Bitcoin ETFs did billions. They've already surpassed. If you just look at like
the first month or the first six weeks, you know, we're about week
seven. I think if you stack them up on any measurement, they blow
everything away. At this point, you could probably find something in there like,
oh, if we look at the first two weeks and we xout GBTC
technically and we and adjust for inflation technically, the GLD actually was tied,
Like, there are ways to maybe find a spot in the seven weeks where
it wasn't earth shattering. But if you go one week, one day,
four weeks, six weeks, seven weeks, you look at volume, assets,
flows, post GBTC extra, whatever you want to do, you're going
to find they blow away every other new lawn truckor This content is brought to
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description. Welcome back to the Thinking Crypto podcast. You're home for cryptocurrency news
and interviews. With me today is Eric Balcunis, who's a senior ETF analyst
at Bloomberg. Eric, welcome, good to be with you. Eric.
I've followed you and James Seyferd on Twitter of course, or what Elon calls
x now, and I appreciate all the great data you've been putting out there
about the bitcoin ETPs, and we got a lot to talk about. Let's
start with your background, where you're from, and what's your professional background.
My background, so, I was trained as a journalist communication at Rutgers.
Did that work for Institutional Investor magazine, which is a magazine aimed a pensions
and investments, wrote about mutual funds there back in the nineties when they were
like the hot thing, and then moved to Bloomberg, which to me was
the krem de la creme of business. Journalism, and they're actually joined the
PR team and did that for a while, which was really good. I
get to see a lot of parts of Bloomberg. And after nine to eleven
I moved back to South Jersey and worked in their data office because it was
in Princeton, so I just happened to geographically need to work in Jersey and
that's all they did. So I'm like a reporter who got dumped into the
data group, and at first I hated it. I'm like, this is
awful, especially compared to PR and journalism, which is more exciting. In
journalism. In PR you're a mile wide but an inch deep. But I
like that. I like to move around. I'm a fan of novelty.
In data, you're more a mile deep in an inch wide. And it
actually was the best thing for me because I got to spend time really working
on problems and in the data. I helped build some tools on Bloomberg to
track different things, and in two thousand and seven ish I got handed ETFs
as a data responsibility and so as a person who tracked mutual funds, I
was like, holy moly, these are really an evolutionary marvel. You know.
It had to be like what seeing the MP three was like for a
music person. You're like, wait a second, this is going to revolutionize
everything. And it did. And so I dedicated my whole career to it
and became like the ETF data guy, and I got recruited by research.
So Bloomberg started a research group they did stocks, bonds, and the guy
running it saw me doing some like media here and there, and just god
was known as the ETF person. He said, why don't you write about
ets for us? And I did, and I've been there eight years.
And so I lead a team for about ten eleven people who do ETF and
a little mutual fund research, and we published on the Bloomberg terminal and obviously
that's bitcoin. ETFs is the flavor of the month topic for us right now.
Absolutely. Now, you also wrote two books, right, can you
tell us about that? Yeah? One of those behind me. I shamelessly
promote it because you know, when you're a small publisher, it's not like
your stuff's on billboards and stuff. So one of them is called The Bogel
Effect, which is about the Vanguard founder Jack Bogel, just the really,
in my opinion, the most impactful human being in the investing landscape. If
you read the book, you'll see why. But he brought all the fees
lower. The reason I bit is twenty basis points or twenty five whatever it
is. And the reason those bitcoin ETFs all had that massive fee war,
even though Vanguard wasn't involved, their spirit it was they created what I call
the ETF terrodom. And because everyone loves low fees, that's why ETFs are
so popular. And you take Vanguard and Bogelo, they are going to be
a lot higher, less growth. They're the core of everything that you see
happening, namely low fees and indexing. Anyway, the other book I wrote
before that was called The Institutional ETF Toolbox. If you're in crypto and you
want to learn just about ETFs, that's a good primer on ETFs tells you
mechanics, creation, redemption. I go into all the different asset classes.
So this is is a little bit more of a wider look out because ETFs
are one chapter in that book. Then I have a whole ETF book.
So I think for a crypto person who's just really curious about learning ETF mechanics,
the first book is probably the better one. Again, and I'd be
grateful if you were were interested, but you won't be let down. They're
good books. I work really hard on them and they basically all my knowledge
is in both of them. I will be sure to link those on the
website. And then the description of the podcast. Everyone check that out.
Eric, You know you brought up a Vanguard and I want to get your
thoughts given that you know they're degree and how they view the markets. But
they've taken the contrarian view on bitcoin. Why do you think they're still on
the fence. Yeah, so it's just that's just how they roll. It's
on brand. So Vanguard, let's face it, Bitcoin is a little like
a rated R movie for most people. For no normal people like take your
parents. If Bitcoin were a movie, you'd be Quentin Tarantino. It would
not be Disney. Okay, Vanguard just does Disney. They don't do the
crazy stuff. They don't allow leverg gtfs on their platform. They do allow
gold, but they don't like it. They are a meat and potatoes kind
of company, family friendly, sixty forty and this in my book on Vogel,
I interviewed him many times and I also asked them about bitcoin and he
had nothing personal against it, although I do think the spirit of disintermediation is
huge With him and bitcoiners, there's a lot of overlap, which is why
I asked Matt Hogan from Bitwise to write the four to that book, because
he's an ETF guy who works heavily in crypto now, and I thought he
could bridge the gap between the old foggy mutual fund world and Bogel and sort
of connect him to the disintermediation movement that bitcoin has, and I think he
did a great job. But there Bogel's problem with commodities was that it's only
worth what someone will pay for it in the future. Whereas a stock is
a company, and a company has people who go there every day, wake
up, create value. That value turns into sales, which turns into cash
flow, which turns into dividends to you. So even if the price does
nothing and there's no speculation, you get paid. The money works for you.
