ETFs: Crypto's PAth to ATHs in 2024 | Matt Hougan

Transcript

the idea of ethereum raising its Banner on the New York Stock Exchange is both an incredible accomplishment there's like an element of the Trojan Horse being invited in detroy that I really love about it again it's making me think just how far we've come right from just a few years ago where that was a crazy idea was a crazy idea and yet there we were at the New York Stock Exchange with huge parts of the ethereum ecosystem right people had been building in that space for 10 years on the floor of the ex ringing the bell for ethereum that's a pretty magical moment this episode is brought to you by anoma the universal intent machine introducing a new era of applications where you define the

outcomes you want to stay up to date with anoma you can follow them at x.com anoma or sign up for the newsletter at ana. net special thanks to anoma for sponsoring today's episode real is a permissionless L2 designed for tokenized real world assets they've just launched their Rewards program so get started at re. rewards and be sure to use the code in the show notes below special thanks to real for sponsoring today's episode hey everyone excited to share with you that Kronos ZK evm has launched its Pioneer program offering early adopters a chance to earn not only loyalty points but also potentially win part of a

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app slcover I was playing around earlier today really cool all right everyone welcome back to Empire back with Mr Matt Hogan Matt welcome uh welcome back to the show thanks for having me I'm excited to be here yeah excited to have you how's life what's going on man life is good I'm up in Maine which is beautiful and uh lots of fun stuff happening in crypto so I can't complain nice yeah really casual weeks we've had here yeah yeah just chill let's uh so we're talking ETFs and I want to get the big questions that everyone's wondering out of the way like hey we've got the Bitcoin and eth ETFs why aren't we at all-time highs uh we got Bitcoin and eth what comes next is it salana is it something else um do the institutions really care who's actually

buying this is self-directed retailers the institutions but maybe we can just start with with expectations actually uh I I know you guys internally at bitwise had pretty high expectations for the EF um but from my vantage point it seems like we exceeded even those higher expectations but I'm just a measly retail guy on the side so I'd be curious uh from your Vantage Point like how how did the EF go yeah I think there probably two important things about that uh the first is that we did exceed expectations the new ETFs have pulled in a billion dollars in net flows in a single week right that's among the fastest of all time in the history of ETFs it's not on par with the Bitcoin ETFs but it's not that far behind and

it's really strong the average ETF pulls in you know a million or two million dollar in its first week so doing a billion is a big deal at bitwise we did a quarter billion dollars which for us is a significant success so I think you know the question was would anyone care about eth ETFs the answer is yes a billion dollars cared and then equally importantly I think we removed the the sort of risk of failure if you remember way back the ethereum Futures ETFs launched and there's no way to look at those as anything but basically a dud right they didn't attract much interest they didn't attract much trading volume and so I think they're there was this

question do ETF investors care about eth but a billion dollars answers that pretty definitively they do and that tells me that we're going to get many billions of dollars of flows over the next six months and then the next year and the next few years so yeah I think it's a success what is the uh maybe we can start with the who instead of the what so when I was at the coinbase state of crypto Summit which um which you spoke at as well uh Kathy Wood and um uh what's her name Samara from from Black Rock both said the same thing which was interesting to me which is roughly 80% of the buyers of these ETFs are not actually the institutions and that the institutional floodgates really haven't even open yet um and that the

the 80% of the buyers are actually the self-directed retail folks I'd be curious if you guys are seeing that as well and and maybe why if that's true why is is that the case yeah I mean that's broadly true if you look at the data you know the SEC requires reporting so that 80% number reflects what was reported as owning the Bitcoin ETFs at the end of q1 so back in March um and it was the case that about 80% was self-directed I would say two things about that though Jason first is if you remove that 80% for the Bitcoin ETFs and you just look at the 20% that's institutional it's the fact fastest growing ETF of all time so it's absolutely the case that retail bought

these in size but it's also the case that institutions bought them faster than they ever bought any other ETF in history and I think that gets lost because it's a a smaller fraction so these are a success on both sides of the spectrum we see both people in our ETFs uh you know we're sort of the Crypton native ETF issuer and there's a strong Embrace from the crypto community of uh of bit wise's ETFs in part because we donate some of the profits back to open source developers and we publish our addresses but you know I had conversation with a couple actually two or three1 billion do plus raas last week about these ETFs and they're thinking about building portfolios that hold both

