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Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast.

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Speaker 1: My name is Mike Reagan. I'm a senior editor at Bloomberg.

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Speaker 2: And I'm Moldona Hired, a cross asset reporter with Bloomberg.

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Speaker 1: And this week on the show, Well, cryptocurrency officionados have

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Speaker 1: been pining for a bitcoin ETF for a long time now,

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Speaker 1: but as application after application was filed with US regulators, well,

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Speaker 1: the regulators have refused to give the green light amid

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Speaker 1: worries about fraud and market manipulation and really all the

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Speaker 1: other things that come up when you talk about the

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Speaker 1: thorny subject of cryptocurrencies. But then Blackrock dropped their application,

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Speaker 1: and many think that's the game changer, since, after all,

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Speaker 1: this is the biggest ETF issue we're in the world.

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Speaker 1: So are we finally going to see a bitcoin ETF?

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Speaker 1: Get into it with two expert guests. But first then

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Speaker 1: I would remark, this is also our latest crossover episode.

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Speaker 3: It is this is like.

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Speaker 2: The last one was a great success?

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Speaker 4: Was it?

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Speaker 2: I think so? You don't think so, I'm going to

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Speaker 2: tell Joan Tracy why you said that.

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Speaker 4: I thought it was a great success.

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Speaker 3: It was great.

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Speaker 4: This will be an even greater successor.

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Speaker 2: Well, the two guests we have on this week, they're

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Speaker 2: from Bloomberg Intelligence. We know both of them really well,

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Speaker 2: and I told them you and I are going to

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Speaker 2: basically drill them. This is going to be a tough

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Speaker 2: episode for them. Oh yeah, no fun, no jokes, like

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Speaker 2: very serious, no jokes.

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Speaker 3: All right, Well, we do got to get a cheese

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Speaker 3: steak recommendation because we have a Philly guy guy.

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Speaker 2: And another New Jersey guy.

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Speaker 4: Yeah, that's a lot of Jersey in that.

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Speaker 2: Oh my gosh, it's so great. Well, we should probably

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Speaker 2: introduce we.

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Speaker 4: Get a quorkcroll recommendation to them.

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Speaker 2: Well, don't offend some people. Taylorham. Some people say Tailorham. Yeah,

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Speaker 2: I think it's poor.

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Speaker 3: It's this is good.

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Speaker 2: We're already starting conspiracy or controversy. Yeah, yeah, but I

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Speaker 2: want to I want to introduce our guests. It's Eric

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Speaker 2: Belchunas from Bloomberg Intelligence and James Seifert, also from Bloomberg Intelligence.

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Speaker 2: There are great, great ETF experts. I've known them for

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Speaker 2: years and thank you guys for joining us.

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Speaker 5: Yeah, thanks for having me. I'm happy to be here,

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Speaker 5: great to be here, big fan. I love the Tracy

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Speaker 5: and Joe on Lot's Crossover. And I also like, was

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Speaker 5: driving to Philly one night when I was listening to

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Speaker 5: your episode with Katie and she said she's never had

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Speaker 5: chees snakes.

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Speaker 3: I almost had to pull over. I was like, I

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Speaker 3: don't understand.

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Speaker 5: Now, somebody could go to school Katie Grayfield's never see

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Speaker 5: that never.

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Speaker 1: But all right, So first things first, Eric, what's your

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Speaker 1: what's your cheese steak recommendation in Philly?

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Speaker 5: So I'm not a Philly native, right, so I don't

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Speaker 5: really care that much about cheeseteakes. But I'll take somebody

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Speaker 5: to Gino's or Pats. They're equally good to me. I

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Speaker 5: just don't I'm not a connoisseur. I don't know which

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Speaker 5: ones are. They're all pretty good. John's is the one

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Speaker 5: a lot of people will I'm sorry, is it Jim's

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Speaker 5: or John's on South Street?

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Speaker 4: The purse Roast pork emploria.

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Speaker 5: This is like a New york Er not knowing like

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Speaker 5: the Broadway show to go to Okay, but the gym's

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Speaker 5: has a line usually going around the ye. But I'm

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Speaker 5: not waiting in the line for a cheese steak.

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Speaker 3: And you know.

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Speaker 4: Exactly the thing is, you are a true Philly guy.

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Speaker 5: Then I have this other thing, which is like, I

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Speaker 5: have a limited amount of calories. As I get older,

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Speaker 5: my metabolism is lower, and I don't know if I

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Speaker 5: want to spend that big of a calorie and take

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Speaker 5: on a cheese steak. Sometimes I'd rather have like Mexican food,

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Speaker 5: or I go to Chick fil A a lot with my kids.

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Speaker 5: Like I just I don't know. Cheese steaks never really

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Speaker 5: come up that much for me.

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Speaker 2: That's not the answer I expected.

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Speaker 4: That's fair. You've expected more enthusiasm.

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Speaker 2: Yeah, how long have you been living in Philly, Oh,

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Speaker 2: eighteen years?

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Speaker 5: Yeah, come on, I mean I eat them like I

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Speaker 5: went to the Eagles game the practice they had at

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Speaker 5: the Link last Sunday, and I went to get food

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Speaker 5: and I got a cheese steak and it was delicious.

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Speaker 5: I think it was from Chicken and Pizza and it

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Speaker 5: was good. And I wasn't like, oh, this is only

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Speaker 5: like an eight at ten and the one at Gym's,

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Speaker 5: I don't do that.

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Speaker 3: They're all pretty good.

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Speaker 4: All right.

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Speaker 1: We got a transition to the subject to the subject

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Speaker 1: that will get Eric excited here, bitcoin ETFs, bitcoin ETFs.

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Speaker 1: So I guess my first question is Blackrock files their application,

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Speaker 1: everyone assumes they know something.

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Speaker 3: Is that?

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Speaker 4: Is that fair?

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Speaker 5: Maybe they know something, but you know, Blackrock is the

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Speaker 5: biggest asset manager in the world. Larry Fink is very

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Speaker 5: well connected. A lot of people who work in the

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Speaker 5: government now work there and vice versa. They helped the

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Speaker 5: fed by ETFs in twenty twenty when the market needed liquidity.

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Speaker 5: So Blackrock has more of a reputation than just being

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Speaker 5: like an etfshore right, So when they filed, it was

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Speaker 5: a whole different ballgame in my opinion, because it's even

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Speaker 5: if they don't know anything or don't have any like

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Speaker 5: I don't know, wink nod from the SEC that's going

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Speaker 5: to happen. The fact is they are generally like to

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Speaker 5: bring a gun to a knife fight. This is a

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Speaker 5: firm who doesn't like to lose, who knows what they're doing,

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Speaker 5: and they must see something. Yeah, they have to have

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Speaker 5: had I'm sure they had multiple meetings. They went over

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Speaker 5: all the stuff that we know, which is Genzer said no, this,

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Speaker 5: that and the other fraud manipulation, and they said to themselves, Nope,

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Speaker 5: this makes sense. That is what is the difference maker.

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Speaker 4: Could part of it.

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Speaker 1: Be that all this enforcement action we've seen this year

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Speaker 1: has not been targeted at bitcoin. You know, it seems

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Speaker 1: like the SEC is kind of letting Bitcoin do its thing.

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Speaker 1: Do you think that plays into the rationale?

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Speaker 3: So that's part of our argument for OI.

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Speaker 5: We've publicly stated we thought there was a sixty five

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Speaker 5: percent chance that these spot bitcoin ets are going to

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Speaker 5: get approved. The SEC is going after everything else. They're

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Speaker 5: going after all the alt coins, these weird institutional sales,

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Speaker 5: the icos, these different things. They're not really doing anything

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Speaker 5: with bitcoin. If you look at Gary Gensler, any of

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Speaker 5: his speeches that he's given testimonies in front of Congress,

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Speaker 5: he says, the only thing I will say that's not

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Speaker 5: a security publicly or the one l name is bitcoin, right,

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Speaker 5: So he puts it on a pedestal on its own.

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Speaker 5: And there's some recent inclinations that we're getting that they

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Speaker 5: might be kind of like bitcoin obviously tier one on

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Speaker 5: its own, not a security. It seems like there might

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Speaker 5: be pushing ethereum a little bit closer to that than

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Speaker 5: we initially thought. But everything else, for the most part,

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Speaker 5: based on the lawsuits against coin base itself, Finance, all

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Speaker 5: these other things, they are not done going after those things,

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Speaker 5: but there might be kind of a bit of a

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Speaker 5: changing of the guard as far as bitcoin goes, and

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Speaker 5: maybe a little bit of ethereum too.

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Speaker 2: Okay, James, can we just take a step back and

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Speaker 2: maybe you can lay out the field, Like what does

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Speaker 2: the actual race and the competition look like. We have

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Speaker 2: a ton of issuers applying for spot bitcoin ETFs. Who

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Speaker 2: who is part of this race? And like, how did

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Speaker 2: we see all of this play out of the last

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Speaker 2: two months or so?

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Speaker 5: If we start, we have to go back to ARC

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Speaker 5: Kathy Wood's ARC in twenty one shares, which is an

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Speaker 5: ETF issue in Europe that has launched a bunch of

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Speaker 5: crypto ets. They refiled for their spot bitcoin ETF application

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Speaker 5: back in April.

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Speaker 3: Yeah, April of this year.

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Speaker 2: I think it was April twenty fifth.

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Speaker 3: Yeah, that's pretty good. You've been covering this pretty well.

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Speaker 5: They were the only one that was active when Blackrock

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Speaker 5: dropped their filing on June fifteenth, and they were almost

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Speaker 5: certainly active because another player that is tech well technically

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Speaker 5: they don't have a nineteen before a filed, which is

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Speaker 5: what you file for a rule change in this case,

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Speaker 5: the rule change to launch a bitcoin ETF is Grayscale.

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Speaker 5: Greyscale launched and owns GBTC, which is the Greyscale Bitcoin Trust,

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Speaker 5: billions of dollars in there. It's not an ETF, it

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Speaker 5: doesn't trade like an ETF. There are a lot of

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Speaker 5: inefficiencies there. They are suing the SEC trying to convert

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Speaker 5: GBTC to an ETF. That decision is due sometime in

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Speaker 5: the next couple weeks, potentially months, but it should be

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Speaker 5: in the next few weeks that we should get a

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Speaker 5: decision like grey Skill ruling. So Grayscale is the other

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Speaker 5: key player here. Then you have Blackrock entering. Then we

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Speaker 5: have Bitwise, van Neck, Wisdom Tree in Vesco, who's partnered

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Speaker 5: with Galaxy. Galaxy is Mike Novogratz is crypto company. Then

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Speaker 5: you have Fidelity, Valkyrie, and global X all that have

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Speaker 5: applied for spot Bitcoin ETF. So there's those are all

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Speaker 5: like huge names in the ETF space, asset management space.

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Speaker 5: This is not like nobody's trying to launch these things.

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Speaker 4: So what is that eight or nine total?

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Speaker 5: It's ten total. Ten global Age just filed last week, actually.

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Speaker 1: So is there enough demand to rationalize ten bitcoin ETFs?

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Speaker 1: Are some of these you think they'll pull their plans

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Speaker 1: if Blackrock gets approved, Like, how do you see it

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Speaker 1: shaken out?

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Speaker 5: Well, let's assume they all get out around the same day.

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Speaker 3: They'll all try.

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Speaker 5: This is where I just sort of note saying that

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Speaker 5: if they approve and are let out multiple ones on

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Speaker 5: the same day, we're going to see ETF marketing like

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Speaker 5: you've never seen before, because they all do the same thing.

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Speaker 5: So marketing is going to be a massive variable here.

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Speaker 5: Blackrock has a big advantage because of their name and

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Speaker 5: their distribution, but you know, like ARC and twenty one

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Speaker 5: Shares are known a little more within the crypto community.

