WEBVTT - The Bitcoin ETF Race Is Over—and Also Just Beginning 0:00:05.880 --> 0:00:13.600 Welcome to Trillions. I'm Joe Webert and I'm Erica Eric. 0:00:13.680 --> 0:00:18.080 The past week has been an eventful week for ETFs, 0:00:19.000 --> 0:00:22.600 specifically bitcoin ETFs, which we've been talking about. I went 0:00:22.640 --> 0:00:26.239 back and looked we first had we talked about e 0:00:26.360 --> 0:00:29.520 t F bitcoin ETFs on Trillions. Do you know when 0:00:29.560 --> 0:00:36.600 it was, uh, well August nine, oh, with Matt Hogan. Sure, 0:00:36.720 --> 0:00:40.919 and that was six. That was three minus five eight 0:00:41.000 --> 0:00:45.440 minus three is five years before after it was first file. Yeah, yeah, exactly, 0:00:45.920 --> 0:00:49.360 So here we are. It happened. We are. Yeah, this 0:00:49.479 --> 0:00:51.440 past week felt like a decade, to be honest, I 0:00:51.479 --> 0:00:53.800 guess because we've been waiting a decade and a lot 0:00:53.920 --> 0:00:57.200 was crammed in. Honestly, I I kind of felt like 0:00:57.320 --> 0:00:59.760 I was, I don't know, like covering the last week 0:00:59.800 --> 0:01:02.600 of a campaign or something. Like every little thing was 0:01:03.120 --> 0:01:07.080 was coming out and and it was really fascinating. And 0:01:07.360 --> 0:01:10.320 some people were saying they were sick of are tweeting 0:01:10.400 --> 0:01:12.880 and writing about this, but I told them, listen, E 0:01:13.040 --> 0:01:15.640 t S only kicked down the doors of an asset 0:01:15.720 --> 0:01:20.720 class once every decade, equities, bonds, gold, and now we've 0:01:20.760 --> 0:01:25.679 got crypto. This is a big deal and I'm happy 0:01:25.760 --> 0:01:28.080 we covered it well and it was really exciting, and 0:01:28.200 --> 0:01:31.759 the whole thing is just been a whirlwind and there's 0:01:31.760 --> 0:01:34.000 so much to discuss about it. So I'm no good 0:01:34.080 --> 0:01:36.480 group to do that too with today, that's right. So 0:01:36.560 --> 0:01:40.120 we're gonna break down what just happened, what else might happen, 0:01:40.240 --> 0:01:42.480 and then maybe get into a few of the more 0:01:42.600 --> 0:01:46.840 technical aspects of it all. So joining us Jeremy Sindo Wicks, 0:01:47.000 --> 0:01:50.160 who's a shareholder at Better Price where he's an attorney, 0:01:50.800 --> 0:01:54.360 are calling Katie Greifield in Bloomberg News, and also James 0:01:54.400 --> 0:01:59.240 C for et F analyst and Bloomberg Intelligence, this time 0:01:59.560 --> 0:02:02.920 on True Alliance. The Bitcoin E t F race is 0:02:03.040 --> 0:02:09.280 over in the beginning at the same time, Katie, James, Jeremy, 0:02:09.320 --> 0:02:13.079 welcome to trillions having Thank you very much. It's a 0:02:13.120 --> 0:02:17.200 big honor. Katie. I want to start with you because 0:02:17.639 --> 0:02:22.000 you had a news article that sort of um it 0:02:22.160 --> 0:02:27.079 preceded the official UH filings go and and sort of 0:02:27.160 --> 0:02:31.400 the the E t F s becoming live investments, and 0:02:31.520 --> 0:02:33.239 I wanted to ask you, did you move the price 0:02:33.280 --> 0:02:36.160 of bitcoin? Yeah, we moved the price of bitcoin. It 0:02:36.280 --> 0:02:38.720 was wild I had I was waiting for that artistic 0:02:39.080 --> 0:02:41.560 article to go. I think it. It went live at 0:02:42.720 --> 0:02:46.239 PM on a Thursday and had my g I P 0:02:46.400 --> 0:02:49.079 screen up, and I mean you saw the price shoot 0:02:49.120 --> 0:02:51.400 straight up I think two right after that. And this 0:02:51.520 --> 0:02:55.200 scoop in question that was with vill Donna Hirich and 0:02:55.280 --> 0:02:58.880 Ben Bane also Bloomberg News, was that the SEC wouldn't 0:02:59.400 --> 0:03:02.519 stand in front of these launches. They wouldn't delay or 0:03:02.720 --> 0:03:05.840 stop them. It's the language was a little tricky because 0:03:05.880 --> 0:03:08.480 it's not like they were they don't approve it necessarily, 0:03:08.560 --> 0:03:11.560 but basically, if you boil it down, the story that 0:03:11.680 --> 0:03:14.280 they would let these e t F launch and that's 0:03:14.320 --> 0:03:20.560 what happened, okay, and what's transpired since BITTO ticker b 0:03:20.680 --> 0:03:25.000 I t O uh finally started treading well, we saw 0:03:25.160 --> 0:03:29.400 the second most heavily traded debut ever according to uh 0:03:29.720 --> 0:03:34.080 b i's own data, and I mean just the assets 0:03:34.160 --> 0:03:35.960 pouring into this fund. It was clear there was so 0:03:36.160 --> 0:03:39.720 much pent up demand for bitcoin and e t F rapper, 0:03:40.440 --> 0:03:42.440 more so than I was expecting. I mean, I've been 0:03:42.480 --> 0:03:45.520 talking to people for weeks, analysts and investors who weren't 0:03:45.560 --> 0:03:48.720 expecting as much demand as we saw, given that these 0:03:48.760 --> 0:03:51.880 are futures products. It's not the real deal that many 0:03:52.040 --> 0:03:55.320 in the crypto and et F community really have been 0:03:55.360 --> 0:03:57.640 waiting for. That's kind of the holy grail. But even still, 0:03:57.680 --> 0:04:00.200 I mean the Bitto e t F it already as 0:04:00.520 --> 0:04:03.160 well over not well over, about one point two billion 0:04:03.240 --> 0:04:06.080 in assets at the time that we're recording this UM, 0:04:06.520 --> 0:04:08.480 and it really feels like they stole the show because 0:04:08.480 --> 0:04:12.480 we've had Valkyrie launched since then and still very heaty debut, 0:04:12.600 --> 0:04:15.560 but not to the same scale and the Valcori ticker 0:04:15.840 --> 0:04:19.440 b t F. So when Biddle launch, I'm gonna agree 0:04:19.480 --> 0:04:23.120 with Katie that it was beyond my expectations. We had 0:04:23.160 --> 0:04:26.760 a group call with my research team, our team, and 0:04:27.200 --> 0:04:29.640 I basically had everybody pick how much do you think 0:04:29.680 --> 0:04:32.120 the volume would be on day one? And I think 0:04:32.160 --> 0:04:34.840 the highest pick was three million. I think we averaged 0:04:34.839 --> 0:04:37.440 about two hundred millions, so it traded one billion. But 0:04:37.600 --> 0:04:39.560 here's the thing with bidd oh that was impressive, is 0:04:39.560 --> 0:04:41.920 it traded more the second day and the only other 0:04:42.000 --> 0:04:43.240 e t F to do that in history were like 0:04:43.320 --> 0:04:46.680 g L d accused, like really ones that are studs today, 0:04:46.680 --> 0:04:48.880 So that was a good sign. It has trickled off since, 0:04:49.240 --> 0:04:52.599 although I will say, um to that stat The number 0:04:52.680 --> 0:04:55.680 one most voluminous e t F on day one was 0:04:55.800 --> 0:04:59.840 this preceded carbon blackrock e t F, which I can 0:05:00.000 --> 0:05:03.680 account because that was one institution. Um So, if you 0:05:03.839 --> 0:05:08.520 take away the b y o A preceding launches, Biddo 0:05:09.040 --> 0:05:12.120 was two times over the most you know, the biggest 0:05:12.200 --> 0:05:16.440 launch ever by grassroots volume. So again, major major deal 0:05:16.640 --> 0:05:19.040 and something that I think none of us expected to 0:05:19.080 --> 0:05:23.080 be so big. Okay, and James, I want to bring 0:05:23.120 --> 0:05:25.120 you in here because we've we said it a couple 0:05:25.120 --> 0:05:27.240 of times. We talked about it a couple of episodes ago. 0:05:27.800 --> 0:05:31.520 This all of this was the futures based e t F. Right, 0:05:31.680 --> 0:05:37.200 and walk us through why that got approved instead of 0:05:37.720 --> 0:05:41.440 um uh, you know something that was actually commodity backed. 0:05:42.480 --> 0:05:44.560 Eric and I and pretty much everyone in the e 0:05:44.680 --> 0:05:47.640 t F ecosystems in agreement that the futures based product 0:05:47.800 --> 0:05:50.680 was not the right product for most people out there 0:05:50.760 --> 0:05:54.080 trying to buy a bitcoin etf UM And the sole reason, 0:05:54.360 --> 0:05:56.480 there's really only one reason as far as I'm concerned 0:05:56.520 --> 0:05:58.120 that the future is BASTF got to prove, and that 0:05:58.160 --> 0:06:00.760 one reason is Gary Gindler. He gave a speech on 0:06:00.880 --> 0:06:03.840 August three basically outlined this is what you need to do, 0:06:03.960 --> 0:06:05.520 and he he gave a few different things, but the 0:06:05.560 --> 0:06:08.880 two main things where he wanted it under the and 0:06:08.960 --> 0:06:11.520 he wanted it to be holding bitcoin futures and pro shares. 