Bitcoin and eth so I do think the institutions are coming I think that story is intact but there's also this strong Embrace by retail what is the pitch uh may maybe you could walk through the pitch for Bitcoin and the pitch for for eth and and the context for this is Santi and I have been talking a lot about this in the roundups it seems like so Larry fin went on CNBC right and he basically to said a you know three minute beautiful commercial for Bitcoin but I think you could summarize it and say the best way if you if if there's chaos in the world and you're scared about chaos the best way to get exposure to that fear was either shorting markets or buying gold and today the best way to get exposure is Bitcoin to that uncertainty or fear or whatever it may in the markets eth it

feels like is this Global Computing platform for the new for the new digital asset era right it feels like a totally different pitch but I'm curious how how you how you think about it and how you pitch these assets yeah no I think that's right I mean Bitcoin is a monetary asset it's a hedge against chaos it's a hedge against inflation it's digital gold it's an exciting technology so it's it's got that element as well but I really think that's how people think about it that's something they put in their portfolio that's not correlated to anything else and that Hedges them against dollar debasement runaway inflation and sort of a loss of faith in institutions so that's a that's a relatively easy pitch the way advisers think about eth is as a technology they

think of it almost as it picks and shovels way to play things like tokenization or play the growth of stable coins or play the growth of defi or play the growth of nfts all those are built on eth so if you want to invest in tokenization how are you going to do it the best possible way is to invest in ethereum so I do think people think of it as a technology play now I recognize to the eth community eth has a lot of money in it like a lot of the value of eth is it's a it's a it's a monetary asset to the ethereum community but from wall Street's perspective they need an easy place to bucket it and they bucket it as part of technology and I think that gets them 70% of the way to the

story on eth H what's the what's the last 30% well the last 30% is that sort of that that monetary aspect of ethereum I don't think its only value is in utility right there's plenty of parts of the ecosystem that are legitimately denominated in eth right nfts are denominated in eth it is used as money and so it has a monetary premium but Wall Street likes to think in simple ways a simple way is Bitcoin is digital gold eth is technology a story I've been talking to a lot of investors about um is pretty simple which is you know if you own the NASDAQ 100 the QQQ ETF which many people own as a way to play technology and you don't

own ethereum you're missing part of Technology right you're only capturing a portion of it it would be like not owning AI or not owning semiconductors or not owning biotech eth is just another sliver of that technology sphere and if you want to own Tech you need to own some q's and you need to own some eth sure yeah so then what's the you mean with these raas the financial advisors sure some retail folks big institutions what is the main reason why people are not buying it is it a regulatory reason is it a they don't understand the thesis reason is it lack of fundamentals what is what is the reason why people don't buy yeah so most of it is just time I mean I do think that's what crypto misses is when new

products launch professional investors don't rush to put them in their portfolio these are people who are building portfolios that last people for 30 years if they get to it today or they get to it in three months or they get to it in six months or a year is fine right I mean for most new Investments they have to due diligence themselves then they have to arrange a call with their client they have to review it and then they have to execute it that all takes time these people have 100 different clients they have to arrange a hundred different meetings I mean this process just takes time not for crypto but for everything so the number one reason is just time and I think they will eventually come the secondary reason people still get hung up on how can

Bitcoin have value if it doesn't have cash flow I do think that that is still a stumbling block and they're there's a great answer for that but um you need to be able to have that conversation with people and that just takes time what about the interest outside of just Bitcoin and eth things like salana or nfts or other l1s or maybe even l2s or or defi um what's the interest like in those assets yeah there's a lot of interest in salana uh the funny thing about these professional investor organizations is they usually have one person who absolutely loves crypto and they want to be just on the outside of what is mainstream so in the early days that was liking Bitcoin because Bitcoin

inside these firms was a crazy idea but now by and large these firms have come along and and embraced Bitcoin right the CEO of Goldman Sachs just said Bitcoin is a store of value so that's like a a normal position then for a period it was ethereum but now we have Bitcoin and eth ETFs and what I hear when I talk to these advisers is the the crypto person always wants to ask a question about Solana so they always want to be a little bit ahead of where the market is beyond salana there's really sporadic interest there's some interest in defi there's some interest in dpin uh occasionally they'll be interested in one specific coin but really Bitcoin eth and salana are the shining stars that the professional

investor Community knows about what's the pitch for salana is it hey all these Defi and all these things could be built on eth don't try to get exposure to one thing just B buy the underlying it's like buying a cloud platform like all these websites are getting created go buy AWS or Amazon uh hey maybe salana comes along it's a competitor go by Google cloud and and AWS as well because you know what it's going to be is that the main kind of story that's being told right now that is the main story it's betamax and VHS it's blackberry and iPhone it's Google and Yahoo it's the fact that you know people have seen that technology is hard to predict so do you want a layer one blockchain that's scaling through l2s or