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Speaker 3: That could help.

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Speaker 5: So same with Novagrats and Galaxy, with Invesco SO and

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Speaker 5: Global Act. They all have their customers and clients. So

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Speaker 5: I think though it's a winner take most market, one

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Speaker 5: of them is going to be the GLD. Let's just

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Speaker 5: say Black rocks out in the same day, and it

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Speaker 5: becomes like the GLD.

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Speaker 1: GLD is the gold the prominent gold ETF for those

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Speaker 1: who don't know.

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Speaker 3: Yeah, and GLD.

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Speaker 5: Even though there's been cheaper ones and much cheaper ones,

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Speaker 5: actually GLD still commands a lot of assets and a

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Speaker 5: lot of volume, and there's a lot of eat traders

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Speaker 5: and institutions who will look over a more expensive ETF

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Speaker 5: because of the liquidity. So if you're the most liquid one,

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Speaker 5: it's perfect because you have pricing power. You know, if

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Speaker 5: the worry about getting sort of undercut on fees, it's

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Speaker 5: the next one is probably going to be the cheap

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Speaker 5: one and they're going to maybe get their assets from advisors.

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Speaker 5: Then there'll be ones that might I don't know, write

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Speaker 5: options on top of it. There might be one that

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Speaker 5: comes out and adds ether into it. There'll be a

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Speaker 5: whole set of creative products that try to do something different.

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Speaker 5: But for the nine or ten that come out that

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Speaker 5: are just bitcoin, I would say, to get James's take too,

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Speaker 5: I would say one will be the superstar, and they'll

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Speaker 5: be like two or three other ones that are able

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Speaker 5: to carve out enough of a niche to make it

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Speaker 5: onto like you know, the next couple of years.

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Speaker 4: Yeah.

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Speaker 5: Some of the niches I'm thinking about is like one

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Speaker 5: of some of them are going to say we will

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Speaker 5: absolutely not lend out your bitcoin, but other one will

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Speaker 5: be like, we'll lend out your bitcoin and give you

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Speaker 5: dividends and returns, which will scare plenty of people away,

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Speaker 5: but other people will like, oh, if they're doing it smartly,

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Speaker 5: I would love to get that additional return you can

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Speaker 5: like there's there's ETFs out there where you can deliver

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Speaker 5: gold to your doorstep if you have enough ETF shares.

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Speaker 5: It's a lot easier to deliver bitcoin to somebody's bitcoin

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Speaker 5: while than it's gold, So I think they'll figure that

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Speaker 5: out too. So there'll be different ways that people try

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Speaker 5: to differentiate. But I'm with Eric, it's going to be

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Speaker 5: one at the top and then a handful of others.

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Speaker 5: Like you said, winner take most. It's is the way

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Speaker 5: it's going to play out, will Don.

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Speaker 1: I would make sure I was at home if they

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Speaker 1: delivered gold in I really hope you don't want to.

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Speaker 2: The ups guy doesn't want you gold anyway. He makes

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Speaker 2: a lot of money to see.

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Speaker 5: I mean, honestly, I've had like really low budget random

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Speaker 5: stuff stolen off my doorstep from people in the Amazon

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Speaker 5: delivery gold would be the best. These guys would be like,

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Speaker 5: oh my god, you'd hit the jacket. I thought I

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Speaker 5: was going to get a toothbrush or something. I got gold.

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Speaker 2: Okay, James, can we talk about what actually might happen

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Speaker 2: with the approval process, because there's a lot of I

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Speaker 2: guess questions around this, like is it the case that

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Speaker 2: we would see all of them go at the same time,

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Speaker 2: is that something the SEC would want or is there

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Speaker 2: an advantage to having filed earlier than the rest.

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Speaker 5: Historically the way it works is if you file first,

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Speaker 5: you go out first, right, That's the way it has

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Speaker 5: worked historically. If you look at Biddo, which is the

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Speaker 5: bitcoin futures etf that launched, that is a slightly different

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Speaker 5: process than the nineteen before that we're doing talking about

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Speaker 5: the spot bitcoin ETFs, but it launched first a couple

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Speaker 5: days early because they filed first, and it commands the market.

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Speaker 5: It's ninety eight ninety nine percent of the volume, ninety

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Speaker 5: five ninety six percent of the assets, and the SEC

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Speaker 5: got a lot of flak for basically being a king maker.

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Speaker 5: So we've got from conversations we're hearing with other people

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Speaker 5: that are having with the SEC, they don't they probably

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Speaker 5: don't want to be a king maker. There's been a

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Speaker 5: lot of firms that spend a ton of money on

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Speaker 5: legal and all these different things filing for the CTFs.

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Speaker 5: I mean, the Winklevalls filed for this thing for the

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Speaker 5: first time ten years ago at this point, so there's

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Speaker 5: been a lot of people putting a lot of time, money,

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Speaker 5: and effort. Maybe they shouldn't take that into account, but

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Speaker 5: I mean, really, the cleanest way to do this would

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Speaker 5: be to allow all of them to go to the

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Speaker 5: same time. Theoretically, we do really do think if they approve,

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Speaker 5: it's going to be multiple at least, if not all

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Speaker 5: at the same time.

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Speaker 3: So there's good thesis to that that's what they'll do.

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Speaker 5: Theoretically, though, the way it should work is there's all

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Speaker 5: these approvals in delay or deny deadlines, and usually they

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Speaker 5: just wait till two hundred and forty days and then

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Speaker 5: they approve or deny. Right, the average time is like

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Speaker 5: two hundred and twenty twenty something days, So for the

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Speaker 5: most part, they take the full time and then they approve.

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Speaker 5: But as Eric has said, and he can get into

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Speaker 5: a little bit more, this is like a completely different situation.

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Speaker 5: We have the Gray Scale lawsuit against the SEC, which

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Speaker 5: we're expecting a decision on, so we're waiting for that decision.

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Speaker 5: If obviously, if Gray scill loses, it changes our odds

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Speaker 5: all of a sudden. We're probably not at sixty five percent,

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Speaker 5: but we think grey Skill is likely to win this right, So.

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Speaker 3: The timeline is weird.

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Speaker 5: Is there going to be some day after that decision

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Speaker 5: comes down where they just the SEC says, all right,

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Speaker 5: they have forty five d to do what's called an

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Speaker 5: no bond hearing, which basically just means they'll rather than

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Speaker 5: panel three judges in the Grayscale, they'll include all sixteen

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Speaker 5: or seventeen judges on the DC Circuit Court of Appeals

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Speaker 5: and they all come back and be like, did these

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Speaker 5: judges do this right? Essentially, so it would be a

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Speaker 5: little bit more time. But assuming the SEC doesn't do that,

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Speaker 5: there's going to be some language in the opinion that

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Speaker 5: says what the SEC needs to do, and there'll be

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Speaker 5: some time where the SEC either needs to deny Grayscale

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Speaker 5: again for different reasons or approve it. And this brings

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Speaker 5: up this sort of thesis and it's not been confirmed

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Speaker 5: at all, but this is many people of coimped with

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Speaker 5: this possible thesis, which is why Blackrock filed. Somehow Blackrock thought, okay,

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Speaker 5: we're going to file, and what they did that was

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Speaker 5: novel is they included a surveillance sharing agreement with Coinbase.

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Speaker 5: Not even ARC had that, so this was a novel situation.

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Speaker 5: And NAS that too wasn't involved, so there was some

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Speaker 5: novelty to their filing. The thesis is that well, Blackrock

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Speaker 5: filed because then if the SEC loses to Grayscale, the

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Speaker 5: SEC can save face by saying, well, we were waiting

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Speaker 5: for an SSA with Coinbase Blackrock provided that. Therefore, we're

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Speaker 5: going to let them out. That's why we didn't let

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Speaker 5: you out. And they let Blackrock out first and just

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Speaker 5: sort of maybe delay in court with Grayscale to not

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Speaker 5: let them convert, just to sort of screw them over

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Speaker 5: for suing them. So you save face and sort of

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Speaker 5: get back at this company that sued you. This is

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Speaker 5: one of the thesises on why Blackrock filed. Then Gensler

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Speaker 5: gets to say, not only did I do that, but I,

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Speaker 5: as I look at regulating crypto, I'm getting no help

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Speaker 5: from Congress. So at least I got Coinbase to clean

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Speaker 5: up in order to meet a say s to this,

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Speaker 5: and I left it with the adults Blackrock. He can

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Speaker 5: almost turn that into a win regulatory wise. So you

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Speaker 5: could see this is again all thesis, but you could

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Speaker 5: see how that kind of makes political and practical sense

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Speaker 5: and explains why Blackrock would have filed.

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Speaker 4: Thesis are a little bit of conspiracy theory.

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Speaker 3: Oh yeah, no, I told James all the time, thesis

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Speaker 3: we'll call it.

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Speaker 5: You ever seen the movie JFK. Yeah, I feel like

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Speaker 5: Jim Garrison. It's easy to say they're not going to

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Speaker 5: prove it. That's Lee Harvey Oswold act alone. But then

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Speaker 5: you start to see all this stuff and you're like,

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Speaker 5: what's real? What's a red hiring? The circumstantial evidence that

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Speaker 5: he didn't is so compelling and interesting, and that's sort

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Speaker 5: of what this is like.

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Speaker 2: But talk about the surveillance sharing agreement and how important

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Speaker 2: it was, because then all of the issuers that had

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Speaker 2: also filed for US popaquinitif had to go in and

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Speaker 2: add surveilance sharing agreements.

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Speaker 3: Right.

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Speaker 5: Yeah, So all the denials I said, the wink of

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Speaker 5: all supplied ten years ago, right, and every denial has

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Speaker 5: basically said they want it. And I'm going to say,

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Speaker 5: in putting quotes, a surveillance sharing agreement with a market

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Speaker 5: of significant size. So the question is what is a

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Speaker 5: regulated market? Which isn't it sounds like, yeah, I know

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Speaker 5: what it is, But there's no The SEC has refused

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Speaker 5: to exactly define what that is because they like to

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Speaker 5: have a little wigger room, and they also haven't defined

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Speaker 5: what a market of significant sizes right, So they will

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Speaker 5: do things to back into whatever decision is made from above.

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Speaker 5: So if Gary Gensler and the politicians that he worked

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Speaker 5: with in reports to decide they want to improve this,

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Speaker 5: they'll figure out a way to do it and meet

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Speaker 5: those requirements. So if we look at the bitcoin futuresztfs

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Speaker 5: that went through this nineteen be four process, the SEC

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Speaker 5: approved it by saying it met those metrics because the

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Speaker 5: CMME Bitcoin Futures market was the only market for the

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Speaker 5: CMME Bitcoin Futures ETFs. So therefore it's a regulated market

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Speaker 5: of significant size, which is just like weird to back into.

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Speaker 4: Right.

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Speaker 5: So the argument here for Coinbase is are they a

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Speaker 5: market of significant size? If you just look at bitcoin

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Speaker 5: trading volume, they probably aren't be because binance makes up

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Speaker 5: sixty percent of the global trading volume. But if you

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Speaker 5: look at just US trading, Coinbase is a dominant player.

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Speaker 5: And if you look at US dollar trading specifically, they

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Speaker 5: are by far and away the dominant player because all

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Speaker 5: of Binance's stuff is with stable coins and all these

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Speaker 5: other things. So the SSA, the question is, is the

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Speaker 5: SSA a market of significant size? I think I could

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Speaker 5: easily make the argument that it is a specific for

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Speaker 5: US dollars, but it's not a regulated market under what

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Speaker 5: you would normally consider to be a regulated market. But again,

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Speaker 5: bitcoin isn't a security, so it's not going to trade

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Speaker 5: on a regulated SEC exchange. Yeah, and a lot of

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Speaker 5: this wasn't really put on gold when it launched. Gold

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Speaker 5: is the same thing. It's like a commodity. This is

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Speaker 5: an unusually high bar in my opinion, versus when gold

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Speaker 5: came out. And that's what a lot of people are arguing.