0:06:11.560 --> 0:06:13.960 I don't I would love to talk to somebody inside 0:06:13.960 --> 0:06:15.280 of pro Shares to tell me how they did this, 0:06:15.320 --> 0:06:17.720 because they got their filing out the next day. So 0:06:17.839 --> 0:06:19.680 either there was a group, or they had this thing 0:06:19.760 --> 0:06:21.960 tabled already ready to go or was on the shelf, 0:06:22.160 --> 0:06:24.960 or they had somebody working twenties four hours straight to 0:06:25.000 --> 0:06:28.120 get this filing. I don't know, UM, but I do 0:06:28.240 --> 0:06:29.720 want to hear the story because that's the reason they 0:06:29.720 --> 0:06:31.560 were first they got this thing out. Gary Genzler gave 0:06:31.600 --> 0:06:34.120 this peach on August three, and to us, we talked 0:06:34.120 --> 0:06:36.000 about him, You're like this, this is it. There's gonna 0:06:36.000 --> 0:06:38.960 be an e t F and our team was kind 0:06:39.000 --> 0:06:41.320 of in favor, like yes, that they're gonna prove a 0:06:41.320 --> 0:06:44.480 Bitcoin futures et F. Ginzer wouldn't say this, um. And 0:06:44.560 --> 0:06:47.600 then he reiterated that statement on September twenty nine, UM, 0:06:47.720 --> 0:06:49.679 so we were pretty adamant. And then once he readed 0:06:49.680 --> 0:06:51.640 that statement on twenty nine. We were very bullish that 0:06:51.800 --> 0:06:53.760 there was going to be an approval um. But yeah, 0:06:53.760 --> 0:06:55.920 it just goes back to Gary Gensler and his his 0:06:56.120 --> 0:06:59.800 adamant see that it became the whole bitcoin futures and 0:07:00.040 --> 0:07:02.880 be under the I just want to jump in. So 0:07:02.960 --> 0:07:05.520 pro Shares they were like right there, ready to go, 0:07:05.640 --> 0:07:08.440 probably working twenty four hours. So was Investco. I mean 0:07:08.760 --> 0:07:12.840 Vestco also filed on that day. And a fascinating story 0:07:13.280 --> 0:07:16.720 yet to be uncovered is Investco dropped their pursuit of 0:07:16.960 --> 0:07:20.320 their Bitcoin E T F futures filing. I mean they didn't. 0:07:20.600 --> 0:07:23.800 They haven't withdrawn it. It's still you know, it's sort 0:07:23.840 --> 0:07:27.600 of on just hanging out in purgatory. But they theoretically 0:07:27.680 --> 0:07:31.320 could have launched in the past weekend chose not to. Yeah, 0:07:31.360 --> 0:07:33.680 they were exactly one day after pro Shares they're filing 0:07:33.760 --> 0:07:35.840 hit the egg or filing the next day, so they 0:07:35.840 --> 0:07:38.640 were just one day late. The idea that pro Shares 0:07:38.680 --> 0:07:41.720 would win this rate, so James and myself and R 0:07:41.760 --> 0:07:45.559 T was pretty aggressive and saying the SEC would approve 0:07:45.560 --> 0:07:48.120 a bitcoin etf aggress more aggressive than most. We got 0:07:48.120 --> 0:07:50.480 a lot of pushback and we had pro Shares as 0:07:50.520 --> 0:07:53.560 the favorite so those did turn out to be true, 0:07:53.640 --> 0:07:56.640 but rewind two years, nobody would have picked pro Shaares 0:07:56.680 --> 0:07:59.640 to win this race. And the thing that I keep 0:07:59.720 --> 0:08:02.240 thinking of the scene in Silence of the Lambs, when 0:08:02.800 --> 0:08:05.240 you know Jodie Foster walks into see Hannibal Lector and 0:08:06.040 --> 0:08:08.640 he tells her all everything you need is in the 0:08:08.720 --> 0:08:12.400 case file. Uh that just it's all was all in 0:08:12.480 --> 0:08:15.720 Genzer speeches and pro Shares. Not only were they quick 0:08:15.800 --> 0:08:17.080 to do it on the e t F side, but 0:08:17.600 --> 0:08:20.120 three months before that, Genzer talked about a mutual fund 0:08:20.600 --> 0:08:22.880 and they file that right away and launched