or one that's scaling through parallelization and they just you know they're not in a position to know the answer to that I would argue that even people inside of crypto though they have opinion are not in a not in a place to know exactly what will transpire and so I think most of them just want to own both and that's a pretty standard response I I I think it's smart actually yeah is do you think so Mike and I have this conversation a lot which is like all right if if we sold our crypto what would you buy um because Mike and I both have I mean basically 99% of our liquid exposure is crypto at this point yeah um and it's like I'm just I mean like I I guess you could go by Facebook or something or Netflix or something like that but how much of the demand for

crypto right now do you think is coming from it's like yeah what are you going to go do buy Nvidia like I mean this that chart looks crazier than Bitcoin did in 2017 like what so how much of the demand is coming for interest in in crypto versus like uncertainty around what else you should buy yeah I mean look there there's certain areas of the market that I think people find very exciting people are excited by AI they're excited by the story you're seeing in India they're excited by Gene editing and the advances in biotech so there there are other areas that are exciting but look crypto has the best you know best returns of any asset in over the world or last 1 three five and 10 years it's easy to see how it could still 10x from here and so I do think

people are attracted to that and they're looking for a way to get you know outsized returns um and there aren't that many options like I just rattled off four but I think that's the complete set yeah right and crypto is probably the most attractive of that Bunch so I do think that matters is there interest in um I imagine people bring up coinbase stock one one thing that I'm kind of waiting for is more publicly traded crypto companies so whether that's Circle or Kraken or bitwise one day um have you have you guys thought about the strategy of putting together just a I'd call it like I'm putting quotes around this word for people not watching on YouTube like a nor a normal trafi ETF

like a crypto ETF that's just maybe coinbase Circle Kraken and may maybe you do throwing some Bitcoin in eath in there as well but have you guys thought about that yeah you know I wrote a piece about this for my CIO memo about how to build the Diversified crypto portfolio and what I said was using publicly available tools it would be 60% Bitcoin 30% eth and 10% crypto companies because I do think there are opportunities in crypto that it's hard to capture in the token or crypto asset space you can capture some of what's happening in stable coins through ethereum and salana and Tron if you want to go there but you

can't capture all of it like a lot of the value in stable coins is going to ACR to companies like Circle and you can capture some of what's happening in the layer two Spath in arbitrum ETC but the fastest growing piece is base which is part of coinbase so I do think the sort of default starting position in crypto should be at least Bitcoin and eth maybe Bitcoin eth salana and then crypto companies we have a crypto Equity ETF BQ which I think is the best on the market but there are a lot of crypto companies you mentioned Circle Kraken uh and others which aren't public yet and so I do think there's some interesting ways to gain access to that and I think that's pretty smart I will add just one

thing the story that resonates better with institutional investors than almost anything is stable coins people love stable coins it's a US dollar bank account in every cell phone in the world they're 8.2 billion people that's a huge addressable Market that could want dollars I think people would love a way to invest in stable coins and uh there really aren't good public vehicles to do that right now maybe you could walk us through you mentioned the CIO memo so two weeks ago you wrote this good piece about um uh eth etps in the path to a new all-time high and uh I don't have it in front of me but you said something along the lines of uh everyone wants to know what's going to happen to the price of eth after

these e ETFs launch uh I think your summary was we'll probably chop around for a little bit they'll be demand into the eth ETFs but also selling out of the grayscale uh e eth products um but by the end of the year we'll be at we we'll hit above 5,000 and we'll hit we'll hit a new alltime high I don't want to put words in your mouth but yeah can you just walk us through your thesis for the price action for the rest of the year for I think both Bitcoin and eth would be interesting yeah let's start with eth you know I think when these ETFs launch it's great to talk about fundamentals but what really matters is supply and demand so in the short term supply and demand determines the price and so what I said about eth was I didn't know what

would happen in the first few weeks because I was concerned that a huge amount of money would flow out of the grayscale trust a lot of those people in ethe are not long-term eth investors they're people who were simply arbitraging the discount right they're not systematically long and so that money is going to come out also people might sell it because it's gone up a lot and then have to pay taxes so not all the money will come back in and that's what we've seen we saw $ 1.7 billion dollar come out of that product in the first week which is more than went into the new uh the new ETFs that were launched that was about 1.1 billion right so in the short term and I think that could continue for another week or two you could even have outflows from