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Speaker 5: And this leads me to this whole idea of just

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Speaker 5: like he's just not that into you. You know that

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Speaker 5: that movie Kencer just doesn't like crypto, and that's just

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Speaker 5: the way it is. And so we also, in our

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Speaker 5: calculus factor in the political angle and will this become

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Speaker 5: politically untenable for Gensler because there are some Democratic congressmen

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Speaker 5: who are actually moving over and sort of becoming more

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Speaker 5: pro crypto, and if he sort of feels it from them,

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Speaker 5: and now he's gonna if he loses grayscale, it's more

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Speaker 5: egg on the face because they just lost another lawsuit

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Speaker 5: on these spikes futures things. It's possible he's in a

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Speaker 5: position where it's the politically right move and then they're

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Speaker 5: going to make up whatever legal language to fit that

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Speaker 5: they want. Anyway, So our thesis is that the language

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Speaker 5: they use is you can change it.

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Speaker 3: Yeah, they'll just make it work if they want to

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Speaker 3: do it.

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Speaker 4: But didn't.

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Speaker 1: He made some comment on Bloomberg TV to the point of, hey,

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Speaker 1: I'm only one vote on the commission that that.

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Speaker 3: Yeah, little on me. I'm just yeah. We thought that

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Speaker 3: was interesting. He never spoke like that before.

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Speaker 5: He said, I'm just one of five commissioners when Kaylee

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Speaker 5: asked him about the bitcoins etf And that's interesting because

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Speaker 5: when the last one was denied, three said denial, but

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Speaker 5: two dissented and said you should have approved it.

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Speaker 3: So it's three two. So if one.

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Speaker 5: Defects, he's in trouble.

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Speaker 3: Now.

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Speaker 5: We again, we hear from our legal analysts and regulatory

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Speaker 5: analysts that that just wouldn't happen because that would be

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Speaker 5: like defecting from your own party. But again, as I

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Speaker 5: said before, there's democratic congressmen who are moving.

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Speaker 4: Oh yeah, that the political line.

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Speaker 1: Yeah, it's not clear, you know, but let me I

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Speaker 1: got to play the role here of the cranky old

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Speaker 1: traditional finance guy would come boomer, which, let's be honest,

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Speaker 1: it's not a stretch for me, right.

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Speaker 3: Uh.

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Speaker 1: But you know, well, Don and I we talked to

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Speaker 1: a lot of fund you know, traditional asset fund managers rias,

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Speaker 1: you know, the old school, the old guard I don't

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Speaker 1: see a lot of them pounding their fists on the

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Speaker 1: table saying I'm dying to get my customers, my clients

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Speaker 1: into bitcoin, but only if there were an ETF, you know.

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Speaker 1: To me, it's like, okay, I get the whole notion that, okay,

436
00:19:28,400 --> 00:19:30,400
Speaker 1: people with clients like that are going to be more

437
00:19:30,400 --> 00:19:34,439
Speaker 1: comfortable on a regulated exchange with a regulated product. But

438
00:19:34,520 --> 00:19:37,000
Speaker 1: when you boil it down to I don't want you

439
00:19:37,040 --> 00:19:40,359
Speaker 1: putting your money into coinbase, put it into this ETF

440
00:19:40,560 --> 00:19:43,879
Speaker 1: where the bitcoin is custodied by Coinbase, I don't know,

441
00:19:43,960 --> 00:19:45,640
Speaker 1: like how big is the demand there?

442
00:19:45,680 --> 00:19:46,200
Speaker 4: How big?

443
00:19:46,359 --> 00:19:49,800
Speaker 1: Like how much in assets are we talking about that

444
00:19:49,840 --> 00:19:53,360
Speaker 1: we expect to go into these ETFs should they be approved?

445
00:19:53,480 --> 00:19:55,160
Speaker 3: All right, let me take first swing at that games

446
00:19:55,160 --> 00:19:56,400
Speaker 3: can clean up anything. I miss.

447
00:19:56,560 --> 00:19:59,840
Speaker 5: The financial advisors in America have about thirty trillion an

448
00:19:59,840 --> 00:20:02,600
Speaker 5: hours sets. It's a big amount. So even if like

449
00:20:02,640 --> 00:20:06,159
Speaker 5: zero point four percent of all of those portfolios or

450
00:20:06,200 --> 00:20:08,760
Speaker 5: a portion of them go into this, that's one hundred

451
00:20:08,760 --> 00:20:11,160
Speaker 5: one hundred and fifty billion dollars. That's how much gold

452
00:20:11,200 --> 00:20:13,560
Speaker 5: ETFs have. So that's kind of where we're at. Zero

453
00:20:13,560 --> 00:20:16,280
Speaker 5: point five percent. Some will never use it, but there

454
00:20:16,280 --> 00:20:18,399
Speaker 5: could be some that use two three four percent. The

455
00:20:18,400 --> 00:20:20,080
Speaker 5: other thing you have to know is advisors are scared

456
00:20:20,119 --> 00:20:22,400
Speaker 5: about this transfer of wealth from the boomers who are

457
00:20:22,800 --> 00:20:25,919
Speaker 5: eighty ninety years old almost, and they're going to transfer

458
00:20:25,920 --> 00:20:28,560
Speaker 5: it down to their millennials, gen xers like me and

459
00:20:28,600 --> 00:20:31,359
Speaker 5: even the generation below, and the boomers are going to

460
00:20:31,400 --> 00:20:32,800
Speaker 5: want to I mean, the advisors are going to want

461
00:20:32,800 --> 00:20:35,640
Speaker 5: to look hip and cool to what the younger people want.

462
00:20:36,040 --> 00:20:38,679
Speaker 5: And I believe some of those young people are going

463
00:20:38,720 --> 00:20:41,920
Speaker 5: to want exposure to this in terms of just as

464
00:20:41,960 --> 00:20:44,600
Speaker 5: a fomo trade or a store of value. So we

465
00:20:44,640 --> 00:20:46,479
Speaker 5: do think there's probably gonna be some market for it.

466
00:20:47,080 --> 00:20:49,720
Speaker 5: When you look at other countries like in Canada, that

467
00:20:50,359 --> 00:20:53,440
Speaker 5: percentages are about the same. So I think a bitcoin

468
00:20:53,480 --> 00:20:56,400
Speaker 5: ETF again won't it won't be that big of a deal.

469
00:20:56,800 --> 00:20:59,320
Speaker 5: But if we're talking one hundred and fifty billion, that's

470
00:20:59,359 --> 00:21:02,159
Speaker 5: a pretty big of what total bitcoin market cap is.

471
00:21:02,200 --> 00:21:06,199
Speaker 5: So it will be a bridge though, to all of

472
00:21:06,240 --> 00:21:08,280
Speaker 5: the boomer money, and they have all the money.

473
00:21:08,480 --> 00:21:12,119
Speaker 1: Yeah, so you think even an advisor who's maybe skeptical

474
00:21:12,240 --> 00:21:16,639
Speaker 1: personally about crypto will have to react to the client

475
00:21:16,680 --> 00:21:19,680
Speaker 1: demands and say, look, if you're gonna do it, i'd

476
00:21:19,680 --> 00:21:22,760
Speaker 1: prefer you to be in an ETF then a separate crypt.

477
00:21:23,000 --> 00:21:26,160
Speaker 5: There's two things here, right, So I've talked to plenty

478
00:21:26,160 --> 00:21:28,800
Speaker 5: of advisors who have clients that they don't offer their

479
00:21:28,800 --> 00:21:31,399
Speaker 5: their advisors. They don't really offer crypto specifically. So for

480
00:21:31,520 --> 00:21:34,040
Speaker 5: years there's been platforms where like, we'll tie into your platform,

481
00:21:34,080 --> 00:21:36,080
Speaker 5: you can pay an enterprise license and we'll get you

482
00:21:36,119 --> 00:21:38,800
Speaker 5: access to coin based custody. But really, like for the

483
00:21:38,800 --> 00:21:40,640
Speaker 5: most part, advisors don't want to deal with that. I'm

484
00:21:40,640 --> 00:21:43,320
Speaker 5: sure you've met plenty of advisors. They are more like salespeople,

485
00:21:43,640 --> 00:21:45,960
Speaker 5: many of them. So what they would prefer is for

486
00:21:46,000 --> 00:21:48,080
Speaker 5: those assets to be under their umbrella. Right, they charge

487
00:21:48,119 --> 00:21:50,280
Speaker 5: one percent on their assets or whatever what have you.

488
00:21:50,320 --> 00:21:52,159
Speaker 5: So if a client comes with them and says, I

489
00:21:52,240 --> 00:21:55,120
Speaker 5: want crypto in my portfolio or I want bitcoin. Figure

490
00:21:55,119 --> 00:21:57,160
Speaker 5: out how much I should have. Maybe it's one, two three.

491
00:21:57,160 --> 00:21:58,840
Speaker 5: There's plenty of studies that show out there that will

492
00:21:58,840 --> 00:22:02,919
Speaker 5: increase your sharp ratio, helps returns, that decreases volatility. Ironically,

493
00:22:03,280 --> 00:22:05,679
Speaker 5: so there's different reasons why you would hold it. But

494
00:22:05,920 --> 00:22:07,600
Speaker 5: telling them to hold it on coin Base on their

495
00:22:07,600 --> 00:22:09,959
Speaker 5: own account, that's not under my one percent fee. Right,

496
00:22:09,960 --> 00:22:12,280
Speaker 5: If I'm an advisor, I can the ETF is click

497
00:22:12,280 --> 00:22:13,680
Speaker 5: and buy, I can hold it. I don't have to

498
00:22:13,680 --> 00:22:15,719
Speaker 5: worry about custody, I don't have to set up other pipes,

499
00:22:16,040 --> 00:22:17,560
Speaker 5: and I get it under my umbrella.

500
00:22:17,600 --> 00:22:20,800
Speaker 3: I get the greed motivation more than the other explanation.

501
00:22:20,880 --> 00:22:22,200
Speaker 2: You're turning Mike into a believer.

502
00:22:22,680 --> 00:22:25,399
Speaker 5: One other thing, if you're trading on coin Base, you

503
00:22:25,440 --> 00:22:28,040
Speaker 5: get charged not nothing. I mean, I know we debate

504
00:22:28,080 --> 00:22:29,600
Speaker 5: this all the time, but you can charge as much

505
00:22:29,600 --> 00:22:32,200
Speaker 5: as one hundred and fifty basis points for trade three

506
00:22:32,240 --> 00:22:36,720
Speaker 5: percent three percent A bitcoin ETF will be one basis point, right,

507
00:22:36,720 --> 00:22:40,040
Speaker 5: Really we all ETFs like if you take trading, he's

508
00:22:40,040 --> 00:22:43,480
Speaker 5: still in trading expense ratio, bitass spread.

509
00:22:44,880 --> 00:22:46,840
Speaker 3: What kind of expense ratio, would you think.

510
00:22:46,680 --> 00:22:49,080
Speaker 5: So, I think they're probably gonna This is my I

511
00:22:49,119 --> 00:22:51,760
Speaker 5: think seventy seventy five will be the opening bid by

512
00:22:51,760 --> 00:22:53,960
Speaker 5: the black Rocks and Arcs. But then someone's going to

513
00:22:54,040 --> 00:22:56,240
Speaker 5: Vanguard the category with like a thirty basis point.