that right away. 0:08:23.160 --> 0:08:25.080 And the fact that the SEC allowed that mutual fund 0:08:25.120 --> 0:08:27.640 out gave us confidence to say, okay, well the mutual 0:08:27.640 --> 0:08:30.320 phone was out seventy seven days. Uh, let's just go 0:08:30.400 --> 0:08:32.520 ahead and be very confident the e t F will 0:08:32.520 --> 0:08:35.120 also be approved. And it did. But it just goes 0:08:35.200 --> 0:08:38.760 to show you, like following instructions. Those tests back in school, 0:08:39.160 --> 0:08:41.199 those are good tests. I think, those ones that like 0:08:41.320 --> 0:08:43.400 three kids get because everybody else does the one thing 0:08:43.480 --> 0:08:45.839 and only three of them actually listened to the teacher. 0:08:46.559 --> 0:08:51.160 Go ahead, go ahead and pop your callar Eric, good job, James, 0:08:51.480 --> 0:08:55.040 can you tell me the difference between Bitter and BTF 0:08:55.400 --> 0:08:58.360 the Valkyrie offering, Like, you've got two of these future 0:08:58.400 --> 0:09:01.319 ones out there, what's what's the difference? I mean, honestly, 0:09:01.440 --> 0:09:04.440 from a high level perspective, pretty much nothing but right now, 0:09:04.679 --> 0:09:07.679 just because of when Biddo launched or however you want 0:09:07.679 --> 0:09:10.200 to us be I t o UM. Basically they had 0:09:10.280 --> 0:09:12.320 to roll because so much money poured in so quickly. 0:09:12.400 --> 0:09:15.280 As Katie talked about that, they had to basically leave 0:09:15.400 --> 0:09:18.520 that front month's contract, which was October at the time, 0:09:18.559 --> 0:09:22.040 and start investing in the second month contract, which was November. 0:09:22.400 --> 0:09:25.760 So their exposures are a little different right now. So theoretically, 0:09:25.840 --> 0:09:28.559 if there's something big happens in the market, UM, it's 0:09:28.559 --> 0:09:32.320 possible that BTF would move more in line or aggressively 0:09:32.440 --> 0:09:35.040 than than BTF. But other than that, they're pretty much, 0:09:35.320 --> 0:09:39.640 as far as I know, uh, almost the exact same product, um, James. 0:09:39.960 --> 0:09:43.640 This whole role issue is clearly why at the beginning 0:09:43.679 --> 0:09:46.400 we said most people did not want a future z ETF. 0:09:46.800 --> 0:09:49.800 They thought of spot physically back to would be better 0:09:49.880 --> 0:09:53.120 for investors. I still feel that way, UM, But let's 0:09:53.200 --> 0:09:56.320 go into why Gezer did this, because it is baffling 0:09:56.400 --> 0:09:58.040 to most people, and it really comes down to the 0:09:58.040 --> 0:10:00.760 difference between the nine Act and nine Team forty Act, 0:10:01.400 --> 0:10:04.719 and Jeremy is the perfect person to explain this. UM. 0:10:05.520 --> 0:10:10.760 Jeremy walks through why Gary Gensler was so okay with 0:10:10.920 --> 0:10:13.760 futures under the forty Act and the differences, and why 0:10:13.840 --> 0:10:16.000 he was not okay with the e t s that 0:10:16.040 --> 0:10:18.600 were followed the thirty three Act, which clearly would track better. 0:10:19.160 --> 0:10:23.080 I think the best way probably to understand Gensler's position 0:10:23.480 --> 0:10:28.959 is that UM regulator is that his his his conclusions 0:10:28.960 --> 0:10:35.520 were driven by UM regulatory concentration rather than UM rather 0:10:35.600 --> 0:10:39.800 than what is the most efficient exposure to bitcoin. And 0:10:40.040 --> 0:10:44.640 from his perspective and from the SEC's institutional perspective, it 0:10:44.880 --> 0:10:49.120 makes sense that the combination of a futures based product 0:10:49.640 --> 0:10:52.679 that is regulated under the forty Act would provide the 0:10:52.920 --> 0:11:00.240 maximum regulatory supervision UH maximum regulatory coverage. Then a e 0:11:00.360 --> 0:11:03.400 t F that is registered that is only offered under 0:11:03.440 --> 0:11:05.640 the thirty three Act. So let's go over that. So 0:11:06.440 --> 0:11:09.960 a Bitcoin, a bitcoin e t F can't be under 0:11:09.960 --> 0:11:15.160 