the ecosystem and that could be challenging to price which I think is what happens but in the long term there's just so much demand for these ETFs right I I think I put out a note I expect 15 billion dollars of inflows in the first 18 months I think that could be too cautious I think we might be above that based on the fact that we pulled in a billion into the new ETFs in the first week um and that's going to all else equal drive up the price so the reason I thought we would chop around or at least chop around up to the all-time highs is you always have a series of investors who want to sell around the all-time highs we saw that in Bitcoin the price bumped its head against $72,000 a couple

times and so you have to exhaust those Sellers and then you move higher um but if we get you know $5 billion of ETF flows this year we're going to push it up to all-time highs and exhaust the sellers there and then be above that and I think the same thing is true in Bitcoin I actually think we're probably pretty close to exhausting the sellers at bitcoin's all-time high and I think as we get closer to the election we're going to push through that level and then I think it's fairly clear sailing up to about 100K where the next level of sort of opportunistic sellers probably wait um yeah this might be a really dumb question is that a quantitative or qualitative thing that you look at like

is there a thing that you can look at on a on trading view or whatever charts you look at where it says Ah the we're we're we're being oversold here overbought or is this a qualitative feeling that you have that like people sell around alltime highs you got to push past clear s sailing to 100K because it's this nice like numerical number yeah I think it's I think it's just behavioral yeah it's um it's qualitative right and you can look at his history right you I'm not a chartist but you can often see in assets bump against their all-time highs and I think that aligns with behavioral Tendencies and it's indeed what we saw with Bitcoin and I think we'll see it with eth as well yeah yeah even uh it's funny my um I feel like I've been bringing up my wife too much on Empire

so uh she it's just funny because I think she is a good indicator of like retail uh someone who doesn't pay attention to crypto and how they think about buying and selling crypto from a retail perspective and uh when Bitcoin hit an all-time high she's like all right bitcoin's at an all-time high let's sell I was like what she's like yeah it's at an alltime high let's sell I was like oh man we were looking at this differently so yeah yeah yeah but I think that's completely normal I think that's completely normal I mean if I if you woke up and Bitcoin was at $882,000 would you think it's going to 100K like you you probably would yeah right but right now it's this it's this overhang you know people are part of the

market so you you can't Overlook it yeah I also think we'll get a lot of selling I agree I I think the other reason is at 100K I think there's this idea when you talk to people who have been in crypto for a while what's Bitcoin going to this cycle they usually say 120 125 1 15 somewhere between 120 and 150 so the the quote smart money uh who's been in crypto for a while they say I'm not going to wait until 120 because I didn't sell the top in 2017 I didn't sell the top in 2021 let me take some chips off the table like 80% of the all-time high of what I think it's going to go to and if you do the math that's around 100K as well so yeah yeah uh yeah I wish I wish there were more sort of quantitative

hard facts here but um but again the market is made up by people and and this is this is what I've seen so what's it going to take for the institutions um you know you've got the Larry Finks on CNBC and yeah I did see uh the the Goldman uh uh who is it David David Solomon I think it I think it was at the Olympics on CNBC said Bitcoin is uh could be a good store of Reserve or good Reserve currency here um or excuse me a good store of value what's it going to take to get these institutional allocators to just start buying Bitcoin corne yeah it's going to happen and I think it's going to happen in the second half of this year so there are two levels at which we should we should talk about it um the first is the wirehouses

so you know if you think about the the US wealth Market it's 20% self-directed retail investors people managing their own portfolios they can already buy these ETFs and they're the Big Driver of of of of assets it's 40% wealth managers so people managing money on behalf of individuals and then 40% institutions like pensions endowments Etc in that wealth manager space most of the money is controlled by people who work for firms like Morgan Stanley Wells Fargo UBS Marl Lynch Etc big firms and they can't yet buy these ETFs because they haven't gone through the due diligence process that's happening right now and I expect that that will unlock late Q3 early Q4 and when it does all of a

sudden you can have trillions of dollars of wealth managers moving into the space Bas um and so I I suspect that will happen the the pension side the true endowment side that's slower but we're starting to see it right it used to be one name now it's three or four or five I think they'll probably be something like 10 when we see the Q2 uh Holdings of Bitcoin but that's more three or four or five year Story look ETFs are multi-year stories uh if you look at the Gold ETFs inflows Rose seven years in a row the first year was big the second year was big bigger the third year was bigger the fourth year was bigger we're going to see the same thing in Bitcoin so you know patience I think they are coming um and when they do come it it'll

