these the whether it's Footsie Russell, NASDAQ or the S&P they go through what the what are called consultation periods

and public people and people involved in the company these indices can comment on whether or not they want to make these changes. NASDAQ already approved these changes a few weeks ago. So that's a done deal. Footsie Russell just got approved I think last week or the week before. And the S&P Dow Jones they will announce their decision I think by June 8th. So within the next three or four days whatever whatever's today's date 5 days. Um, so we'll know by then. Uh, and our expectation is the S&P is going to approve these changes for a lot of those reasons I talked about. Like it's it's it's kind of it's very different from requiring what they call the seasoning period for for companies these large. So our expectation it will be approved. So for two of them it's a done deal. For one of them we have a 75 to 80% odds

that it's going to be a done deal as well. James, my last question for you, and this is a u this is very much aopium question that we have around these parts these days in crypto, but there is a there is this idea of the rotation back to crypto uh that people discuss away from AI and maybe once these IPOs kind of move through and once there's clarity on clarity one way or another uh and you know even even as things kind of settle. Is that is that a a fabled myth or is that something that you think could happen?

I mean, the big concern is like we talked about these multi-t trillion dollar IPO come IPOs coming. Um, the big like if you're just like general consensus concern is which makes me feel like it's not going to happen is like it would it would just be way too fitting for these three companies to IPO and come to market and for the market to collapse after that because it's so much money that's coming to market and getting unwound. Uh, and people are going to want to buy it and the people in there are going to be selling and it's just a lot of liquidity to absorb. So I would say one that would be a concern because no matter what you do in crypto, these things are viewed as a cryp as a as a risk asset, right? Like a lot of us like to talk about Bitcoin as

a potential store of value, a hedge against currency debasement. And no matter what you or I say uh or whatever argument I make, um the market views it as a risk asset. So that's one thing you have to worry about. But obviously um there are some examples in the crypto world specifically like you mentioned Venice that's very tied into AI. Same with Near that are actually holding up pretty well. Um, but they're like obviously the ones that are very different from from what's happening from the rest of the market. I would also say like the crypto market. I was at Consensus the crypto conference down in Miami and things are becoming way more institutionalized. You have a lot of the big banks there. you have a lot more people that are more discerning around what they're investing and a lot of these tokens and crypto more broadly

like there needs to be a a very simple elegant way to explain how you're earning revenue and what's profitable and not just like we're launching this thing and it's going to be successful because people are going to use it then there's needs to be some mechanism hype is a perfect example with that with the way that they're burning or at least storing um >> buying back hyperlid or hype tokens so I think there's like this overarching trend of like the the industry itself is changing ing from this retail driven uh cipher punk retail mania um to more instit institutionalized viewing of investing and it's both new entrance coming in and older people who have been in the space changing the way that they're viewing at these diff viewing these different assets >> definitely an evolution and a a

maturation as well um James appreciate your time man always appreciate the insight and the data so thank you for that uh and hopefully we're going to see you again soon maybe on the other show to to talk historic IPOs as they happen. >> Yeah, I'd love to come back. We're we're in a bare market and like I said, bare market in price and time and we're only uh you know, we're we're not we're not even 6 months in, I don't think. So, uh we're or no, we're just about 7 months in. So, give it give it some time. >> We're keeping the lights on here, man. We're doing our job. So, uh good to see you man. >> Want insights on what's moving crypto markets and how we're trading each event? Subscribe to our channel and join the Milk Road daily and pro newsletters and start investing like the top 1%.

This show is for educational purposes only. Nothing we say is financial advice. Investing is risky. Never invest more than you can afford to lose.