A bond you get a interest rate, a coupon payment, So stocks
and bonds the money does work for you, regardless of speculative return. He
argued, commodities are just pure speculative return. There is no underlying thing.
Now bitcoiners will say, well, there are people creating value in bitcoin.
Fine, I'm not I'm not Bogel. I'm just telling you what he would
say and what Vanguard thinks. And I think people inside Vanguard aren't happy about
that decision. I think some might be, some might not. I personally
think that it's a little nanny statish of them. They should just trust their
own investors to make decisions. If you found Vanguard, and you are a
Vanguard person, because they don't pay intermediary, so you had to find Vanguard.
So if you found Vanguard, you're definitely into low cost and the bogolism.
You're probably not gonna be the person who swayed and going to put all
their money in bitcoin. That's just not who you are. So there's no
harm, I think. And then putting it on their site, whereas you
could argue like putting big advertisements on Robinhood for the new bitcoin ETFs could be
a little risky because people are just going to go crazy there. So I
just think they shouldn't have done it. And I do think they'll lighten up
over time because they have an advisory service, so they don't only offer funds.
They also will advise you on all your money, like you're estate planning
your taxes, and if you're an advisor, you kind of need access to
everything. So like if your client is like, hey, you want private
equity or bitcoin, you kind of have to get it for them they're going
to leave. So I think their move to become a bigger advisor is going
to push them into offering bitcoin at least. If not, they're probably not
gonna have a fund. Maybe times change, but for now, I get
why they did it. If my metaphor for this, somebody said, oh,
this is their bud Light moment, like this is going to ruin them,
and I'm like, no, because bud Light really crapped on their own
bases views. Vanguard did not crap on their bases views. This is more
like Walmart not letting the gangster rap albums in the late eighties on the shelf,
you know, like Two Live Crew and NWA. These are my favorite
albums as a kid because they had the parent advisory label on them, but
Walmart wouldn't carry them and it gave them more intrigue. So I actually think
Vanguard saying no gave the story another news cycle. It created conflict and attention
and intrigued. So I think, if anything, Bitcoin benefited from that,
but Vanguard certainly wasn't hurt. In my opinion, some of these bitcoiners are
like, boycott Vanguard. One of them's like, and I can tell he's
a dot eth guy, and he's like, I just called up Vanguard and
moved all my money. I'm like, there's zero percent chance that actually happened.
But but you know, to your point, at some point, you
know, as this asset class continues to grow, it's going to have to
make numbers and sense for them where their CFO or their board is going to
say, hey, we're missing out here. When you go back goes back
to the you know, the business and the economics of running that business.
So do you think it's a year or two years out that they make that
switch. Yeah, I would say two or three years now. I'm just
saying they let them trade on the platform. I'm not saying they offer one.
But Vanguard sometimes if they can't find a good product for like as an
advisor, they may start doing themselves because they can do it cheaper. They
may go, well, we can do this cheaper. We can use our
mutual ownership structure. To keep bringing. They may just do it themselves,
but I would say that let's go in Stage's first step is just letting it
on the platform, and I do think they'll do that eventually two years.
I don't know, we'll see at the rate bitcoinytfs are going. It seems
to me that there is going to be some fomo and more and more if
you have their main competitor, black Rock, getting a hit product here and
they're seeing that this is like used as a legit portfolio allocation in the black
Rocks and the fidelities of the world, and it's hell way, it's going
to reduce sharp ratio and there's some more adult like you know, rationale as
opposed to just when moon or whatever. If there is more of that,
they may go, all right, well it's fine, you know, we'll
allow it. But I think they at this time the reputation of bitcoin is
degenerates, Sam bankron Fried all kinds of as Gary gamser put it, fraud
and hucksters, and it's a commodity. On top of that, we don't
need it. So I just think black Rock Infidelity are their too biggest competitors.
So if they're in it and they start to like, I don't know,
it might Irk Vanguard also that hey, it's not just Vank or Valkyrie
having success, like they could care less about those companies, But black Rock
Infidelity are their two main competitors, and they do care about what they do
absolutely. Now, Eric, you have a plethora of experience around et aps
and you've seen other asset classes have ETF's launch. Give us some perspective here.
How does the bigcoin ETF launch compare? Is it an outlier? Dos
a standout significantly as it's Is it something you've never seen before in the ETF
world? Yeah? No, I look, there's been big launches, and
there's been really highly publicized launches. When Gold launched GLD, that was a
big deal, and I'd say that was the only equivalent to this because they're
like, for example, remember you know, Dave Portnoy launched that ETF buzz
and he had all the marketing that thing. I think it traded four hundred
million on the first day, which is an insane amount for an indie small
ETF and he really got to give him credit for getting that many people excited.