be you know trillions of dollars I noticed you didn't mention one group which are the which are corporate treasuries um this is honestly one narrative that I've always found to be a bit silly is that companies are gonna you know buy a bunch of Bitcoin and put it on their balance sheet um I just maybe I'm mid curving it too much I just have never really got on board with that thesis but what are what are you seeing here and am I wrong are these Fortune 500s going to come out and we're going to see it in the reports that they're that they're buying Bitcoin I mean I think it's a very similar almost a similar question to central banks buying Bitcoin it's not the core of what companies do right what companies do is they make products and sell them and create profits and then distribute

dividends their treasury management is just a way to have cash to you know make payroll and to fund Investments so I agree with you I don't think it's going to be mainstream you'll see more companies doing it but you don't see these companies you know holding stocks or having Venture portfolios like that's a very it's somewhat atypical you see some companies doing it but it's atypical I think it will be atypical with Bitcoin um at least until you know it's extremely mainstream they don't hold gold they don't hold silver um I'm not sure that they're all going to hold Bitcoin but clearly some of them do and and they're being rewarded by the market for doing so yeah uh big question on

everyone's mind what what comes next so we got Bitcoin we got eth what what are the next maybe three products that you think come into the market and what what do you think the timeline looks like yeah I mean first I just want to emphasize its continued unlocks of Bitcoin and eth is the biggest story right those are maybe 30% open to the market and going from 30 to 100% is a much bigger deal than salana or Litecoin or Dogecoin Etc can can you explain that actually I I actually I didn't realize we're only 30% unlocked so what yeah well it gets to what I was speaking about which is uh these major platforms that haven't yet approved these ETFs for sale right um they represent most of the

wealth in this market and institutions while they don't have a formal like key switch there'll be a day when Morgan Stanley approves Bitcoin ETFs there won't be a day when institutions do but they're all running their due diligence process and that process takes time takes six months 12 months 18 months 24 months for any asset and so yeah I think most of the market is not yet turned on even to bitcoin much less to the ethereum ETF and that's going to happen over the next six to 12 months and again this isn't unique to crypto this is this is par for the course for ETFs so I think that's by far the biggest story um probably the next biggest story are

variants of Bitcoin and eth I think you're going to see a lot of like momentum strategies and covered call strategies and other strategies wrapped around Bitcoin and eth in terms of other assets people filed for salana ETFs I think if we get a regulatory reset in November you'll start to see things like salana ETFs become possible under the current regime they're just not possible but we could see a major change in the fall or in the spring of next year that makes those suddenly possible and then we'll have a wide array of ETFs do you so obviously I think what you're referring to is if Trump gets elected and we get this uh more hands-off SEC or agency um you know a

lot of things can unlock what about if kamla gets elected yeah I mean I think the the right response is we don't know she's talked about a reset towards crypto I think you know maybe there there two paths that she could go down she could go down the Elizabeth Warren path which is sort of the the SEC path we've been on in which case anything beyond Bitcoin and eth is very very difficult right there are no regulated Futures markets on salana or any other assets it's just very hard to imagine the ETF landscape expanding Beyond Bitcoin and eth they'll still be there um and they'll even have a degree of regulatory capture in terms of investor mind share because they'll be the only

sort of approved assets but it'd be very hard to go beyond that but I think if she goes the other direction and creates a more sort of normalized policy towards crypto then I think we will see those other assets unlock over time right that pathway is probably slower than the Republican pathway which could just have a very uh different SEC mindset to what's allowed the Democratic pathway probably requires legislation and a slower change over time but it will open up as well to salana and to a multiple other assets hey everyone Jason here I wanted to talk about something that's been on my mind a lot recently and that is where are all of crypto's killer apps we often

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episode of Empire go explore Avalanche subnet ecosystem at core. appd Discover that's core C.A app slcover thanks again avalanche on a more personal note like what do you what do you make of all the the craziness in the election and just I don't know Trump's saying he's gonna build a Fort Knox of Bitcoin and yeah all all this madness I'd love to just get your thoughts yeah it's something that just just been rattling around in my mind for the last few days I think my long-term takeaway is we need to sort of widen the Overton window of what's possible in crypto one of the funny things about being sort of trying to be a rationalist

in crypto is that it's the land of hype and hyperbole for years Bitcoin was either going to zero dollar or it was going to a million dollars depending on who you talk to and I think some of us have sort of carved out a path this is a disruptive asset with risks and opportunities uh it's interesting and exciting but those are extreme outcomes coming out of the Nashville conference and watching what's going on even with the Harris campaign or with various senators or various Representatives I think you have to start widening the possibility that you know you really could be talking about Bitcoin being hundreds of thousands of dollars if we get a regulatory reset let alone central banks buying Bitcoin it's just such a it's such a