514
00:22:56,480 --> 00:22:58,680
Speaker 3: But not Vanguard, Not Vanguard. No.

515
00:22:59,680 --> 00:23:02,760
Speaker 5: I Well, I wrote a note saying that the endgame

516
00:23:02,840 --> 00:23:06,760
Speaker 5: here is a fifteen basis point Vanguard multi crypto basket

517
00:23:06,800 --> 00:23:09,640
Speaker 5: ETF in ten years. Vanguard laughed at me, said that'll

518
00:23:09,680 --> 00:23:12,520
Speaker 5: never happen. But if they're saying even Vanguard is starting

519
00:23:12,520 --> 00:23:15,800
Speaker 5: an advisory they started one. They're have an advisory platform.

520
00:23:15,840 --> 00:23:18,679
Speaker 5: They manage people's wealth. That got them into private equity.

521
00:23:18,720 --> 00:23:22,560
Speaker 5: That's a very unbogulian area too. If you're managing somebody's assets,

522
00:23:22,600 --> 00:23:24,920
Speaker 5: you kind of have to have access to everything. So

523
00:23:25,000 --> 00:23:27,199
Speaker 5: I think Vanguard could be pushed to do it themselves

524
00:23:27,200 --> 00:23:29,000
Speaker 5: if they don't like anything on the market. It's a

525
00:23:29,040 --> 00:23:31,200
Speaker 5: long shot, but I think black Rock and some of

526
00:23:31,200 --> 00:23:33,080
Speaker 5: the other firms are also going to just like Vanguard

527
00:23:33,119 --> 00:23:35,520
Speaker 5: the category. Even without Vanguard, they've got the scale to

528
00:23:35,520 --> 00:23:38,000
Speaker 5: totally And you're the ETF has a long tradition of

529
00:23:38,040 --> 00:23:40,720
Speaker 5: when they bust down a new asset class. You know,

530
00:23:40,760 --> 00:23:42,720
Speaker 5: the products come in at a fee like you know,

531
00:23:42,760 --> 00:23:45,440
Speaker 5: maybe fifty to sixty, but within five years, you know,

532
00:23:45,800 --> 00:23:48,520
Speaker 5: usually there's a super liquid one that's affordable.

533
00:23:48,800 --> 00:23:49,440
Speaker 3: So think about it.

534
00:23:49,440 --> 00:23:52,280
Speaker 5: If you're an advisor, ETF has all the plumbing that

535
00:23:52,359 --> 00:23:54,840
Speaker 5: works for you, and it's going to charge you, say,

536
00:23:54,880 --> 00:23:57,600
Speaker 5: fifty BIPs, and it charges one basis point to trade.

537
00:23:57,720 --> 00:23:59,440
Speaker 5: The one basis point to trade is also going to

538
00:23:59,480 --> 00:24:03,240
Speaker 5: attract initutions. Some institutions really like GLD because they is

539
00:24:03,240 --> 00:24:05,600
Speaker 5: someone to deal with gold. Nobodyans to deal with coinbase.

540
00:24:05,680 --> 00:24:08,720
Speaker 5: So I think if the liquid ETF here will also

541
00:24:08,760 --> 00:24:11,640
Speaker 5: attract pensions, endowments, foundations, traders.

542
00:24:12,160 --> 00:24:13,240
Speaker 3: Maybe not again to.

543
00:24:13,240 --> 00:24:16,919
Speaker 5: This mass, it's not gonna a mass like surge, but

544
00:24:17,040 --> 00:24:19,080
Speaker 5: on the edges, some of these bigger fish are going

545
00:24:19,160 --> 00:24:23,640
Speaker 5: to appreciate anonymously trading whenever they want go long short

546
00:24:23,880 --> 00:24:26,960
Speaker 5: this one basis point traded exposure to bitcoin.

547
00:24:28,200 --> 00:24:31,320
Speaker 1: I wonder, you know, so bitcoin's spent stuck in a

548
00:24:31,320 --> 00:24:34,480
Speaker 1: price range a little above thirty thousand, little below it

549
00:24:34,600 --> 00:24:36,639
Speaker 1: for a few months now. It did get a pop

550
00:24:36,720 --> 00:24:40,800
Speaker 1: when Blackrock filed. Are these approvals in the price do

551
00:24:40,840 --> 00:24:41,400
Speaker 1: you think.

552
00:24:41,640 --> 00:24:44,080
Speaker 5: I think the pot so I would you would be

553
00:24:44,160 --> 00:24:46,760
Speaker 5: dumb to argue that the potential approval is not in

554
00:24:46,800 --> 00:24:49,160
Speaker 5: the price. You can go back to the Blackrock filing,

555
00:24:49,200 --> 00:24:50,560
Speaker 5: all those things. It was part of the reason why

556
00:24:50,560 --> 00:24:53,560
Speaker 5: the price ran up. I don't so, I think, no

557
00:24:53,560 --> 00:24:55,320
Speaker 5: matter how you look at it, right, if we get

558
00:24:55,320 --> 00:24:57,840
Speaker 5: to January, So that we were talking about deadlines, right,

559
00:24:57,880 --> 00:25:00,040
Speaker 5: so I said some deadline after the Greyscale decision. We

560
00:25:00,119 --> 00:25:03,080
Speaker 5: could see some approvals happening, but ultimately we're going to

561
00:25:03,119 --> 00:25:05,600
Speaker 5: see full denials at least by January tenth. If that's

562
00:25:05,640 --> 00:25:07,359
Speaker 5: what's happening, we don't see some of these other ones.

563
00:25:07,800 --> 00:25:11,040
Speaker 5: The SEC denying ARCS and then approving black Rock in March.

564
00:25:11,240 --> 00:25:14,560
Speaker 5: It's possible, but I think it's somewhat unlikely. So we

565
00:25:14,600 --> 00:25:17,920
Speaker 5: get to March and they're not approved, that's definitively bad

566
00:25:18,000 --> 00:25:21,560
Speaker 5: for demand and price. But approval, I would, it's hard

567
00:25:21,560 --> 00:25:23,760
Speaker 5: to say. Right, So we talk about Grayscale. They have

568
00:25:24,920 --> 00:25:26,960
Speaker 5: six hundred and thirty three thousand bitcoin something like that.

569
00:25:27,000 --> 00:25:29,399
Speaker 5: They have over three percent of the supply, So all

570
00:25:29,440 --> 00:25:32,120
Speaker 5: of a sudden, GBC can convert to an ETF. It's

571
00:25:32,119 --> 00:25:35,240
Speaker 5: trading at a massive discount. Twenty five percent is right now,

572
00:25:35,560 --> 00:25:37,520
Speaker 5: all of a sudden, that bitcoin is open to go

573
00:25:37,600 --> 00:25:39,000
Speaker 5: on the market. Right now, it's been locked up. No

574
00:25:39,000 --> 00:25:41,400
Speaker 5: one can touch that bitcoin. So it's not as clean

575
00:25:41,440 --> 00:25:43,680
Speaker 5: as all of a sudden. Etf launches and billions of

576
00:25:43,680 --> 00:25:45,240
Speaker 5: billions are gonna run in and the price is gonna

577
00:25:45,240 --> 00:25:46,560
Speaker 5: go up. There's a lot of other things that are

578
00:25:46,600 --> 00:25:48,800
Speaker 5: gonna happen. If you look at Bitcoin futures ETFs when

579
00:25:48,840 --> 00:25:52,000
Speaker 5: they launch and just futures themselves. Futures in the CME

580
00:25:52,040 --> 00:25:54,960
Speaker 5: for Bitcoin launched at the end of twenty seventeen, early

581
00:25:55,000 --> 00:25:57,200
Speaker 5: twenty eighteen, and that was the beginning of the end

582
00:25:57,200 --> 00:26:00,800
Speaker 5: for that first bitcoin bull market. Bitcoin Futures ETFs launched

583
00:26:00,840 --> 00:26:03,719
Speaker 5: in late October of twenty twenty one, again right at

584
00:26:03,760 --> 00:26:06,240
Speaker 5: the peak of the bitcoin bull market in twenty twenty one.

585
00:26:06,320 --> 00:26:09,320
Speaker 5: So it's not It also opens new avenues for shorting

586
00:26:09,400 --> 00:26:11,080
Speaker 5: and all these other things. It's not just as clean

587
00:26:11,119 --> 00:26:13,080
Speaker 5: as all of a sudden. The herd is coming and

588
00:26:13,400 --> 00:26:15,320
Speaker 5: hundreds of billions of dollars are going to buy bitcoin.

589
00:26:15,400 --> 00:26:18,280
Speaker 3: The markets were designed to surprise you, and yeah.

590
00:26:18,640 --> 00:26:20,960
Speaker 5: Is that classics buy the room or sell the news.

591
00:26:22,000 --> 00:26:23,960
Speaker 5: That's what's going on. In my opinion, and we got

592
00:26:24,000 --> 00:26:25,720
Speaker 5: to be careful because we were asked on these some

593
00:26:25,760 --> 00:26:28,240
Speaker 5: week on these crypto spaces and podcasts.

594
00:26:28,400 --> 00:26:30,720
Speaker 3: We like go downtown a lot, God bless you. Yeah,

595
00:26:30,920 --> 00:26:33,399
Speaker 3: and we'll be asked like is the price going to

596
00:26:33,480 --> 00:26:33,720
Speaker 3: go up?

597
00:26:34,920 --> 00:26:37,399
Speaker 5: They just want they want hopium so bad, and we

598
00:26:37,440 --> 00:26:40,160
Speaker 5: can't give investment device or even make calls about prices,

599
00:26:40,160 --> 00:26:42,600
Speaker 5: so we're like, look, I mean, biddoh, that was a

600
00:26:42,600 --> 00:26:45,399
Speaker 5: peak that went down. After that, we don't know, and

601
00:26:45,440 --> 00:26:48,680
Speaker 5: there's many variables in crypto. There could be another SBF situation.

602
00:26:48,760 --> 00:26:50,520
Speaker 5: Crypto is famous for having these scandals.

603
00:26:50,880 --> 00:26:51,359
Speaker 3: I don't know.

604
00:26:51,480 --> 00:26:54,480
Speaker 5: All I know is that over time an ETF would

605
00:26:54,480 --> 00:26:57,280
Speaker 5: be a legit bridge from all of the boomer money

606
00:26:57,320 --> 00:27:01,520
Speaker 5: in America to Bitcoin, and noverybody's not gonna flood over.

607
00:27:01,640 --> 00:27:05,400
Speaker 5: But that bridge can't hurt, and over time probably will

608
00:27:05,880 --> 00:27:10,639
Speaker 5: h will probably result in a good amount of bid orders.

609
00:27:11,000 --> 00:27:11,240
Speaker 4: Yeah.

610
00:27:11,400 --> 00:27:13,919
Speaker 5: The one thing I would say is he mentioned we

611
00:27:13,920 --> 00:27:15,520
Speaker 5: go on in a lot of these crypto spaces, like

612
00:27:15,560 --> 00:27:18,160
Speaker 5: with you, I'm like arguing, like why it's more likely

613
00:27:18,200 --> 00:27:19,800
Speaker 5: than you you initially thought it was.

614
00:27:20,119 --> 00:27:22,439
Speaker 3: With them, it's like the exact opposite. I find I

615
00:27:22,440 --> 00:27:23,120
Speaker 3: played the opposite.

616
00:27:23,240 --> 00:27:26,040
Speaker 5: I'm like, look, we are at this sixty five percent odds,

617
00:27:26,040 --> 00:27:28,119
Speaker 5: but there's thirty five percent chance in those odds that

618
00:27:28,240 --> 00:27:30,800
Speaker 5: it's not gonna happen. By the way, one more thing.