But like bitcoin ETFs did billions, they've already surpassed. If you just
look at like the first month or the first six weeks, you know,
we're about week seven. I think if you stack them up on any measurement,
they blow everything away. At this point, you could probably find something
in there like, oh, if we look at the first two weeks and
we xout GBTC technically and we adjust for inflation technically, GLD actually was tied,
Like, there are ways to maybe find a spot in the seven weeks
where it wasn't earth shattering. But if you go one week, one day,
four weeks, six weeks, seven weeks, you look at volume,
assets, flows, post GBTC extra, whatever you want to do, you're
going to find they blow away every other new launch record. It's getting to
the point now and I just told you that I'm looking at the most ETFs
traded. This is out of thirty four hundred. My bit is seventh.
This is you know, this is right up there with spy qqq IWM.
These things have been around for twenty five years. This thing's seven weeks old.
I've never seen an ETF go right up to the top ten like that
in this sort of a time. So, and I think GBTC is in
the top thirty and fidel Fidelity is thirty eight. I mean, if you
added them together, they'd probably be like the fourth biggest most traded, And
if you're the fourth most traded ETF, it puts you around number eight in
terms of all equities. So if you combined all the trading and the bitcoin
ETFs, in fact, I'll do that right now, you're looking at something
like, let's say we'll call it trading about as much is apple. Wow,
that's a lot, right, So this is volume, and I get
it. Some coiners are like, oh, you talk about the volume,
but it doesn't necessarily mean the flows are the same. And I get that
only a portion of volume converts into flows, But you have to understand that
ETFs are trading vehicles and volume is so important long term, and it's important
for bigger fish. If you're an institutions, say you're a hedge fund or
a prop desk, a trading outfit, or a pension plan, and you
want a little crypto bitcoin exposure. You love the fact that you can put
on one hundred million dollar trade or a fifty million dollar trade and no one
will notice you. That's a big deal. If it doesn't trade a lot
there. Then I was like, I don't want to be I don't want
to be half of the assets. I don't want to push the market price.
I don't want a hedge fund to see a big fish coming in and
try to gain me. The more volume there is, the more anonymic these
big fish can come in without anybody noticing them. They love that, and
so they prioritize liquidity over everything else. So the volume is really good,
even though it doesn't. It may get people hyped, Oh it traded a
billion. They think, oh, that's going to be a billion in assets.
It doesn't quite work out like that. Some of it will be inflows,
but the volume is like if you were fishing for professional institutional traders and
they were actual fish in a lake, and you were santasking me what bait
to use, I would tell you volume more important than fees. Even advisors
love fees and low fees, but these are already low. So I always
tell people, if you want full maximum category growth, you need two things,
low fees and high volume. And they got both already, so they're
in great shape. That's why we track volume. Volume also in my opinion
for tens, flows and assets. Later like, for example, in two
thousand and eight in the awful cell off, a lot of institutions discovered ets
for the first time because they were liquid when other things weren't. So let's
say there's some kind of massive crash in the market and bitcoin's kind of brought
into that, and there's some illiquidity in the bitcoin market. I guarantee you
I BIT and FBTC, these will be the most traded things that offer bitcoin.
So institutions are going to be like, I'd rather use the ETF than
actually even interacting the underlying currency. So that's how bond ETFs got big.
And so two thousand and eight, bond ytfs saw volume spike up huge,
and then the years after their assets went up. Volume is a lot of
times also, when someone gets their first taste of an ETF, they're like,
oh that was it. I had a good experience. They come back
later. It doesn't always translate immediately that night. So but volume is again
it's like measuring frequency or popularity. Over time, that volume does convert into
assets, So to me, it's the leading indicator of a category's asset growth.
Hi, everyone, part of the interruption, I'm Tony Edward. The
founder and host of the Thinking Crypto podcast. I have a you favor to
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for your support, and I'll let you get back to the content. Eric,
I don't know if you can take us behind the scenes of how the
bitcoin is actually bought. Once you know, the cash is put into the
collected by black Rock and these other institutions. So the devolume we're seeing is
in cash. And do you think they're buying the bitcoin OTC or on on
the market from regular exchanges OTC okay, So there's gonna be some like that.
That is a great question, and some people are on Twitter like,
oh OTC is running out. Know, I got to explore that. I'm
interested in that. I don't operate in that corner. But if you send
an issuer money, if you're if you're an ap, you can't send them
bitcoin. You have to send them money because you want new ETF shares.
They take your money, they go buy bitcoin through like Jane Street or you
know who has it OTC. That bitcoin then goes into their custodian coinbase.
As soon as that's the they wire you the shares of the ETF. So
you give them money, they wire you the shares back. In the meantime
they're doing they're going to Jane Street or somebody like that to get the bitcoin,
and that's over the counter. But yeah, will there be a time
where they use other areas or do they currently? I'm not sure, but
that's that's the general way they do it. But that part of the market
is it's it's not like it's opaque, but it's a part of the that
it's sort of like, you know, it's it's how the sausage is made,
and when the sausage looks fine, you rarely go back and look in
the factory. You're like, oh, I'm more concerned with how it's selling,
what the marketplace is like. So, but it's a great question,
but there's a good I would recommend anybody interested in this. Nate Jerrasi has
a podcast called ETF Prime. He interviewed Matt Hogan, and Matt went right
through like how a bill becomes a law, how an ETF converts, and
I just paraphrased what he said. There, issuers have a direct view of
this. I do not. I have to get them telling me how it
works, because again, I'm like an analyst looking from the outside in.