the forty UM well generally because bitcoin itself is not 0:11:15.320 --> 0:11:18.920 a security in order to be offered under the forty Act, 0:11:19.720 --> 0:11:23.360 a fund must it must be investing in securities. Um. 0:11:23.559 --> 0:11:27.160 What's interesting about a futures based e t F is 0:11:27.280 --> 0:11:31.400 that it can go either way because because when you're 0:11:31.400 --> 0:11:34.840 holding up, when you're having a futures based e t F, UH, 0:11:34.960 --> 0:11:38.280 your your portfolio makes is made up of the futures 0:11:38.679 --> 0:11:43.479 and some cash equivalent, usually treasuries um for margin purposes. 0:11:43.960 --> 0:11:48.040 And the treasuries have a unique position under the forty 0:11:48.080 --> 0:11:52.760 Act by virtue of various both statutory provisions and sec 0:11:52.920 --> 0:11:56.720 interpretations over the years, and that treasuries can count as 0:11:56.800 --> 0:12:00.199 securities if you want them to for purpose is of 0:12:00.280 --> 0:12:03.480 registering under the forty Act, or they cannot count to 0:12:03.559 --> 0:12:07.640 securities if you don't want to. And so you can 0:12:07.800 --> 0:12:13.160 have a future of futures based product and choose whether 0:12:13.240 --> 0:12:15.600 or not you want to register it under the forty 0:12:15.640 --> 0:12:18.240 Act or under the thirty three Act. And in fact, 0:12:18.320 --> 0:12:21.040 there is a futures based there is a bitcoin futures 0:12:21.080 --> 0:12:23.880 based e t F that's currently on file that's not 0:12:24.160 --> 0:12:27.400 forty Act um and full disclosure, my firm represents that 0:12:27.760 --> 0:12:31.959 represents to uh to curi um um that registrurant. But 0:12:32.120 --> 0:12:34.520 real quick, just it walk us through what does the 0:12:34.600 --> 0:12:37.800 forty Act have it's quote protections Because again there has 0:12:37.800 --> 0:12:39.800 been interviewed a couple of times about this very question, 0:12:39.840 --> 0:12:42.480 and he keeps saying the word investor protections over and over. 0:12:43.080 --> 0:12:45.160 What is what do you get under the forty Act 0:12:45.280 --> 0:12:47.959 that you don't under the UM You get a whole 0:12:48.080 --> 0:12:54.960 host of both portfolio requirements and governance requirements like, for example, 0:12:55.240 --> 0:12:59.480 and a forty Act funds must have a board UM 0:12:59.760 --> 0:13:03.120 that largely made up of independent board members. UM. It's 0:13:03.200 --> 0:13:07.120 required to have an audit committee UM. It's required UM. 0:13:07.320 --> 0:13:10.520 There are substantive limitations on what the fund can do 0:13:10.640 --> 0:13:16.640 withouts portfolio UM, such as limited limitations on leverage, limitations 0:13:16.679 --> 0:13:20.479 on transactions with affiliates UM, which is a huge governance, 0:13:21.280 --> 0:13:24.559 huge governance third rail for the forty Act UM. So 0:13:25.679 --> 0:13:29.839 it's though, so that entire structure is something that the 0:13:30.040 --> 0:13:34.880 SEC views as being fundamentally for the benefit of investors UM. 0:13:35.000 --> 0:13:38.000 So Gensler is clearly expressing this view that all other 0:13:38.080 --> 0:13:42.120 things being equal, it is preferable for this type of 0:13:42.440 --> 0:13:46.280 novel product to come out first under the forty Act 0:13:46.960 --> 0:13:51.920 that essentially requires the product to be futures based rather 0:13:52.040 --> 0:13:55.560 than physical physically UM, and there are other reasons as 0:13:55.600 --> 0:13:58.679 to why UM a physical bitcoin e t F A 0:13:58.840 --> 0:14:01.320 t F as a practical matter couldn't really be under 0:14:01.320 --> 0:14:04.480 the Forty Act even if it wanted to, primarily relating 0:14:04.520 --> 0:14:08.120 to custody requirements under the Forty Act, which there aren't. 0:14:08.160 --> 0:14:11.760 There aren't really viable solutions for a Forty Act fund 0:14:11.840 --> 0:14:21.200 to comply with right now. Clearly the Forty Act has 0:14:21.240 --> 0:14:23.720 more protections. Again, sort likes it, and