619
00:27:31,080 --> 00:27:34,480
Speaker 5: They sometimes they're so into hopium that they'll take something

620
00:27:34,560 --> 00:27:37,680
Speaker 5: and just completely contort it. So remember I said, advisers

621
00:27:37,720 --> 00:27:39,520
Speaker 5: have thirty trillion, and I was on a podcast and

622
00:27:39,560 --> 00:27:42,440
Speaker 5: I explained that a tiny portion of that money will

623
00:27:42,440 --> 00:27:44,960
Speaker 5: probably be in play, maybe point five percent. That's still

624
00:27:44,960 --> 00:27:47,680
Speaker 5: one hundred and two hundred billion whatever. But the one

625
00:27:47,840 --> 00:27:50,560
Speaker 5: place came out the headline saying Bloomberg analyst says thirty

626
00:27:50,600 --> 00:27:54,560
Speaker 5: trillion dollars in demand is coming to I was like, whoa, whoa,

627
00:27:54,600 --> 00:27:57,680
Speaker 5: there's a lot more words in my answer there. I mean,

628
00:27:57,800 --> 00:28:00,240
Speaker 5: come on, that's crazy, it's it's a trick, it's a

629
00:28:00,240 --> 00:28:01,160
Speaker 5: whole ris make.

630
00:28:01,080 --> 00:28:04,639
Speaker 3: That our headline says thirty tillion, thirty trillion.

631
00:28:05,040 --> 00:28:08,560
Speaker 2: But speaking of those infamous crypto scandals, can you talk

632
00:28:08,600 --> 00:28:12,199
Speaker 2: about some of the risks that potentially would be inherent

633
00:28:12,240 --> 00:28:14,199
Speaker 2: to such a product, or even just some of the

634
00:28:14,280 --> 00:28:16,480
Speaker 2: risks that the SEC has cited in the past.

635
00:28:16,720 --> 00:28:20,920
Speaker 5: Sure, So I wrote a couple notes saying, after SBF

636
00:28:20,920 --> 00:28:25,200
Speaker 5: and FTX. I said an ETF is SBF proof because

637
00:28:25,280 --> 00:28:29,000
Speaker 5: let's say an ETF existed, right. Market makers are very smart.

638
00:28:29,000 --> 00:28:30,200
Speaker 5: These are the ones who are going to go between

639
00:28:30,240 --> 00:28:34,640
Speaker 5: crypto and the end client. They probably would have smelled

640
00:28:34,840 --> 00:28:38,720
Speaker 5: SBF as a fraud earlier, maybe even and if they

641
00:28:39,040 --> 00:28:42,840
Speaker 5: did use other crypto exchanges to make a market in crypto.

642
00:28:43,160 --> 00:28:46,200
Speaker 5: We know this because there were spot bitcoin ETFs in

643
00:28:46,240 --> 00:28:49,440
Speaker 5: Canada and in Australia and other countries, and they traded fine.

644
00:28:49,480 --> 00:28:50,000
Speaker 3: Like the NAV.

645
00:28:50,400 --> 00:28:52,400
Speaker 5: The price didn't really deviate too much from the NAV,

646
00:28:52,480 --> 00:28:56,160
Speaker 5: meaning ARB was possible, whereas if you were in FTX,

647
00:28:56,240 --> 00:28:59,160
Speaker 5: you basically had your money frozen. So even if the

648
00:28:59,160 --> 00:29:02,160
Speaker 5: ETF issue were I don't know, let's say it's a

649
00:29:02,160 --> 00:29:05,040
Speaker 5: small one, like let's say Kathy would I'm let's say

650
00:29:05,160 --> 00:29:07,640
Speaker 5: she just goes crazy takes and just runs off of

651
00:29:07,640 --> 00:29:10,560
Speaker 5: the Bahamas. You still have the crypto with the custodian

652
00:29:10,960 --> 00:29:15,360
Speaker 5: And that's why ETFs are so I think prevalent is

653
00:29:15,360 --> 00:29:18,360
Speaker 5: that they're they're as liquid as derivatives, but they actually

654
00:29:18,360 --> 00:29:20,920
Speaker 5: are physically backed, so I don't think there's much of

655
00:29:20,960 --> 00:29:22,760
Speaker 5: a risk. There's a risk of the price going up

656
00:29:22,800 --> 00:29:25,640
Speaker 5: and down, it can be volatile, but people are okay

657
00:29:25,640 --> 00:29:28,400
Speaker 5: with that GiB The problem with GBTC is that it

658
00:29:28,440 --> 00:29:31,400
Speaker 5: doesn't match the price of bitcoin. All people want is

659
00:29:31,440 --> 00:29:33,560
Speaker 5: for this thing to give you the price. They're okay

660
00:29:33,560 --> 00:29:36,200
Speaker 5: if it goes down. I think the fraud of manipulation

661
00:29:36,360 --> 00:29:39,760
Speaker 5: is definitely something that can happen, But in the as

662
00:29:39,800 --> 00:29:42,880
Speaker 5: crypto's matured, I think once you get all these market

663
00:29:42,880 --> 00:29:45,840
Speaker 5: makers who are not messing around, these are people, they're

664
00:29:45,920 --> 00:29:50,240
Speaker 5: very sophisticated traders. They're not gonna deal with shady characters.

665
00:29:50,760 --> 00:29:54,320
Speaker 5: So naturally the shady characters will be isolated, and maybe

666
00:29:54,360 --> 00:29:57,440
Speaker 5: they'll even get unshady so they can participate in this

667
00:29:57,840 --> 00:30:00,640
Speaker 5: bitcoin ETF. So I think the SEC was kind of

668
00:30:01,040 --> 00:30:04,120
Speaker 5: I don't know, simple minded in not approving it in

669
00:30:04,120 --> 00:30:06,520
Speaker 5: that if they did, I think it would help their

670
00:30:06,640 --> 00:30:10,840
Speaker 5: actual regulatory goals of cleaning up crypto. So, but would

671
00:30:10,840 --> 00:30:13,240
Speaker 5: I recommend a bitcoin ETF to my mom? I mean,

672
00:30:13,240 --> 00:30:15,400
Speaker 5: I would say, Look, it's volatile, but I don't I

673
00:30:15,440 --> 00:30:18,160
Speaker 5: don't not trust it. You're not gonna, like, it's not

674
00:30:18,160 --> 00:30:20,640
Speaker 5: gonna get frozen. You're not gonna like lose all your money.

675
00:30:20,640 --> 00:30:22,920
Speaker 5: But if bitcoin go was down, you are gonna lose

676
00:30:22,920 --> 00:30:25,840
Speaker 5: that money, So that'd be my answer to that. Yeah,

677
00:30:26,040 --> 00:30:28,240
Speaker 5: I would also say, like the SEC a bit here

678
00:30:28,240 --> 00:30:29,960
Speaker 5: has kind of like lost the force for the trees.

679
00:30:29,960 --> 00:30:32,320
Speaker 5: Like GBDC already exists, people are getting access to this

680
00:30:32,360 --> 00:30:36,040
Speaker 5: in coinbase. This isn't twenty six micro strategy micro There's

681
00:30:36,120 --> 00:30:38,680
Speaker 5: all these way less efficient ways, and I understand they're

682
00:30:38,680 --> 00:30:40,640
Speaker 5: trying to protect investors, but at the end of the day,

683
00:30:40,720 --> 00:30:43,320
Speaker 5: like anyone buying a bitcoin ETF at this point, like

684
00:30:43,360 --> 00:30:44,440
Speaker 5: they know what bitcoin is.

685
00:30:44,480 --> 00:30:45,640
Speaker 3: This isn't twenty sixteen.

686
00:30:46,120 --> 00:30:48,000
Speaker 5: Like I understand denying the Wink of loss for all

687
00:30:48,000 --> 00:30:49,880
Speaker 5: the reasons they denied them plenty of the other ones,

688
00:30:49,880 --> 00:30:51,400
Speaker 5: but like we're at a point where like people know

689
00:30:51,440 --> 00:30:53,719
Speaker 5: what they're buying. It's not like they're they're buying this

690
00:30:53,760 --> 00:30:55,880
Speaker 5: thing and like expecting like that it's not going to

691
00:30:55,920 --> 00:30:57,960
Speaker 5: be risky or the vast majority of people will and

692
00:30:58,000 --> 00:31:00,600
Speaker 5: there'll be a lot of disclosures in there. So there's

693
00:31:00,640 --> 00:31:02,840
Speaker 5: a whole other avenue that you can make the argument here.

694
00:31:02,840 --> 00:31:04,800
Speaker 5: But obviously the SEC is fixated on a few things,

695
00:31:04,800 --> 00:31:07,720
Speaker 5: and the issuers applying for this have to argue with

696
00:31:07,760 --> 00:31:09,720
Speaker 5: the SEC on those issues. Yeah, and We have a

697
00:31:09,760 --> 00:31:13,400
Speaker 5: traffic light rating system for all ETFs green, yellow, red,

698
00:31:13,720 --> 00:31:16,920
Speaker 5: and it just basically gauges the nasty surprise potential, like

699
00:31:17,280 --> 00:31:20,680
Speaker 5: what potential do you have to be surprised? So voo green,

700
00:31:21,000 --> 00:31:23,200
Speaker 5: no dings like it's you know, you'll never get surprised

701
00:31:23,240 --> 00:31:26,920
Speaker 5: at Vanguard.

702
00:31:25,280 --> 00:31:26,760
Speaker 3: Yeah, and IVV same deal.

703
00:31:26,880 --> 00:31:29,160
Speaker 5: GLD actually gets a one and a green light from

704
00:31:29,200 --> 00:31:31,800
Speaker 5: us because it's because its tax is collectible, so it's

705
00:31:31,840 --> 00:31:33,840
Speaker 5: got a little bit of a surprising tax thing going

706
00:31:33,880 --> 00:31:34,360
Speaker 5: on there.

707
00:31:34,160 --> 00:31:34,920
Speaker 3: But it's still green.

708
00:31:35,320 --> 00:31:38,760
Speaker 5: Now, the SEC has approved a two x bitcoin futures

709
00:31:38,760 --> 00:31:40,680
Speaker 5: ETF that would be hardcore red light.

710
00:31:40,920 --> 00:31:41,160
Speaker 4: Yeah.

711
00:31:41,360 --> 00:31:43,480
Speaker 5: And then GBTC, if it were an ETF, would be

712
00:31:43,520 --> 00:31:45,480
Speaker 5: hardcore red light because it deviates from the NAV so

713
00:31:45,560 --> 00:31:48,760
Speaker 5: much and has awful tracking. So it's ironic that there's

714
00:31:48,800 --> 00:31:51,120
Speaker 5: all these red light ways to get it. Yet if

715
00:31:51,120 --> 00:31:53,160
Speaker 5: a spot bitcoin ETF is approved, we would give it

716
00:31:53,200 --> 00:31:56,640
Speaker 5: a green light based on our system. That's just ironic

717
00:31:56,720 --> 00:31:57,400
Speaker 5: and frustrating.

718
00:31:58,080 --> 00:32:01,880
Speaker 1: I wonder, you know, okay, say coins trading at thirty thousand,

719
00:32:01,960 --> 00:32:05,280
Speaker 1: I wonder how the pricing of the ETFs would reflect that.

720
00:32:05,320 --> 00:32:08,080
Speaker 1: Would it be like a similar to the spy where

721
00:32:08,560 --> 00:32:12,120
Speaker 1: I don't know bitcoins at thirty thousand, is the ETF

722
00:32:12,160 --> 00:32:14,680
Speaker 1: at thirty bucks three hundred? You know, would it try

723
00:32:14,680 --> 00:32:18,440
Speaker 1: to track it with a shift of decimal point like that?