I'm a pundit, a critic, so I have the data, but I
don't do this behind the office. But that's what issuers tell me happens.
Yeah, I'm very curious about the inner workings of that. And you know,
what do you think about bit wise? They have released their wallet address
where they're showing their bitcoin holdings that are, you know, allocated to the
ETF. Do you expect the other issuers to do something along those lines.
Nobody has yet, so I don't know. I think bit wise is probably
one of the most Cryptoi native issuers, so it's on brand for them.
Maybe arc would do it, you know, because they're with twenty one shares
and Ophilia Snyder is very crypto native and Kathy's a big fan. I could
see them do it. Maybe Valkyrie would do it. The bigger guys,
no way, they just don't you know, that's just not them. They
don't need to. They don't care. Yeah, they don't. The only
way they do it is if the other if a bit wise did it and
bitwise started to get more flows than them, that would that would turn their
head. I don't see that happening, so I don't see any reason for
them to do it. Yeah, that would definitely make sense. Like I'm
sure black Rock day, they don't care. But like you said, if
there was a competitive angle, you know, where they were losing that they
would you know, pitch late and do the same thing. Now, I
remember you tweeted about this and I saw the reports I think about a month
ago that major banks want to custody the big coin et apps and the problem
is the blocker is the SEC's SAB one two one rule and they want to
participate. You know, what do you think about that? And let's say
that gets removed because you see members of Congress are pushing back on that rule.
What would that open up for the big banks like JP Morgan and what
they would you know, decide to do with the big cooinytfs. Well,
look, all of them could be issuers today, so they've all chosen not
to. You know, the guy who runs JP Morgan's ETF business, he
said never say never, but he also said they're happy to sit this out
and just watch all the craziness. So I think what it means though,
is that if banks are allowed to handle bitcoin, it means they can be
part of the ecosystem more. And the reason they were interested to be part
of the ecosystem after the launch was they were like, Wow, this was
bigger than I thought it was going to be. You have to understand,
many people wrote this off, even really smart people. There's this one guy
used to work at morning Star who's like one of the smartest ETF analysts that
you'll ever meet. He works he's into the crypto space now actually, and
he his predictions were so low and I was higher, but they like were
ten times higher than mine and his was like way down here. So a
lot of people just thought this isn't this is all about nothing, all this
approval watching it's going to come out and it's going to be like there'll be
like a couple hundred million, But who's really the audience. Most of them,
I think underrated the power of the ETF. You know, somebody the
other day said, you know, if you want to spend less money,
stop shopping at Amazon and just go and get everything physically, because everything else
just the lack of friction makes you buy more. That's the ETF. So
the ETF is so good that you could put like dog shit in it and
it would probably sell a little bit of dog shit. I think bitcoin obviously
has a real market, and I say that facetiously. There have been ETFs
to flop, no doubt, but the demand is probably even somewhat generated by
the fact that it's now so convenient, easy, it's an entrusted rapper,
sec approved, and it's with these big brands that everybody knows and loves that
have been around for like dozens of years in Fidelity's case, like I don't
know what one hundred years. So this is a big deal for a professionals,
conservative people, older people like I said, I think that the bitcoin
ETFs are not for crypto people. They're for their parents. But their parents
have a trillion times more money than them. So I was looking I was
actually looking at there's one hundred and fifty seven trillion dollars in wealth in the
United States. The boomers and the Silver Generation have like one hundred and two
trillion of the one to fifty seven, so they have the vast majority of
all the money. And so even if a tiny tiny sliver of that is
like, yeah, you know, I heard my kids talking about it,
or I don't want to kick myself in ten years if this thing does go
crazy, even if I don't understand it, that's a logical thought. And
so I think that's what people underestimated was the buying the bitcoin etf as a
way to have a little fun on top of your boring sixty forty and the
potential future fomo cure. People know themselves. They even though they love their
sixty forty in their vanguard, they also like sometimes see something happen and they're
like they don't want to miss out, and they think they feel with bitcoin,
I don't understand it, or I even think it's a scam, but
I don't want to be like feeling like an asshole twenty years down the road
when it's a million dollars and I could have just put a little on my
account. So I think like future fomo cure is an underrated thing. And
the other thing is the idea that there's way less pressure when you're talking about
the hot sauce part of your portfolio. For a boomer, they're not going
all in. They'd put one percent, and like, you know, okay,
it flames out. This is not the money that counts. I'm not
gonna This isn't my beach house, this isn't my kid's money, right,
this is just a little flyer on something that just in case it goes up,
you know. So there's just a lot less pressure. And if something's
volatile and speculative as Bitcoin is, the fact that it's only one percent,
you can stomach that volatility much better than if it were the whole thing.
And so I believe that Vanguard in the core has actually done wonders for people's
behavior with the crazy stuff. Look at ARC. ARC was used as a
one percent allocation, hardly saw any outflows when it went down eighty percent.