GameChanger it's so far out of where we were even two years ago right two years ago FTX was collapsing today David in from Goldman Sachs called Bitcoin a store of value uh you know a few years ago they were seizing Signature Bank even though it wasn't in solve and and today we're building a Bitcoin Fort Knox I mean it's just it's hard to wrap your head around how much the conversation has shifted and I think for investors you have to widen out the right tail of what this asset could be it it's still not likely that it immediately goes significantly higher but I think you have to accept that six-figure Bitcoin has a reasonable probability of being

here sooner rather than later given what's going on in DC if I had to ask you to put a a time frame on that sooner rather than later what's uh what are you gonna say look I think Bitcoin could could be north of $100,000 this year um I think that's a very real probability I I agree with that that's that's my mental model too right now is yeah we could be at six figures by the end of the year be at six figures by the end of the year and then depend depending on how things sort out we could be significantly higher in 2025 right I do think you need to start modeling in a major Regulatory and political reset towards crypto the industry has been working for the last

four years with both hands tied behind its back and like you know a parachute pulling backwards and not only could those be released but you could get a tailwind and I don't think the market has realized just how significant that shift would be if it in fact occurs and even if it doesn't occur if we get just a normalization of crypto I think you know I think we'll be you know heading towards sixf figure big Bitcoin uh in relatively short order um based on what I'm seeing in the market right now H okay so the let's let's let's play this out a little bit and think about it from a portfolio perspective so the I think in your CIO memo you said the the best portfolio for a maybe a more cautious

institution who wants to get exposure cryptos like 60% Bitcoin 30% eth and 10% um what was it publicly traded crypto companies I think it was so the coin bases and miners of the world yep what if you are not the cautious institution and you're inside of crypto and you're saying Matt you've got all the these insights and you're telling me that bitcoin's gonna go above 100K and you think eth is gonna hit an all-time high well over the last couple of Cycles for for for since crypto has existed the long taale tends to have uh basically have have higher beta than than Bitcoin and eath and on the downside that sucks

but on the upside that's really really cool and that's really really fun so how do you think about the portfolio not for an institution but for maybe a crypto native person listening to this episode yeah well look I think you have to be anchored in Bitcoin and E uh because those are the the two leading assets in the two leading use cases that exist in the market today um and again I think there's this possibility of a regulatory Direction in DC that leads with those assets in a really unique position that benefits them at the expense of other assets so I I think you want to be anchored in Bitcoin and eth um but look we're at the part of the cycle where all coins tend to outperform I think a a a high quality you know 20% 10% 20%

allocation to smaller assets I think could make sense as you know I'm a big index investor most of my money is in our Index Fund which is 10 largest assets that's a pretty boring answer but also I think a pretty good answer um but I would I would at least want exposure to salana and I would pick and choose some smaller interesting products projects um to have a more complete portfolio right you're otherwise you're missing you're missing the growth of layer twos you're missing the growth of defi I think there's some exciting things out there would you basically do you think the best strategy for that is pick five areas that you like maybe it's AI crypto l2s dpin just buy the top two or three

in all of those areas because you can't really pick a winner try to pick the top two to four and just get exposure to all of those yeah I I love that strategy we have a strategy called the crypto category leaders which defines the market into seven different categories and holds the leading asset in each one so the leading monetary asset the leading layer 2 the leading smart contract platform uh and so on I think that's a good strategy I think you could expand it a little bit to hold maybe the top two assets and you would be in a great position because all of those will have their moment right defi will have another moment and you're going to want to have some exposer so just just own all the categories I think is a good starting point own it all just own it

all own it all exactly uh what was it like to ring the bell uh it's always great to ring the bell I mean the thing about the thing about the bell ringing which I really loved uh and I actually wasn't there I was in Nashville for this one although I've done it done it in the past um there's something if you've seen it on Twitter about the banner going up on the outside of the New York Stock Exchange yeah you know it was it was for our ETF but really it was for ethereum the idea of ethereum raising its Banner on the New York Stock Exchange um is both an incredible accomplishment there's like an element of the Trojan Horse being invited in Detroit that I really love about it and um again it's making me think just how far we've come

right from just a few years ago where that was a crazy idea it was a crazy idea and yet there we were at the New York Stock Exchange with huge parts of the ethereum ecosystem right people had been building in that space for 10 years on the floor of the exchange ringing the bell for ethereum that's a pretty magical moment that is magical yeah so how does that come come to be they is that a sales pitch to bitwise are they saying look when you guys decide to go public one day you should go P you should go public on on our Stock Exchange not the other guy Stock Exchange and we'll do these cool things for you yeah that's part of that's part of the competition between the exchanges right which is not to say that NASDAQ is lesser exchange or or