724
00:32:18,200 --> 00:32:21,880
Speaker 5: So there is like evidence that like lower handles like

725
00:32:21,920 --> 00:32:25,200
Speaker 5: do better specifically with ETF. So, like, honestly, I wouldn't

726
00:32:25,200 --> 00:32:27,160
Speaker 5: be surprised if they did that, But for the most part,

727
00:32:27,160 --> 00:32:29,480
Speaker 5: I don't think it matters. People are like, even if

728
00:32:29,480 --> 00:32:32,160
Speaker 5: there's one that tracks, they tend to started like ten dollars,

729
00:32:32,160 --> 00:32:34,440
Speaker 5: twenty dollars, twenty five dollars, So starting at thirty or

730
00:32:34,480 --> 00:32:36,239
Speaker 5: whatever it is, I assume that might be something they

731
00:32:36,280 --> 00:32:38,320
Speaker 5: try to do, But I mean time will tell some

732
00:32:38,720 --> 00:32:42,840
Speaker 5: ETFs purposely lower the price so get more retail investors

733
00:32:42,880 --> 00:32:46,440
Speaker 5: in some though, it like GLD likes a higher price

734
00:32:46,480 --> 00:32:48,920
Speaker 5: because if they're a big trader and you get charged,

735
00:32:49,200 --> 00:32:51,120
Speaker 5: you actually get charged less if the price is higher.

736
00:32:51,160 --> 00:32:53,680
Speaker 5: So basically I think they'll probably start at forty bucks.

737
00:32:53,680 --> 00:32:56,520
Speaker 5: Most start at forty or twenty five, and then from

738
00:32:56,560 --> 00:32:58,920
Speaker 5: there it will track the price of bitcoin. But we

739
00:32:59,200 --> 00:33:02,200
Speaker 5: could see again, once there's one or two popular ones,

740
00:33:02,560 --> 00:33:04,800
Speaker 5: you're gonna see everybody throws spaghetti at the wall to

741
00:33:04,840 --> 00:33:06,440
Speaker 5: try to like go oh, this is bitcoin with a

742
00:33:06,480 --> 00:33:09,160
Speaker 5: low handle, this bitcoin with the high handle, this bitcoin

743
00:33:09,200 --> 00:33:12,600
Speaker 5: that goes short goal long bitcoin, this goes long tesla

744
00:33:12,640 --> 00:33:14,880
Speaker 5: short bitcoin. They're gonna try all kinds of stuff, and

745
00:33:14,880 --> 00:33:17,080
Speaker 5: that's fine. Most that stuff will be fringe, but there'll

746
00:33:17,120 --> 00:33:19,320
Speaker 5: be one or two mainstream ones that make it in

747
00:33:19,400 --> 00:33:20,719
Speaker 5: or are used by mainstream America.

748
00:33:36,800 --> 00:33:39,080
Speaker 2: But you mentioned b t X, which is the two

749
00:33:39,400 --> 00:33:43,280
Speaker 2: x bitcoin features et F and launch in June, and

750
00:33:43,560 --> 00:33:45,800
Speaker 2: I think a lot of people at first were like, no,

751
00:33:45,840 --> 00:33:47,480
Speaker 2: there's no way this is going to launch. I think

752
00:33:47,520 --> 00:33:49,360
Speaker 2: you were one of the only ones who was like, no,

753
00:33:49,480 --> 00:33:53,320
Speaker 2: this is launching on Twitter, and a lot of people

754
00:33:53,320 --> 00:33:55,760
Speaker 2: are potentially seeing that as the SEC may be warming

755
00:33:55,840 --> 00:33:57,760
Speaker 2: up to crypto bit more, is that one of like

756
00:33:58,120 --> 00:33:59,440
Speaker 2: is like a step forward?

757
00:34:00,080 --> 00:34:00,960
Speaker 3: Yeah, I think so.

758
00:34:01,720 --> 00:34:05,440
Speaker 5: I get back channel information and some of it's very valuable,

759
00:34:05,520 --> 00:34:07,640
Speaker 5: and that's why we are at sixty five. We've we've

760
00:34:07,800 --> 00:34:09,640
Speaker 5: we don't just get public things. We get things that

761
00:34:09,680 --> 00:34:12,560
Speaker 5: are a little sort of you know, in the back alleys.

762
00:34:12,440 --> 00:34:13,440
Speaker 2: Sent your brag about it.

763
00:34:14,320 --> 00:34:16,880
Speaker 3: Some of that stuff is nonsense valleys. You get a

764
00:34:16,920 --> 00:34:21,960
Speaker 3: lot of nonsense in the bad alleys. The key I

765
00:34:22,000 --> 00:34:22,399
Speaker 3: get it.

766
00:34:22,320 --> 00:34:25,440
Speaker 5: But behind Jim's behind Jims a lot of information back there,

767
00:34:25,640 --> 00:34:29,320
Speaker 5: but this was an ETF bid X two x futures

768
00:34:29,320 --> 00:34:31,839
Speaker 5: when it came out, and then uh, I don't know.

769
00:34:31,880 --> 00:34:35,279
Speaker 5: Three weeks later, that same firm filed for an ether

770
00:34:35,400 --> 00:34:38,520
Speaker 5: futures ETF which had been withdrawn, filed and withdrawn maybe

771
00:34:38,520 --> 00:34:41,480
Speaker 5: three or four times historically, and in May, and just

772
00:34:41,520 --> 00:34:42,080
Speaker 5: in May.

773
00:34:41,960 --> 00:34:44,120
Speaker 2: Had been withdrawn in May by a bunch of issuers.

774
00:34:44,239 --> 00:34:46,640
Speaker 5: They file, and then like another ten people file, and

775
00:34:46,680 --> 00:34:48,840
Speaker 5: then I hear back channel the SEC is actually okay

776
00:34:48,840 --> 00:34:52,719
Speaker 5: with these, and so we are we handedicaped it seventy

777
00:34:52,680 --> 00:34:54,399
Speaker 5: of our percent just in case that information was bad.

778
00:34:54,680 --> 00:34:56,759
Speaker 5: But now we're we're in like two weeks since the

779
00:34:56,800 --> 00:34:59,200
Speaker 5: first filing, and most of the withdrawals happened within six days,

780
00:34:59,320 --> 00:35:01,520
Speaker 5: so we're well being the normal time they withdraw. So

781
00:35:01,800 --> 00:35:05,120
Speaker 5: it looks like they're gonna let ether futures come out,

782
00:35:05,400 --> 00:35:07,759
Speaker 5: which again, if they let bitcoin futures, it almost it's

783
00:35:07,760 --> 00:35:10,880
Speaker 5: a it's one step, in my opinion, on to the spot.

784
00:35:11,280 --> 00:35:14,040
Speaker 5: But it does show the SEC can have policy changes

785
00:35:14,080 --> 00:35:16,799
Speaker 5: because we also argue with these people on who are

786
00:35:16,800 --> 00:35:19,680
Speaker 5: like anonymous on Twitter, who are like ex regulatory guys,

787
00:35:20,239 --> 00:35:22,400
Speaker 5: and they'll like, they'll say they're never gonna do this.

788
00:35:22,400 --> 00:35:24,080
Speaker 5: They're always I don't know, they lean negative. I think

789
00:35:24,120 --> 00:35:26,399
Speaker 5: they just hate crypto, but they were. They said they'll

790
00:35:26,440 --> 00:35:27,960
Speaker 5: never do the futures, and they did it. And some

791
00:35:28,000 --> 00:35:29,880
Speaker 5: of these people said they never do the bitcoin futures

792
00:35:30,160 --> 00:35:32,880
Speaker 5: now ether So some of the people who are like

793
00:35:32,960 --> 00:35:35,480
Speaker 5: come out and like this won't happen a lot of

794
00:35:35,480 --> 00:35:37,120
Speaker 5: times you gott ask them, did you say the futures

795
00:35:37,120 --> 00:35:40,400
Speaker 5: wouldn't happen either? I guess my point is things change,

796
00:35:40,600 --> 00:35:43,720
Speaker 5: Policies can change, and it might not be because anything

797
00:35:43,840 --> 00:35:47,400
Speaker 5: legally changed. Their brains just changed or the politics changed

798
00:35:47,680 --> 00:35:49,960
Speaker 5: it all. It's a lot political and it's also legal.

799
00:35:50,040 --> 00:35:50,239
Speaker 3: Right.

800
00:35:50,280 --> 00:35:52,759
Speaker 5: So one of my arguments for why so they the

801
00:35:52,760 --> 00:35:56,239
Speaker 5: bid X the Bitcoin futures ETFs launched. I mean theoretically,

802
00:35:56,239 --> 00:35:58,439
Speaker 5: the way that process works is you file and after

803
00:35:58,480 --> 00:36:00,960
Speaker 5: seventy five days you can list and for bid X.

804
00:36:00,960 --> 00:36:03,920
Speaker 5: They filed and it wasn't withdrawn, and but really the

805
00:36:03,920 --> 00:36:06,360
Speaker 5: way it usually works is the SEC just back channels

806
00:36:06,400 --> 00:36:08,600
Speaker 5: to the asset manager that applied, right and says, hey,

807
00:36:08,800 --> 00:36:11,680
Speaker 5: can you withdraw this? If somebody decides like what these

808
00:36:11,719 --> 00:36:14,480
Speaker 5: ethereum futures ETFs or that bitcoin two x futures CTF.

809
00:36:14,520 --> 00:36:17,040
Speaker 5: It's like, no, you got to send me, like the

810
00:36:17,080 --> 00:36:19,279
Speaker 5: equivalent of a season desist. You got it, you gotta stop,

811
00:36:19,320 --> 00:36:21,319
Speaker 5: And they're like that issuer is willing to go to

812
00:36:21,320 --> 00:36:24,480
Speaker 5: court the way Greyscale was, based on what the SEC

813
00:36:24,520 --> 00:36:26,440
Speaker 5: has seed in court. In the Gray Scale case, if

814
00:36:26,440 --> 00:36:28,799
Speaker 5: you look at those oral arguments, I am guessing that

815
00:36:28,840 --> 00:36:31,120
Speaker 5: the SEC was like, all right, if somebody really wants

816
00:36:31,160 --> 00:36:33,400
Speaker 5: to push us on this two x bitcoin futures ETF

817
00:36:33,800 --> 00:36:37,200
Speaker 5: and on this these ethereum futures ETFs, we're likely to

818
00:36:37,239 --> 00:36:39,840
Speaker 5: lose in court the same way we're gonna lose in Greyscale.

819
00:36:40,120 --> 00:36:42,000
Speaker 5: And except if we lose in court on that front,

820
00:36:42,040 --> 00:36:43,759
Speaker 5: we don't have a way to argue against it.

821
00:36:43,840 --> 00:36:44,640
Speaker 3: Right for Bitcoin.

822
00:36:44,960 --> 00:36:48,440
Speaker 5: Our thesis initially for Gray Scale was they would the

823
00:36:48,480 --> 00:36:50,600
Speaker 5: SEC would lose in court and then they would basically

824
00:36:50,640 --> 00:36:53,040
Speaker 5: all it does is vacates the denial letter. And before

825
00:36:53,080 --> 00:36:55,440
Speaker 5: Blackrock filed, we're like, the SEC is just gonna find

826
00:36:55,440 --> 00:36:57,839
Speaker 5: another reason to deny this thing. They'll lean on. There's

827
00:36:57,840 --> 00:37:00,879
Speaker 5: no custodians we trust. There's other reasons they could say

828
00:37:00,880 --> 00:37:03,560
Speaker 5: why they deny you don't have any of any reasons

829
00:37:03,560 --> 00:37:06,120
Speaker 5: really on Ethereum futures or two ex Bitcoin futures DF.