In the old days, they would have seen all the people left. But
because ARC was simply a little hot sauce add on, people were like,
yeah, okay, I get it. You know, Kathy's stuff is volatile,
but I still think she has a vision of the future that could come
true. And plus it's only one percent who cares, so people are less
likely to act. That's why this thesis I see on Twitter about this all
traders and weekends, I would think the opposite. I think the Bitcoin ETFs
are going to be much stronger hands than people think. Not necessarily because the
people are strong. It's that vanguard and the core has made them strong,
and that's all that's underappreciated. But again, as a guy who lived in
this book and the other book, I feel somewhat trained to make this assessment.
And when I talk to people and actually interact with them anecdotally, that's
what I hear. And then they look at the flows and then these sell
offs. You just don't see money commanding out of thematic ETFs or r ETFs.
So the stuff that's used in the hot sauce bucket doesn't necessarily people don't
leave when there's a downturn. Some will, and I BIT in particular could
be like the GLD, where it's traded so much, where you do have
these institutions who are using it in all kinds of different ways, and the
flows might be like this, but over net time you probably see an increase.
That's what's happened with GLD. With treasury ETFs, but there will be
one that gets I think more sensitive to price, but like a fidelity one
or some of the other ones that are long term holders. I doubt you'll
see people running for the hills in a selloff a little, but it's not
like I just don't. That's my take, and so the stronghands theory is
also part of why people underrated the growth or the asset potential in my opinion,
but I'll be honest, I even underrated it a little bit where we
are now. I thought there'd be ten to fifteen billion in flows after the
first year, so we're already at six. So we're essentially halfway to where
my middle point is and it's only been two months. My predicts prediction is
probably dead in the water, but I'm happy to be low. I think.
I think I we've been so optimistic on approval. We were optimistic on
how these would be bigger than people think. Like we've been largely bullish the
whole time that I think we'll get a pass for being a little under bullish,
but we weren't like Hater's bullet bearish. Ten to fifteen million is a
legit category starter. GLD was probably. I think Gold's first year was like
a billion and a half, so you can see why ten to fifteen is
pretty optimistic. But the six billion, I think is pretty shocking in the
first two months. Or it's not even been two months, seven weeks,
Yeah, it's wild. So or do you think part of the like you
said, people's gravitational you know pull or bitcoin's gravitational poll to bring in these
investors is due to the change in the macro and different industries like for example,
tech is a big driver of investments now because tech has been booming,
right, whether it's AI or whatever, web technology and whatever may just look
at the video, right, and and things along those lines. They people
investors almost see bitcoin as hey, let's get as much exposure to tech as
possible, because that's been, even though it's volatile, has been giving great
returns. Yeah, so I think what you're bringing up is a really good
point, which is someone I forget who it was, an analyst who does
podcasts like two years ago, said I just keep it simple. I view
bitcoin as a as a high growth tech stock, and I just want a
piece of that stock. That's a good way to look at it. What
I am not totally sold on is this idea that it's an alternative like gold,
because to me, it's a little too volatile to be a total alternative.
It is a store of value, but it's too volatile in my opinion,
to be called alternative. And it sometimes moves with the market, like
if everything went to hell tomorrow, like the stock market. I got to
think bitcoin's probably going to be like along with it. I don't see bitcoin
spiking up like if there's a huge inflation print, even though you think,
okay, high inflation should be good for bitcoin, I just think high inflation
means Fed's going to raise rates, means the market tanks, and I think
bitcoin goes along with it because to me, for most people, bitcoin is
a speculative, hot sauce outer layer of their portfolio. It isn't something they
expect to hedge anything, and they shouldn't. But it's being sold a little
bit by the fun companies as a sort of sharp ratio increaser, risk reducer.
I'm not totally sold in that. I think over time it could be.
But if you charted gold and bitcoin, bitcoin makes gold look like a
money market fund. I mean it's it's just too volatile, right, Now
to so, I like you, that's a perfect way to look at it.
If I was telling somebody who's interested, I was like, look,
I mean, just look at it as like some like high growth maybe not
yet quite profitable tech company. Like if you believe in it or you just
want to not kick yourself later, put one percent in it. But just
look at it like that, expect volatility, and I would that's a great
way to think about it personally. I think that's better than thinking of it
as some kind of an alternative or a liquid all as they call them.
Now, great point that you brought up that you know there's a high correlation
with the stock market, and just look at COVID crash right in twenty twenty.
Bitcoin went down too with everything else, and then bounced up when the
stock market bounced as well. So it's following the stock market in global liquidity.
And two. So to your point, maybe over time that changes,
but the facts, the data don't lie. It's moving with the stock market.
Now, let's talk about the eighty twenty investment rule, which has changed
to sixty forty. But as this asset class mature is and it goes beyond
bitcoin, you have all coin baskets and all coin ets. We're going to
talk about the ethere METF, and then you have tokenized securities, you know,
real estate and stops and so forth. Do you see the portfolio split
becoming sixty thirty ten and ten being digital assets? Ten maybe ten years from
now? It depends, Like for a younger millennial, ten could be right
on the money. I don't see boomers doing ten. Sure, I'm gen
x and if you're talking about me personally, I wouldn't do ten. I'm
but it depends. Let's say an Ether ETF gets proved. I don't know.