CBOE but there is something iconic I think about listing crypto asset ETFs on the New York Stock Exchange yeah on Wall Street like the home of the Buttonwood tree it's it's just it's just so incredible and if you haven't ever been there before um being on the floor of the exchange is sort of a magical experience you do feel this history of American capitalism and then if you're there for crypto you feel where that capitalism is taking this this industry and it's it's really pretty special yeah I had the feeling when I was there I was like we've we've we've infiltrated like yes I can't I can't believe they're letting us in here that's what I mean

that's that's the Trojan Horse thing like like uh you're letting us ring the bell for ethereum don't you don't you understand what's going to happen can't you see that's pretty great I think that's great I love it look exchanges evolve Right started under underneath a tree um a few you know not that long ago they were trading pieces of paper then it moved upstairs to digital and now they've invited ethereum in so maybe they know where it's going yeah do you have any thoughts on if um these exchanges will trade 247 I think eventually I mean it's such an anacronismo to settle trades in a day

instead of two days I know big it's so funny there's a Bloomberg headline that said stock exchanges settle trades the fastest they have in a hundred years because a hundred years ago they settled them in one day and then we went backwards for 100 years um just imagine it's like it's like cars cars finally catch up with horses um it's it's a it's a pretty incredible yeah but yeah they'll trade 247 365 that's the way the world Works we're totally digital and we're totally Global um and I think both of those things will switch yeah can you take us into um like bit wise' strategy conversations when you guys are talking

about how you compete with the likes of fidelity and black rock and these you know Invesco and these huge financial players that I don't think people can wrap their heads around how big their distribution really is how many financial advisers they have pushing products um but but here we are and you guys I mean I don't I haven't looked at the I should have looked at the numbers going into this episode but I mean you guys came out at least for the EF ahead of folks like Fidelity so how is that how is that possible than it's a great great question thank you I mean I think you have to think about like I do seven of these podcasts every day right exctly three years in a row there's an element of that no I mean

look uh you have to understand how you how you can't compete right we're not gonna out Market Black Rock we're not going to have a bigger sales team than Black Rock we don't have as well a known brand as Black Rock so you have to find where you can compete and where we can compete is we can be the most crypto ative ETF issuer we express that by doing things like donating 10% of the profits from each ETF to op Source developers in that ecosystem by doing things like publishing our ethereum custody addresses and tying them to enss domain names and uh we do it by writing and understanding the space better than other people and it turns out that there

are many investors who want to work with a specialist it sounds maybe surprising in crypto but if you put it in other terms of course it's true would you hire a stock manager to manage your bond portfolio or a commodity manager to manage your stock portfolio right of course not would you hire a venture capital firm to invest in private Equity no you would want a specialist you want a venture capital specialist a private Equity specialist it turns out people want a crypto specialist and they're actually are like fundamental advantages to how we trade Bitcoin versus how some of these other people trade Bitcoin they're fundamental safety procedures we put in place that are different from how other people you know work with trading

and custody and it turns out that people want this specialist asset manager I think there's a place in the world for a large crypto asset manager that cares about the crypto ecosystem and the hope is that bitwise can fill that role how do you guys think that um you'll get into the financial advisory business one day I don't think so I think we serve financial advisors I think our lane our lane is going to be um helping investors gain access to the opportunities in crypto at the lowest possible cost and the highest possible quality right yeah can you give us a sneak peek and uh what you guys are cooking up for the rest of the year oh

we have some big announcements coming this year I'm really excited about it um let's see what can I talk what can I talk about look look I think you're going to see us innovate on uh within the Bitcoin and ethereum space I think you'll see that coming out from us and more than anything you'll see us continue to put our shoulder Behind These ETFs again they have multiple years to run I say this fact all the time we do 20,000 meetings a year with financial professionals to talk about crypto and uh that means we got another 8,000 or so to go this year so that's going to be a primary thing that you guys have done 12,000 meetings with financial advisers this year financial advisors and family offices