830
00:37:06,280 --> 00:37:09,480
Speaker 5: And just to get into the whole how Cannonball run.

831
00:37:09,560 --> 00:37:11,560
Speaker 5: This whole thing is this reminds me of Cannonball Run.

832
00:37:11,719 --> 00:37:12,080
Speaker 3: Everybody.

833
00:37:12,560 --> 00:37:14,759
Speaker 1: I'm the only one, yeah in the room old enough

834
00:37:14,800 --> 00:37:17,000
Speaker 1: to get that reference, Matt, and I thank you for that.

835
00:37:17,760 --> 00:37:19,279
Speaker 4: Burt Reynolds over here.

836
00:37:19,600 --> 00:37:22,360
Speaker 5: Remember Sammy Davis Junior and d Martin dressed up as priests.

837
00:37:22,440 --> 00:37:24,440
Speaker 5: The whole the movie was about who can get from

838
00:37:24,480 --> 00:37:27,120
Speaker 5: New York to La the fastest. But you obviously if

839
00:37:27,160 --> 00:37:28,600
Speaker 5: you get busted by a cop, it's going to slow

840
00:37:28,640 --> 00:37:30,920
Speaker 5: you down. So some people tried to pretend they were

841
00:37:30,920 --> 00:37:33,960
Speaker 5: an ambulance. Some people drove a Lamborghini. They all tried

842
00:37:34,000 --> 00:37:36,200
Speaker 5: these interesting ways. Whoever gets to La gets a million dollars.

843
00:37:37,080 --> 00:37:39,680
Speaker 5: It reminds me of this. And so in the ether Futures,

844
00:37:39,719 --> 00:37:42,200
Speaker 5: what we've already found is that somebody said, oh, we're

845
00:37:42,200 --> 00:37:44,160
Speaker 5: going to change the name and a strategy for current

846
00:37:44,160 --> 00:37:47,200
Speaker 5: etf and that process is a little shorter. So we're

847
00:37:47,200 --> 00:37:49,480
Speaker 5: going to see if the SEC allows a name change

848
00:37:49,520 --> 00:37:52,600
Speaker 5: to cut the line to come out before the regular

849
00:37:52,640 --> 00:37:55,759
Speaker 5: filer so there's all of this. Yeah, there's all this

850
00:37:55,960 --> 00:37:58,279
Speaker 5: jockeying because again, if you get out first, you have

851
00:37:58,360 --> 00:38:02,000
Speaker 5: such a massive advantage. To James's point, there has been

852
00:38:02,040 --> 00:38:04,240
Speaker 5: some of a history of better to ask for forgiveness

853
00:38:04,280 --> 00:38:06,919
Speaker 5: than permission with the SEC and to just push them

854
00:38:07,320 --> 00:38:10,000
Speaker 5: and push them and sometimes override them. It. People have

855
00:38:10,040 --> 00:38:13,120
Speaker 5: had some success, namely the Latin America Real Estate ETF

856
00:38:13,160 --> 00:38:15,520
Speaker 5: that converted to a pot ETF before the SEC was

857
00:38:15,520 --> 00:38:17,720
Speaker 5: comfortable and the SE just sort of like fine whatever.

858
00:38:17,800 --> 00:38:19,719
Speaker 5: The SEC did come out after that was like, don't

859
00:38:19,719 --> 00:38:22,800
Speaker 5: do this again. But Valkyrie is the company that filed

860
00:38:22,800 --> 00:38:24,680
Speaker 5: for their name change. They have a Bitcoin Futures ETF.

861
00:38:24,719 --> 00:38:26,360
Speaker 5: They launched it and I mentioned biddoh has ninety eight

862
00:38:26,360 --> 00:38:28,880
Speaker 5: percent of the asset, so BTF it doesn't really have

863
00:38:28,960 --> 00:38:30,400
Speaker 5: much in the way of assets, right, so they were

864
00:38:30,440 --> 00:38:32,520
Speaker 5: just like we're going to go this way. They jump

865
00:38:32,520 --> 00:38:34,840
Speaker 5: in front of volatility shares about a week. Yeah, and

866
00:38:34,880 --> 00:38:38,280
Speaker 5: Bitwise sees that Valkyrie does that, and Bitwise also jumps.

867
00:38:38,280 --> 00:38:41,240
Speaker 5: They're changing their Bitcoin futures ETFs the whole bitcoin and ethereum,

868
00:38:41,520 --> 00:38:44,440
Speaker 5: so they're also jumping in front of the Volatility shares,

869
00:38:44,440 --> 00:38:45,839
Speaker 5: which was the one that was the first to launch.

870
00:38:45,880 --> 00:38:48,319
Speaker 5: They served and this is just the undercard. This is

871
00:38:48,360 --> 00:38:50,480
Speaker 5: just the undercard race to the real race. So there's

872
00:38:50,520 --> 00:38:53,080
Speaker 5: two races going on constantly. James and I were frazzled.

873
00:38:53,640 --> 00:38:57,319
Speaker 5: Every day there's something new, and it's just I tell people,

874
00:38:57,360 --> 00:38:59,080
Speaker 5: this is the most one of the most fascinating stories

875
00:38:59,120 --> 00:39:01,720
Speaker 5: because it's issue with the spot pit Quinny. It's the

876
00:39:01,800 --> 00:39:06,160
Speaker 5: largest asset manager, the highest rungs of finance, government, and

877
00:39:06,160 --> 00:39:08,799
Speaker 5: and it's in the bridge to this crazy underworld. All

878
00:39:08,840 --> 00:39:11,680
Speaker 5: these elements, and there's a clock and it's a race.

879
00:39:12,200 --> 00:39:15,279
Speaker 5: So it's hard not to be completely compelled and just

880
00:39:15,320 --> 00:39:18,600
Speaker 5: sort of, you know, uh, fascinated by this, although not

881
00:39:18,640 --> 00:39:20,960
Speaker 5: everybody on our team is as into it as we are.

882
00:39:22,560 --> 00:39:24,520
Speaker 5: I told the Athanasias like, look, if they take you

883
00:39:24,520 --> 00:39:27,560
Speaker 5: guys to the psych ward, I'll be here for the team.

884
00:39:27,920 --> 00:39:29,960
Speaker 4: You come back well.

885
00:39:30,000 --> 00:39:33,520
Speaker 1: And the sort of blurred political lines make it more

886
00:39:33,600 --> 00:39:36,440
Speaker 1: fascinating you there's so many issues in modern life for

887
00:39:36,840 --> 00:39:39,000
Speaker 1: left and right. You know, there's there's no crossing in

888
00:39:39,040 --> 00:39:42,279
Speaker 1: the middle, but the blurry political lines that I find fascinating.

889
00:39:42,600 --> 00:39:44,800
Speaker 1: But I think what I've learned today is I should

890
00:39:44,840 --> 00:39:50,640
Speaker 1: file for a single stock, micro strategy ETF and beat everyone.

891
00:39:50,640 --> 00:39:53,400
Speaker 3: What do you think like a leveraged one leverage and

892
00:39:53,440 --> 00:39:54,040
Speaker 3: you might do well?

893
00:39:55,120 --> 00:40:01,120
Speaker 1: Two x Eric and James such a tree to catch

894
00:40:01,160 --> 00:40:02,759
Speaker 1: up with you guys and hear all about the beat

895
00:40:02,760 --> 00:40:05,360
Speaker 1: Bitcoin eat. If we can't let you go just yet,

896
00:40:05,600 --> 00:40:07,799
Speaker 1: we're gonna do our craziest thing. But I feel like

897
00:40:07,920 --> 00:40:10,640
Speaker 1: it's finally time for me to reveal my favorite cheese steak.

898
00:40:11,280 --> 00:40:12,560
Speaker 1: I'm a heretic.

899
00:40:14,040 --> 00:40:14,359
Speaker 4: As well.

900
00:40:14,400 --> 00:40:17,080
Speaker 3: I know it's sorry you think you would catch the

901
00:40:17,080 --> 00:40:18,840
Speaker 3: bait on that you know that catch the hints.

902
00:40:19,360 --> 00:40:20,440
Speaker 4: I'm a bit of a heretic.

903
00:40:20,600 --> 00:40:23,400
Speaker 1: The best Philly cheese steak is actually in Atlantic City,

904
00:40:23,520 --> 00:40:26,960
Speaker 1: white House Subs in Atlantic City. I'm just gonna throw

905
00:40:27,000 --> 00:40:28,400
Speaker 1: that out there and now we can get to our

906
00:40:28,400 --> 00:40:29,640
Speaker 1: craziest you're.

907
00:40:30,239 --> 00:40:33,319
Speaker 5: The on what makes it so good? Just to take

908
00:40:33,400 --> 00:40:36,240
Speaker 5: this extra something? Or do they use cheese whizz?

909
00:40:36,360 --> 00:40:39,600
Speaker 1: I no, I think I think it's either prevalent or American.

910
00:40:39,840 --> 00:40:44,560
Speaker 1: It's the bread. So nine percent of your Philly cheese

911
00:40:44,560 --> 00:40:47,880
Speaker 1: steaks are on the Amoroso Bakeries roll, which is a

912
00:40:47,880 --> 00:40:52,560
Speaker 1: fine classic cheese steak roll. White House, I think they

913
00:40:52,600 --> 00:40:53,440
Speaker 1: bake their own bread.

914
00:40:53,320 --> 00:40:54,839
Speaker 4: And it's delicious. It's absolutely great.

915
00:40:54,920 --> 00:40:57,279
Speaker 1: So all right, time for our craziest thing. I don't

916
00:40:57,280 --> 00:40:59,080
Speaker 1: know if they warned you guys about our gimmick. Care

917
00:40:59,080 --> 00:41:01,360
Speaker 1: of the craziest thing we've in markets this week.

918
00:41:01,800 --> 00:41:04,319
Speaker 2: So I want to get a started, right, Okay, mine

919
00:41:04,360 --> 00:41:05,360
Speaker 2: is about Taylor Swift.

920
00:41:05,840 --> 00:41:09,240
Speaker 3: Oh, okay, shockingly who is not in the market.

921
00:41:09,280 --> 00:41:12,040
Speaker 2: But she's not in the market, but listen to this.

922
00:41:12,040 --> 00:41:15,040
Speaker 2: This is from a New York Times story. A research

923
00:41:15,400 --> 00:41:18,839
Speaker 2: shop estimates that her concert could generate four point six

924
00:41:18,920 --> 00:41:23,759
Speaker 2: billion in economic activity in North America alone. That's stadium capacity,

925
00:41:23,840 --> 00:41:25,760
Speaker 2: people's spending plans.

926
00:41:25,360 --> 00:41:26,319
Speaker 4: Like I believe that.

927
00:41:26,360 --> 00:41:28,960
Speaker 2: This story said, like people are spending money on costumes

928
00:41:28,960 --> 00:41:30,360
Speaker 2: and getting their nails done.

929
00:41:30,120 --> 00:41:33,040
Speaker 3: And I believe it like that.

930
00:41:32,160 --> 00:41:36,680
Speaker 2: That's on par with the revenues from the Beijing Olympics

931
00:41:36,680 --> 00:41:39,640
Speaker 2: in two thousand and eight, after adjusting for inflation.

932
00:41:40,200 --> 00:41:40,799
Speaker 4: That's pretty good.

933
00:41:40,800 --> 00:41:44,439
Speaker 1: I've heard some speculate that she we avoided recession because

934
00:41:44,440 --> 00:41:47,280
Speaker 1: of I don't know if that's believable.

935
00:41:47,480 --> 00:41:49,640
Speaker 2: But well, people spend like, I don't know, two thousand

936
00:41:49,640 --> 00:41:52,120
Speaker 2: bucks or something, just not just on the tickets, but

937
00:41:52,440 --> 00:41:53,560
Speaker 2: buying costumes and.