I just think I don't know if any retail is going to go back
to the days of like shit coins and like you know, in getting I
just think I think Bitcoin in particular is it. You know, maybe I'm
in the micro sailor camp, but there is no second best. I mean,
if Ether's going to come along, I was just talking to a guy
today, like Ether coming after spot Bitcoin is like the opening act, trying
to follow the headliner. It's like reversed Eth should have come first. Spot
Bitcoin is the main attraction, the headliner. I'm much less interested in anything
else, And I think over time, like GLD or gold. ETFs have
like something like ninety percent of the physically backed commodity. As said, silver
is a tiny slice pladium, platinum or even tinier. That's probably what you'll
see here. But could you argue, Okay, maybe I need some three
or four coins. You're gonna see once they have Ether come out, they're
gonna have bitcoin plus Ether in a proportion to the market cap. That could
be something you put in. Again, I still wouldn't do ten, but
I would do one. But younger people may be more interested in that.
I mean, the corners. It's amazing how little faith they have in sixty
forty is stocks and bonds, which I think is a mistake, but that's
their choice. So clearly there's some correlation to age and interest in putting more
into non sixty forty. So yeah, it could be for a young person
who's really into this, it could be like instead of eighty ten ten,
it could be like eighty ten ten bitcoin stocks bonds. I mean, or
again, I've been on several podcasts where they're one hundred zero zero, I
mean they are like, I mean, are you are you one of those
guys? Are you like one hundred percent? Oh? No, so my
wife wouldn't allow me to. That's the thing. So you're married, yeah
you have kids yet? Or no, yeah I have a six to zero.
Oh yeah, so this is the thing. You know, some of
these degens, there's singles still, so A they may not have gone through
a true crash. B they don't have anyone talking sense to them, you
know, or like, hey dude, we're not putting all this on yourself.
You're in your dumb coin. We have to plan for the kids at
educate education. That kind of real world pressure I think is going to move
people more to a sixty forty combo, the coiners. But I did ask
some I asked somebody. I asked. I said on Twitter day, has
anybody ever successfully sixty forty pilled a bitcoiner? And they're all like, get
out of here. That can never happen. Once you go bitcoin, your
mind cannot come back. And I'm like, this is a little scared to
me. And I'm like, I feel like everyone who replied is single.
I don't know, maybe I'm stereotyping, or at least I don't have kids
yet. Yeah, once you get kids, especially in a house and a
mortgage, it's like I don't know. You, I don't think about the
whole ranch on this. I wouldn't. I wouldn't feel comfortable sleeping at night
on that. But there are some people just when you go that all in,
I find that it's almost it's like they've gone all in on like this
destruction of society thing. And that's also another So your bull case is something
so really dark and wild. Yeah, I again like it reminds me of
the two thousand and eight big short people. Yeah they won, but like
America collapsed and there was this sort of empty feeling at the end of it
all, And I don't know, I wouldn't want it. Just seems like
going all in on that is it's just like it's like a deeper dive down
the rabbit hole than I'm capable of. So I think most of the people
who buy ten percent or one percent, they're not going to go that deep.
They're gonna to this is a little like new gold, shiny object,
and I'm moving on with my life. No, you're Eric, You're spot
on, because you know, for me, as someone who's neck deep in
crypto, and I have a good amount of crypto holdings, right, I
have also a financial advisor. I have a college one from my daughter.
I have a retirement accounts with well I shouldn't mention the name, but anyway,
it's one of the Wall Street farms. People know so and guess what.
My wife made sure to weaken all that stuff because it was up to
me, I would be irresponsibly exposed. So that's that's interest to me.
So you basically, and being honest, if you were single, you'd be
all in. I think so. And yeah, so in other words,
you have stocks and bonds and advisory, but spiritually that doesn't do it for
you. You do it more so to just check the box with being in
a responsible adult and a husband exactly. That's interesting and that does validate my
theory that part of the sixty forty lifestyle is the domesticated lifestyle. Yeah.
Absolutely, And like you said, I have a mortgage, a daughter,
so there's all these other facets of my life that have to be focused on
and I can't. Crypto is very volatile, still new so but the good
thing is I think my wife is coming along more to me being a bit
more so. If I were to split my holdings, I'm sixty percent crypto
and forty percent in traditional assets. So you're like a sixty forty new school
Yeah, yeah, yeah, no, it's that makes sense to me more
than one hundred percent. But yeah, anyway, you just gave me a
little more anecdotal data that just again sort of solidifies my view of correlations between
being all in on crypto and your domestic situation. Yeah, it's fascinating.
And then you know you were mentioning about boomers having a majority to wealth.
Look in another ten years. Fortunately those boomers will pass away and that wealth,
I think there's been reports about it. We'll trick it down to millennials
and gen z and where will they put the money? Right, It's interesting
demographic shift and where capital is going to go. As now there's talks of
an ETF coming out of Hong Kong. We saw I think the first application
going a month ago. The US is the largest capital markets. But do
you think do you think Hong Kong could put something together here and there's a
lot of capital coming in from the Asian markets, Yeah, sure, I
think that's Yeah. Let me give you data though. In the world,
the US has twenty five percent of all ETFs, but we have seventy something
percent of all the assets and eighty five percent of all the volume. So
the US just kicks global button. So yeah, I mean Hong Kong's probably
like one one one percent, So you can get excited, but it's a
it's a speck of saying. It's a drop in the bucket. But I
think the more people globally that get into this probably the better I think for
your cause. So it's it's additive, but I don't I don't really see
it as being that impactful. What's impactful is seeing IBID today trade, you
know, as much as Netflix or whatever. That is so much big deal.