we're just gonna 0:14:23.800 --> 0:14:25.400 live with the Forty Act for a while. So Katie, 0:14:25.480 --> 0:14:28.000 let me turn to you, and you wrote another article 0:14:28.040 --> 0:14:30.600 about the next in line. You know, Betto has a 0:14:30.680 --> 0:14:33.440 great head start, and we know it's tough talk about 0:14:33.560 --> 0:14:36.680 what's who's in line and what we might see launched 0:14:36.720 --> 0:14:40.600 in the next couple of months. Well, Valkuru was able 0:14:40.640 --> 0:14:42.760 to make it out of the gates the same week. UM. 0:14:43.160 --> 0:14:46.960 We're waiting on van x, so they were expected to 0:14:47.080 --> 0:14:49.760 launch this week. They haven't yet, So it's gonna be 0:14:49.840 --> 0:14:53.200 interesting to see what goes on there, especially because I mean, 0:14:53.840 --> 0:14:57.840 the pro shares the Valkyrie funds, their expense ratio is 0:14:57.840 --> 0:15:02.880 about basis points. The van Neck Fund is sixty five 0:15:02.960 --> 0:15:07.360 basis points, so nominally lower, and I mean it is 0:15:07.480 --> 0:15:09.880 filed as a C corporation, so that gets into some 0:15:10.480 --> 0:15:16.280 interesting tax implications which could dent performance, but not onally 0:15:16.440 --> 0:15:19.080 if you're just looking at expense ratios and management fees, 0:15:19.680 --> 0:15:21.880 that's a cheaper product. So it's gonna be interesting to 0:15:21.960 --> 0:15:26.240 see if that's a way that they're able to differentiate themselves. Um. 0:15:26.880 --> 0:15:30.480 But going back to differentiation, I think it was James 0:15:30.560 --> 0:15:32.880 that brought up the fact that you know, pro Shares 0:15:32.880 --> 0:15:35.680 has already had to roll out into out beyond the 0:15:35.760 --> 0:15:38.760 front month contract. And I'm curious, you know, given that 0:15:38.840 --> 0:15:43.680 we are approaching the role, um, given the pro Shares 0:15:43.760 --> 0:15:46.680 has rolled out already into other months, I mean, will 0:15:46.760 --> 0:15:50.080 there roll out of the front month be less painful 0:15:50.120 --> 0:15:53.080 than it is for Valkyrie in terms of you know, 0:15:53.200 --> 0:15:56.000 how much that cost is. I don't think it will 0:15:56.080 --> 0:15:59.480 hurt them more. Um, it's possible, I mean we could, 0:15:59.640 --> 0:16:02.640 this thing could go wonky with the bitcoin futures market 0:16:02.640 --> 0:16:04.680 at this point. But honestly, I mean, we're just gonna 0:16:04.720 --> 0:16:06.440 have to wait and see. Anyone who's saying they know 0:16:06.520 --> 0:16:09.560 exactly what's gonna happen, Uh, it's probably lying or lying 0:16:09.640 --> 0:16:13.680 to themselves at least. Um. This one crucial thing about 0:16:13.720 --> 0:16:16.320 these e t f s that probably is different than 0:16:16.400 --> 0:16:19.280 what people remember with U S O or V x 0:16:19.480 --> 0:16:22.240 X or x I V. Those were all like basically 0:16:22.360 --> 0:16:25.160 rules based. These are active, so they can sort of 0:16:25.360 --> 0:16:28.240 really time the role and when there's good opportunity to 0:16:28.360 --> 0:16:31.920 roll without much friction. Um. But I will say, just 0:16:32.240 --> 0:16:35.400 if you have half of your portfolio in November already, 0:16:35.720 --> 0:16:38.880 I would argue you're probably going to see less effect 0:16:38.920 --> 0:16:41.000 on the role than one who has all of it in. 0:16:41.640 --> 0:16:43.480 But we did have we have a sample set of 0:16:43.560 --> 0:16:46.240 this BTCFX, which is the mutual fund that was launched 0:16:46.600 --> 0:16:49.480 three months ago, that's been that's rolled a couple of times, 0:16:49.600 --> 0:16:52.640 and it's not bad. It looks like ninety bits to 0:16:52.720 --> 0:16:56.640 a hundred basis points of frictional cost over what it 0:16:56.720 --> 0:16:59.440 was it three months. That would translate to about seven 0:16:59.520 --> 0:17:03.480 percent annualized, which is precisely where Mike mcglond and others 0:17:03.560 --> 0:17:06.119 have put the sort of annual role costs. But that 0:17:06.240 --> 0:17:09.840 seven is not nothing, and if you were to put 0:17:09.920 --> 0:17:12.880 that as the expense ratio, that would seem very expensive. Right. 