and institutions Y where do you keep track of that number do you have a big like board that just is ticking up you know that's exactly right yeah Salesforce man um look we have an incredible team here and that's what they do each and every day they wake up early in the morning and they start doing meetings they're on the road uh I think we did 52 events in the first half of the year right this is what it takes to to to introduce people to crypto because it's not just one meeting and somebody buys you need to meet with them multiple times over multiple months uh to help answer their questions and then they eventually come into the market do you think that you're competing more for dollars with crypto funds so let's say the electrics and paradigms of the world

or um or like Black Rock and Invesco and Fidelity who's a bigger competitor for your Capital yeah Black Rock Invesco and Fidelity I think the money that is coming into bitwise today is allocated to the S&P 500 or the NASDAQ 100 which is primarily tech stocks and uh it's money coming out of that into us people are still going to invest with electric right people still want high quality Venture we don't do Venture we do liquid tokens and and and publicly traded companies um and so I think you're people are going to do both so we really consider our competitors to be Black Rock and Fidelity that's who I think

about got it um anything I'm missing here Matt this is interesting chat anything uh I know you're coming to permission list later this year that'll be exciting can't wait for permission list I just want to plug it I don't have anything to to ask you about it but I just want to plug it um no anything that we didn't that we didn't cover that you want to that you want to talk about no I I think I think the pr I mean the primary question on people's minds is one that you touched on earlier which is why aren't prices already at alltime High there are all these systematic Tailwinds the FED is moving to lower rates Washington is embracing crypto billions of dollars are flowing into ETFs

legislation is being passed on a bipartisan basis to support this industry why aren't we at alltime highs I think those are good questions to ask I think a lot of it has to do with uncertainty uh there is still uncertainty around the election even if we think you know right now now maybe it's a toss up and maybe the Harris campaign is looking to reset their position on crypto so maybe we win in whatever happens there's still uncertainty and markets hate uncertainty but I think as that uncertainty resolves the setup for the second half of this year is better than any setup I've seen in crypto in the past and uh I'm pretty excited about it yeah I I've been

full-time in crypto for seven years and been you know around it for a long ER than that I think this is the the best and easiest setup that has I've ever seen now yes watch Bitcoin fall 50% and I'll eat those words but I am knocking on a bunch of wood for listeners here but uh yeah I don't know it's um it's pretty interest it's it's exciting and it's interesting one one last question that was going on on our slack channel the other day was if there's so much buying like what are the actual mechanics when I think you said a billion of flows into into eth or whatever the actual number is yeah does that mean there's if if eth is not moving that much does that mean there's a billion dollars of eth that people are selling right now and that's why the

mark That's why the Market's not moving yeah that is right that is right and so for the last week a lot of that has been coming out of e the grayscale product so that's people selling bitco or eth from there and bitwise buying it on the other side of that Spectrum but again eth will run out and demand for these ETFs I don't think will so there's an of just you know patience we will get there can you explain to me why grayscale is running the strategy that they're running I mean you you'll have to ask them uh I will say that there's a there's an old Playbook from the ETF industry you know as you know I I was in ETFs for 15 years before I was in crypto

and the the position that grayscale finds itself in of having a high fee product and then a low fee Market opening up is not new new to crypto that's existed in ETFs before and grayscale is running the classic paybook which is you maintain the high fee on one product and you launch a lower fee product uh there just isn't a great answer for someone facing this dilemma and this is sort of the classical approach so I know it seems odd to people who are watching it but you have to put yourself in their shoes um and ask yourself what would you do and it's a it's a challenging question um and so would they just bring fees down to compete with you guys well their idea is

they're competing with us with their mini eth trust which is priced competitively and um you know why wouldn't you slash Your sponsorship fees by 90% right so it's sort of the same it's the same idea it's just a challenging thing to do um and uh and and you know I commend them for doing a good job of bringing us into this ETF era yeah yeah um Matt great chat man I appreciate uh I I think uh the the thing I love about bitwise is the industry basically has a team of how many sales people do you guys have we have 20 plus people in the field yeah we got 20 plus the exact team we've got 20 30 people out there every day just pitching 20,000 in investors on behalf of the industry

so uh I commend you guys and I I just I appreciate every day what you guys do yeah well thank you same to you appreciate it be well man thanks for watching today's episode just wanted to quickly mention that the wait for crypto's killer app wve is nearly over thanks to today's sponsor anoma the universal intent machine to stay up to date with anoma you can follow them at x.com anoma or sign up for the newsletter at ana. net thanks again to anoma for sponsoring today's episode [Music]