So so it's not it's part of the story, but it's just it's
like a footnote. In my opinion, Hong Kong there's just so little money.
There's so much money in the US and liquidity and even people like let
Me I wrote a book called the Institutional ETF Toolbox Japan. I heard the
story of Japan pension. So in Japan pension uses EWJ, which is the
I shares Japan ETF trading in the US because it's just more liquid and cheaper.
So it went halfway across the world to invest in stocks that are right
next door. Wow, so you're going to find the biggest, most serious
investors are still going to use the US spot bitcoin ETFs. But for local
retail it's definitely gonna help, I think, and it will help bring costs
down to the crypto exchanges. So it's all net positive, but tiny.
Sure, let's talk etheroremous BODYTF. What are your expectations are you? Are
you expecting an approval this year or possibly twenty twenty five. James is really
looking at this now. We have to have an answer because we're getting asked
more. I see approval, whether it's this the first the final deadline is
in May and it's Blackrock. Black Rock's big and Grayscale also has one and
they want to convert. And we're in this deja vu situation like will they
sue if they're denied? Does the SEC know this? Will they just approve
it not to get sued? A lot of unknowns, But at the end
of the day, I'm just going to stick to the eye test. They
allowed, they approve bitcoin futures, and when they wouldn't approve Spot, they
got sued and a court said you have to approve them. Basically, so
they approved Spot. They already approved eth futures. You do the math.
So either they're going to approve them because they don't want to get sued,
or they're going to get sued and then approve them. I don't really see
any other scenario playing out, And you can't use the securities argument now because
they've already approved the futures. That's out the window. So my guess is
they approve them just to get the hell off the plate, and after that
there's really nothing down the road because Bitcoin and Eather have futures which are regular
by CETFC, and that is an important part of the deja vu. Once
you get to these other coins, like, there's no real frame of reference
for them, there's no future market, So I'm way less optimistic After Ether.
The question is will they approve them by May? You know, I
think James and I are little over fifty percent by May, but then our
odds go up every month after like, so the more you go out there,
odds just go go up. There's an election coming up too, which
could mean a new SEC commissioner, which could mean a whole new sort of
thing to think about. So those are all variables, but I'm pretty I'm
you know, fairly optimistic that we'll see Ether. But again, this is
like getting excited for Ready. I don't know how old you are. I'm
going to throw at gen X references here. This is like, you know,
you've got Sister Hazel opening for Nirvana. Ah okay, Nirvana is literally
so it has flipped. You've got Nirvana opening for sister Sister Hazel with their
one hit wonder. I don't know how people are sticking around after Nirvana.
I'm sorry. So this is like getting excited for Sister Hazel. I have
understand a reference. I am a millennial, I am a Nirvana fan.
I don't know about Yeah. So that's that's my metaphor between like why you
know I can't get too pumped about Ether or even too emotionally or mentally committed
to it. It's part of my job. I got to have an opinion.
James is going to be more into it than I am. Real quick
question here, a rookie question. So you mentioned that the securities question is
out the door because the futures were approved it, so to confirm something has
to not be a security before it can get a future's approval. CTFC approved
Ether futures, which I guess is them saying it's a commodity, okay,
which is part of what's been used against Genzer's comments the whole time. I
believe James would be able to really fine tune this. But that's why the
approval of the futures not see futures, but the eth futures ETFs if so
facto is like him saying it's a commodity, or it's him saying it doesn't
matter that it's not a commodity either way out of the bottle, right yeeah,
Yeah, that makes sense. And I think to your point is just
Genser has been the one keeping some sort of anonymity here with you know,
not answering questions. You know, Patrick mc kenny was like, sir,
is he he refuses to answer it. But you know, under j Clayton
and Bill him and these guys, they had clearly stated the theorem is not
a security. So he's added some confusion and and you know, it is
what it is. I think I said anonymity, I meant ambiguity. But
yeah, it's it's interesting and I hope he approves in and we don't have
to go through this court battle again. But maybe to your point, it's
an election year. Uh, he is Biden appointed, buying an administration appointed,
and maybe they don't want to look too bad as we get closer to
the elections, so maybe things will go smoothly. We'll see. Yeah,
we're we're going to work our back channels. What I need is some good
tip. I need a back alley tip from one of the lawyers or something.
Right now, we don't really we're not running or anything. We haven't
heard the SEC reaching out to any We've seen ARC, and I think it
was just ARC update their perspectives to include the comments from the bitcoin cycle,
so like ARC's you know, ready to go. I mean they've already updated
their comments with like their prospectus incorporating the comments that happened during the bitcoin ETF
cycle. So that doesn't mean anything though, I mean it means ARC is.
ARC's always been like a little bit of like head of the class and
all this stuff, Like every time there was a comments, they'd be first
out with the comment updates, and so I don't know, I like patterns
and just so just to see them out in front, I feel like some
level of comfort. But I have not heard of the Commission reaching out to
anybody. And that's what I would really need to see to get excited.