0:17:12.960 --> 0:17:16.159 So this is the real issue with this uh easy 0:17:16.280 --> 0:17:19.160 t s being used long term, I would also say 0:17:19.200 --> 0:17:21.440 it could be way worse. So like from from July 0:17:21.640 --> 0:17:25.080 when those things launched until until now, the role cost 0:17:25.160 --> 0:17:26.760 is Eric has said has been very low. But if 0:17:26.800 --> 0:17:28.879 you go back a full year, if those things had 0:17:28.960 --> 0:17:31.520 launched last September, it'd be would be trailing bitcoin by 0:17:32.480 --> 0:17:35.680 right now. So we basically when bitcoin goes parabolic and 0:17:35.760 --> 0:17:38.840 goes in these huge bullish runs, um, what happens is 0:17:38.920 --> 0:17:41.080 the contango can increase. And I don't want to get 0:17:41.200 --> 0:17:44.000 too wonky, but essentially it just means the next month 0:17:44.200 --> 0:17:46.280 is way more expensive than the current month. And what 0:17:46.440 --> 0:17:47.960 happens is you have to sell the current month at 0:17:47.960 --> 0:17:49.720 a lower price and then buy at the higher price. 0:17:49.800 --> 0:17:51.919 And that's why you want to perform. So like if 0:17:52.040 --> 0:17:54.680 if bitcoin goes parabolic, depending on what happens with the 0:17:54.720 --> 0:17:58.560 futures market, you could seriously lag. Now the opposite can 0:17:58.600 --> 0:18:01.119 happen when it goes in the scops direction and a 0:18:01.240 --> 0:18:03.840 huge downturn to so and I will say though that 0:18:03.880 --> 0:18:06.280 a lot of people, like we talked to McLoone, he'll say, 0:18:06.320 --> 0:18:08.560 well that when you're looking in the past, or wasn't 0:18:08.760 --> 0:18:11.119 nearly as much liquidity. He thinks that a lot of 0:18:11.160 --> 0:18:15.119 this bring liquidity, which brings arbitrage. That said, we had 0:18:15.200 --> 0:18:18.080 pro shares on two or three months ago about the 0:18:18.160 --> 0:18:20.240 mutual fund, and they brought up the point, which is 0:18:20.280 --> 0:18:23.159 a fair one, although they're like, look if bitcoins on 0:18:23.280 --> 0:18:26.160 fire and you're in, you're in. You're up a hundred 0:18:26.200 --> 0:18:28.560 and fifty instead of a hundred and seventy. I mean, 0:18:29.040 --> 0:18:30.720 you know you're not going to be that bummed out. 0:18:30.800 --> 0:18:33.520 It's not like the way USO would trail spot oil 0:18:34.040 --> 0:18:36.359 and you would have had the call right oils up, 0:18:37.040 --> 0:18:40.200 but you're only up like five. That's the I don't 0:18:40.240 --> 0:18:43.560 think you'll see that. But look, this is part of 0:18:43.720 --> 0:18:48.159 the ish, part of the imperfection of this product, and 0:18:48.280 --> 0:18:50.240 you'll have to compare it against other products. I will 0:18:50.280 --> 0:18:53.879 say with these ETFs, there was the rolling gets is 0:18:53.920 --> 0:18:56.240 a fair point, but the trading costs and these are 0:18:56.280 --> 0:18:58.640 going to be one basis point and that is going 0:18:58.760 --> 0:19:01.920 to pretty much I asked cheaper than any other exchange. 0:19:01.960 --> 0:19:04.600 So I think that the trading crowd will probably use 0:19:04.680 --> 0:19:06.879 these more than the buine hold. Katie, I want to 0:19:06.880 --> 0:19:10.400 bring this back to you because if I'm interested investing 0:19:10.440 --> 0:19:14.200 in bitcoin, sure an E T f sounds great, but 0:19:14.760 --> 0:19:18.320 this all sounds really complicated. When I'm I'm just gonna 0:19:18.400 --> 0:19:20.959 go buy some bitcoin with my robin Hood account, why 0:19:20.960 --> 0:19:23.760 do I need to buy an E t F futures 0:19:23.800 --> 0:19:27.880 based product? So who's actually going to be using this thing? Yeah, 0:19:28.040 --> 0:19:30.320 that's a great question. I think from like the retail 0:19:30.359 --> 0:19:34.080 investor perspective and individual investor probably doesn't