938
00:41:53,880 --> 00:41:56,560
Speaker 1: All right, good stuff. I think I might give you

939
00:41:56,600 --> 00:41:58,719
Speaker 1: the win for that, thank you. But mine mine's pretty good.

940
00:41:58,760 --> 00:42:03,840
Speaker 1: Mine's your favorite sub jack LDNA. No bond maths, Oh no,

941
00:42:05,120 --> 00:42:06,840
Speaker 1: we're all gonna. I'm asking you all to do some

942
00:42:06,960 --> 00:42:10,760
Speaker 1: bond math here. Country Garden. You've ever heard of Country Garden.

943
00:42:10,760 --> 00:42:14,000
Speaker 1: It's the struggling property developer in China. It's kind of

944
00:42:14,040 --> 00:42:18,239
Speaker 1: teetering on the verge of bankruptcy. Default actually suspended this

945
00:42:18,360 --> 00:42:21,920
Speaker 1: week trading of its bonds. We are recording on Monday,

946
00:42:21,960 --> 00:42:24,000
Speaker 1: so keep that in mind. This these numbers may move,

947
00:42:24,080 --> 00:42:27,919
Speaker 1: but I want you, all three of you in our

948
00:42:28,120 --> 00:42:28,640
Speaker 1: game show.

949
00:42:28,680 --> 00:42:29,680
Speaker 4: The price is precise.

950
00:42:30,920 --> 00:42:35,480
Speaker 1: Need you to guess the highest yield that Country Gardens

951
00:42:35,520 --> 00:42:40,160
Speaker 1: bond maturing in January of twenty four, twenty twenty four.

952
00:42:40,239 --> 00:42:42,080
Speaker 1: So in a few months, what do you think the

953
00:42:42,160 --> 00:42:48,640
Speaker 1: highest yield this thing offered in the past week offered? Right, So,

954
00:42:49,800 --> 00:42:52,279
Speaker 1: as you know very well, and when the price of

955
00:42:52,280 --> 00:42:54,759
Speaker 1: a bond goes down yield.

956
00:42:55,160 --> 00:42:56,880
Speaker 3: What's what's wrong with this company?

957
00:42:57,120 --> 00:43:01,360
Speaker 1: They're they're basically teetering on the brink of bankrupt China distressed.

958
00:43:01,680 --> 00:43:04,439
Speaker 4: Yeah, China real Estate. All open.

959
00:43:04,600 --> 00:43:08,240
Speaker 5: I'll open with twenty eight percent forty four.

960
00:43:08,239 --> 00:43:10,480
Speaker 1: All right, you're all your answers are in. Would it

961
00:43:10,520 --> 00:43:13,560
Speaker 1: help if I gave you the price of the bond? No,

962
00:43:13,880 --> 00:43:17,080
Speaker 1: it traded below nine cents on the dollar. You want

963
00:43:17,080 --> 00:43:17,800
Speaker 1: to change your answer?

964
00:43:18,520 --> 00:43:22,080
Speaker 3: So it's hired than fifty percent? I win, I win.

965
00:43:22,440 --> 00:43:23,839
Speaker 4: James was closest to the tea.

966
00:43:24,760 --> 00:43:27,880
Speaker 1: Two thousand, nine hundred and seventy eight percent was the

967
00:43:27,920 --> 00:43:29,560
Speaker 1: yield on off for for a country.

968
00:43:29,719 --> 00:43:31,280
Speaker 5: This is why I should have done forty one percent.

969
00:43:31,320 --> 00:43:32,160
Speaker 5: Like prices right now.

970
00:43:32,200 --> 00:43:34,600
Speaker 4: You always gotta go. Yeah, but you went.

971
00:43:34,480 --> 00:43:35,480
Speaker 3: First, so true.

972
00:43:35,560 --> 00:43:38,799
Speaker 5: Yeah, I'm gonna change my my pick though. That is

973
00:43:38,800 --> 00:43:39,560
Speaker 5: a crazy stet.

974
00:43:39,800 --> 00:43:41,279
Speaker 4: Congratulations James.

975
00:43:41,680 --> 00:43:44,680
Speaker 3: Nice job, James, Thank you for having me. Wanted to play?

976
00:43:44,760 --> 00:43:45,560
Speaker 3: The price is precise?

977
00:43:45,640 --> 00:43:50,080
Speaker 1: Yeah, everyone's dream, James.

978
00:43:51,880 --> 00:43:52,880
Speaker 3: Craziest thing in markets.

979
00:43:53,040 --> 00:43:53,640
Speaker 2: Yeah.

980
00:43:53,719 --> 00:43:56,279
Speaker 5: Obviously the fire that happened to Maui is devastating, but

981
00:43:56,560 --> 00:43:59,280
Speaker 5: there looks like people are starting to blame Hawaii Electric

982
00:43:59,280 --> 00:44:02,560
Speaker 5: and they're down forty percent, thirty five percent today, forty

983
00:44:02,560 --> 00:44:05,640
Speaker 5: percent today. Yeah, so that stock is taking a creator

984
00:44:05,719 --> 00:44:06,080
Speaker 5: right now.

985
00:44:06,200 --> 00:44:06,520
Speaker 4: Yeah.

986
00:44:06,560 --> 00:44:08,239
Speaker 3: You don't want to own a you totally stock when

987
00:44:08,239 --> 00:44:09,560
Speaker 3: a wildfire breaks out there?

988
00:44:09,640 --> 00:44:12,279
Speaker 4: Yeah? How about you? Eric? You got anything crazy for us?

989
00:44:13,120 --> 00:44:16,120
Speaker 5: I mean, I don't know something I just keep thinking

990
00:44:16,120 --> 00:44:18,160
Speaker 5: about is the returns of the cues this year. And

991
00:44:18,200 --> 00:44:19,800
Speaker 5: we have this debate in our team because we have

992
00:44:19,840 --> 00:44:20,960
Speaker 5: a lot of international.

993
00:44:20,560 --> 00:44:22,120
Speaker 3: People on the Team's just.

994
00:44:22,040 --> 00:44:24,640
Speaker 5: Something about America and that index. Man, there's something that

995
00:44:24,719 --> 00:44:26,480
Speaker 5: you don't get in other countries in the queues of

996
00:44:26,600 --> 00:44:30,320
Speaker 5: thirty seven percent. That is just an astonishing hall, especially

997
00:44:30,560 --> 00:44:32,800
Speaker 5: when we're not even sure the Fed's done hiking completely.

998
00:44:33,120 --> 00:44:37,400
Speaker 5: But that index, it's just really really powerful and compared

999
00:44:37,400 --> 00:44:39,200
Speaker 5: to the rest of the world. International has these like

1000
00:44:39,239 --> 00:44:41,680
Speaker 5: six month runs and it's like back to the cues

1001
00:44:42,080 --> 00:44:45,440
Speaker 5: and these like really innovative companies in that index. So

1002
00:44:45,440 --> 00:44:47,440
Speaker 5: that's something that I'm thinking about that we're actually going

1003
00:44:47,520 --> 00:44:48,160
Speaker 5: to do something on.

1004
00:44:48,239 --> 00:44:49,160
Speaker 3: And we talk about a lot.

1005
00:44:49,200 --> 00:44:51,160
Speaker 5: I don't know, that's not financial news, but today on

1006
00:44:51,200 --> 00:44:53,040
Speaker 5: IQ we are talking about the thirty seven percent return

1007
00:44:53,080 --> 00:44:55,200
Speaker 5: of the queues this year. To me, that's just we

1008
00:44:55,280 --> 00:44:58,000
Speaker 5: take it for granted almost. It's almost like Jordan's scoring

1009
00:44:58,040 --> 00:44:59,400
Speaker 5: like fifty five points out whatever.

1010
00:44:59,520 --> 00:45:00,439
Speaker 4: It is pretty wild.

1011
00:45:00,719 --> 00:45:03,520
Speaker 1: What if all mutual funds changed their benchmark to the

1012
00:45:03,560 --> 00:45:04,480
Speaker 1: Nasdaq one hundred.

1013
00:45:04,640 --> 00:45:06,000
Speaker 4: How do you think you think that would fly?

1014
00:45:06,200 --> 00:45:08,879
Speaker 5: Morning started a study and over the past fifteen years,

1015
00:45:08,960 --> 00:45:10,880
Speaker 5: not one growth manager was able to beat the cues.

1016
00:45:11,360 --> 00:45:14,200
Speaker 1: Really, yeah for that for the fifteen year per Yeah. Now,

1017
00:45:14,200 --> 00:45:16,000
Speaker 1: and there's that's a good crazy status, isn't it.

1018
00:45:16,080 --> 00:45:16,880
Speaker 3: Yeah, there's a couple.

1019
00:45:17,520 --> 00:45:19,359
Speaker 5: There's a couple of funds we found over the past

1020
00:45:19,360 --> 00:45:22,080
Speaker 5: five to ten years that have beat it. But the

1021
00:45:22,120 --> 00:45:24,200
Speaker 5: only way to beat the cues is to forget everything

1022
00:45:24,239 --> 00:45:27,200
Speaker 5: you learned in your CFA and just go hog wild

1023
00:45:27,200 --> 00:45:29,640
Speaker 5: on a couple stocks like a Tesla. This one fund owns,

1024
00:45:29,680 --> 00:45:32,319
Speaker 5: like has ninety one percent exposure to Saint Joe's, which

1025
00:45:32,480 --> 00:45:34,239
Speaker 5: owns a bunch of land in Florida. Like, you've got

1026
00:45:34,280 --> 00:45:38,799
Speaker 5: to be really, really crazy and out there to beat

1027
00:45:38,840 --> 00:45:41,000
Speaker 5: the cues. I think if you have a CFA mentality,

1028
00:45:41,280 --> 00:45:44,000
Speaker 5: you're naturally going to shift to stocks that haven't done

1029
00:45:44,040 --> 00:45:45,440
Speaker 5: as well and you will lose.

1030
00:45:45,560 --> 00:45:49,560
Speaker 1: Yeah, diversified holding yourself's a massive conundrum for active managers.

1031
00:45:49,680 --> 00:45:51,520
Speaker 4: Yeah, that's that's that's a great point.

1032
00:45:52,040 --> 00:45:55,960
Speaker 1: Eric Palcunas and James Seaffert of Bloomberg Intelligence, thanks so

1033
00:45:56,040 --> 00:45:56,600
Speaker 1: much for your time.

1034
00:45:56,960 --> 00:45:58,600
Speaker 3: Thanks for having us, great to be here.

1035
00:46:07,600 --> 00:46:08,200
Speaker 4: What goes up?

1036
00:46:08,200 --> 00:46:10,239
Speaker 1: We'll be back next week. Until then, you can find

1037
00:46:10,320 --> 00:46:13,400
Speaker 1: us on the Bloomberg Terminal, website and app, or wherever

1038
00:46:13,440 --> 00:46:16,000
Speaker 1: you get your podcasts. We'd love it if you took

1039
00:46:16,040 --> 00:46:18,920
Speaker 1: the time to rate and review the show on Apple Podcasts.

1040
00:46:19,040 --> 00:46:21,520
Speaker 1: Some more listeners can find us, and you can find

1041
00:46:21,560 --> 00:46:25,480
Speaker 1: us on Twitter. Follow me at rig Anonymous. Goldna Hirich

1042
00:46:25,640 --> 00:46:29,560
Speaker 1: is at Goldna Hirich. You can also follow Bloomberg Podcasts

1043
00:46:29,600 --> 00:46:33,680
Speaker 1: at podcasts. What Goes Up is produced by Stacey Wang.

1044
00:46:34,160 --> 00:46:35,680
Speaker 1: Thanks for listening, See you next time.