Absolutely, Eric, I know we're running up on time, So I got
some wrap up questions here for you. If you could create your own metaverse,
what would the theme beware go? Oh man, that's a good question.
You know what probably like one of my favorite places to go is like
the Southwest, like Arizona, you know, like road Runner in Wiley Coyote.
I would I would want to chill there. I'd want to go to
like like a little like what I just want to be around, like reptiles
and tumbleweed and like those mountain things. And because it's so different than where
I live in Philly. I live in Philly, and like I'm close to
the beach, I go, you know, go there enough. We've got
trees here. One thing we don't have and what looks like another planet to
a Philly person is like Arizona. Sure, and so I'd make it Arizona
themes something like that, nice and rapid fire Questions favorite food crab legs,
favorite crabs, crabs? Yeah, there's that look blue claw too. Anything
crabs to me is the is the top. If I'm on if I have
one meal left, I'm going, you know, three or four pounds of
King Crab Legs. Oh that's the favorite musician or band. I would say
Radiohead and all of Tom York's little side projects, even though Radiohead probably pound
for pound better, but I grew up with them. They're my favorite.
Nice favorite movie. That's tough. I mean Jesus, there's so many good
ones. I you know, it changes too. I would say that I'm
gonna be lame and probably go Godfather. Godfather I, even though it's so
cliched, whenever it's on, I get sucked in. Totally me too,
same with two. Yeah, such beautiful filmmaking, like the characters, the
family story, everything is just so money. It's like the Mona Lisa of
movies. And so it's my favorite. And by the way, if you
you are a Godfather fan, go watch The Offer. The Offer is a
series The Paramount made with Miles. Who's the guy who was in Miles Turner.
No, Miles, who's the young actor with the first name Miles who
was in Whiplash? Oh? H and he was in Tom Cruise A top
Gun two. Yes, yes, I know who you're talking about. I
forgot his name. Robert Miles whatever. That dude plays the producer who put
together Godfather, and the whole thing's about trying to put together this movie over
like a couple of years. The mafia doesn't want it made. Frank Sinatra's
like sent there's you know, they don't want Alt Pacino playing the part.
It goes through the whole like on the edge of the edge of getting this
movie made was it was ridiculous. It's a fascinating, like seven part series
about the making of The Godfather. Highly recommend. I'm gonna to watch that
because I'm a fan. I even read the book. You'll love it.
You're gonna be so into this, I promise you. I'm gonna check that.
The offer, right, the offer perfect favorite book. Oh man,
you know, I'm gonna go with a book I've read twice in the past
like ten years, which is Chronicles by Bob Dylan. So this guy wrote
one book. You know, Bob Dylan influenced the Beatles, like the Beatles
would be singing yeah, yeah, yeah, it wasn't for Bob. Bob
Dylan completely changed the whole course of popular music. And he wrote one book
and in this book, Chronicles, it's not like general biography. It's all
about him. It's not even written in like a normal fashion. But what
you realize is it starts with him about twelve years old and it ends with
him rate when blowing the wind blows up right, So it's like seven years
and he's sleeping on couches in New York. He's going to these different art
gallery openings, he's reading books that are next to and what you realize is
that what he's doing is he's explained to you what went into his brain to
allow him to write all that stuff. It is the best book on the
creative process by one of the most creative people you ever meet. And then
the second half of the book starts when he's down and out in nineteen like
eighty five. Remember the you see the pic the picture from We Are the
World where he looks like fat and lost, you know when they're singing We
Are the World. Anyway, Bob Bylan looked bad. In like eighties,
the eighties, Bob Dylan was like, you know, Madonna was popular,
Michael Bob Dilan was lost. So the book then picks up again in the
eighties when he felt he was like in the gutter. He was like I
had no life, no spirit, nothing, and he was touring with Tom
Petty and was like, this guy's so like on top of his game.
And then it goes into how how he found a second creative birth, and
then it ends when he wins the Grand you know, the Grammy. So
none of it's about the successes or who he dated or anything. It's just
about how he find his creative footing before he made something that had an explosive
popularity. And I just I read it again. It's just there's so much
in there, from my opinion, one of the best. If we're talking
like Tennessee Williams or like you know, premier poet artists of this generation,
I'd put him right at the top, you know, top three, And
so this book gets you get into his brain and creative process. And but
it he doesn't lay it out the way he writes. He's just you just
figure out while you're reading it. Oh, I see what he's doing here.
Anyway, it's fascinating book. There's so many books I love, but
I thought that was just a good one for people who were like watching podcasts
or probably like creative type. So I'd recommend that I will check that out.
And finally, when you're not working at Bloomberg, what are you doing
for fun As a hobby. I like to play tennis, coach my kids
basketball team, and I'll leave it at those two. Those are my two
hobbies for now. I do a little painting, a little chrylic painting,
and when I get into it, I love it. But sometimes I just
forget to do it and it gets busy with like parenting and all this stuff,
and then I'm just watching TV. But I really, really, I'd
say tennis is probably my main hobby right now. Nice Eric, Absolute pleasure
chatting with you. As always, I listen, I follow you on Twitter.
You always provide great content and great updates. So thank you for joining
me. Yeah, great to be here. Nice chatting with you.