make sense. I 0:19:34.119 --> 0:19:35.840 don't know why you wouldn't just go to coin base 0:19:35.960 --> 0:19:38.439 or robin Hood or PayPal or any other of these 0:19:38.480 --> 0:19:41.920 platforms that offer crypto and buy it there. Um. I 0:19:41.960 --> 0:19:45.320 mean too Eric and James's point that this is more 0:19:45.600 --> 0:19:48.200 a product for traders, I think it would also be 0:19:48.400 --> 0:19:52.159 a product for professional money managers who have mandates that 0:19:52.280 --> 0:19:55.600 they can't trade, uh, you know, crypto derivatives, but they 0:19:55.640 --> 0:19:59.080 don't want to be buying physical bitcoin or maybe they're 0:19:59.119 --> 0:20:01.960 not able to in some way. So I think there 0:20:02.240 --> 0:20:05.119 is an audience for them. And I mean just looking 0:20:05.359 --> 0:20:08.120 at how much demand, how much money has been absorbed 0:20:08.160 --> 0:20:11.600 by these funds already, clearly you know there has been 0:20:11.640 --> 0:20:14.760 an audience that's materialized. Who it actually is, whether it 0:20:14.920 --> 0:20:17.959 is retail traders that are going to get burned by 0:20:18.000 --> 0:20:21.400 these rule costs and other things that remains to be seen. 0:20:22.119 --> 0:20:24.320 And I would jump in and say that if you're 0:20:24.320 --> 0:20:27.520 looking at these traditional like crypto things like uh coin 0:20:27.640 --> 0:20:29.359 base or f t x or these other things, that 0:20:29.640 --> 0:20:32.440 their transaction costs are higher, but there's no like custodian costs, 0:20:32.520 --> 0:20:34.359 So that's a huge thing. There's no long term, ongo 0:20:34.600 --> 0:20:37.880 on term, long term ongoing costs. On the other side 0:20:37.960 --> 0:20:40.159 is things like robin Hood and PayPal and Square. You 0:20:40.280 --> 0:20:43.200 technically can't actually take the crypto off of those exchanges 0:20:43.240 --> 0:20:45.360 like they have to stay within those ecosystems, so that's 0:20:45.359 --> 0:20:48.680 a detriment. And the other thing aside you've mentioned professional 0:20:48.720 --> 0:20:51.240 portfolio managers, people that are managing ETFs I want to 0:20:51.240 --> 0:20:53.840 invest in bitcoin and mutual funds. The other side, as advisors, 0:20:54.320 --> 0:20:56.600 until recently, there was really no easy way to get 0:20:56.600 --> 0:20:59.720 access to bitcoin, and advisors managed twenty plus trillion dollars 0:20:59.760 --> 0:21:01.720 in any um. If you're an advisor, you want to 0:21:01.760 --> 0:21:04.280 put one percent of your clients money, five percent, maybe 0:21:04.320 --> 0:21:06.879 a little bit, you're not. There's there's some options out there, 0:21:06.960 --> 0:21:09.720 there's new there's new technology. Companies on Ramp is one 0:21:09.720 --> 0:21:11.560 that's trying to build an ecosystem where people can do 0:21:11.560 --> 0:21:14.080 invest directly in crypto. But if you're only investing one 0:21:14.080 --> 0:21:16.640 percent of some of your clients money, like the easiest 0:21:16.680 --> 0:21:18.320 way to do that is through assist through an e 0:21:18.400 --> 0:21:20.080 t F. Basically, this is this is gonna be the 0:21:20.119 --> 0:21:21.520 way you're gonna do it if you're if you're willing 0:21:21.600 --> 0:21:23.600 to invest in the futures et F. So even one 0:21:23.640 --> 0:21:26.720 percent of twenty plus trillion or point oh one percent 0:21:26.800 --> 0:21:36.560 of twenty plus trillion is a big deal. This is 0:21:36.600 --> 0:21:38.679 going to be a debate for the next year. Probably 0:21:39.040 --> 0:21:41.840 should advisors by this and it will be going on 0:21:42.000 --> 0:21:44.800 and on, and I think for traders it's a much 0:21:44.880 --> 0:21:47.840 more clear value proposition. We wrote a note basically saying 0:21:47.880 --> 0:21:50.600 that this is just one step, and probably if you 0:21:50.720 --> 0:21:53.680 fast forward to five years, there's probably gonna be something 0:21:53.800 --> 0:21:57.000 like a total crypto market et F that's physically backed 0:21:57.520 --> 0:21:59.320