Brian, how are you?Good, good.
Were you surprised?I've been kind of in a coma since the election.I just collapsed and I couldn't function for two days.Sleeping pattern is screwed.So I haven't really been keeping up other than just reading the news.
So we'll probably do a recap here for the audience.Obviously, crypto is doing extremely well.Just talk about the markets in general and what to expect. do a recap over the last couple of days.I saw ETF inflows are massive.
But before that, just on a political, from a political perspective, Brian, your thoughts at the results?Was it a surprise to you as well, the margin in Trump's favor?
So his win wasn't a surprise.I always thought it was going to be close.But I do think the margin and the fact that he won a popular vote, that's very surprising.
And the House and the Senate.
Yeah, I think he's going to be able to do quite a lot of what he wants to do in these first two years.
Another question, are you as critical of Trump now as you were a few years ago, as your perspective changed a bit?
Because I'm seeing a lot of people that were very critical of him, they're a bit more optimistic and they're seeing a different side of him.
I'm critical of him as a person.I think that I agree with his policies regarding Bitcoin.I think that we definitely need to cut our deficits.How we're going to do that is going to be interesting.
I think that having Musk in that position I think could be a positive.It's just that There's going to be, you know, like for every reaction, there's a equal and opposite reaction and how that's going to impact other people.
You know, it's really, it's yet to be seen.I think that there's a lot of his policies I disagree with.I will continue to push back on them.Bitcoin definitely isn't one of them.
Yeah, I agree.By the way, is the audio working?Can you hear me?Yeah, you're good. Perfect.Cool.Oh, let's dig into crypto.Dave, can you give us a quick overview?It's mainly more of a selfish perspective as more people join.
The last two days, what we've seen immediately after Trump's win, I remember me, you and Scott were talking about whether it's been priced in.I was a bit surprised when Scott said it was priced in because it didn't make sense.
How can you price in something that No one knew what was going to happen.On polling market, Trump was up by, at one stage, two days before the election, two, three days, was less than 10 points, then picked up again to about 20 points.
But still, it was a toss-up, according to most polls.So that's why I was a bit surprised when Scott said it may be priced in already.So your thoughts on the market's reaction?
Is it getting ahead of itself, or is it the beginning of a pretty spectacular bull run?
I mean, I hate when you ask questions that can't be answered yes or no.So let's talk about Priced In.First of all, obviously it wasn't.You don't have to be a rocket scientist.
You know, you remember on, what was it, Monday, I said if Trump wins the election that you will see a rally and the rally will be predominantly in, there'll be more of a rally in high quality alts than it will be in Bitcoin.Well, you know.
Seven days, Ethereum's up 15% versus Bitcoin up 8%.Solana up almost 20%.So, okay, check that one.That was obviously not priced in.The most important observation I would make for you, Mario, is this, however.
Often when there's news, when news is priced in in any shape or form, the pattern you see is buy the rumor, sell the news.What we've seen here is buy the rumor, hold the news, buy a little bit more as the rumors get clearer,
hold the news and as it gets there, you know, you start seeing a grinding higher.We're now, this rally looks so much better technically than a rally that is the approval of the ETF and then waiting or the, you know, that sort of thing.
This is not a one-off.This is a sea change in what's going to happen.And so patience is required.Remember something, asset allocators take time to make allocation decisions.
You're seeing what you've seen over the last three days is the beginnings of asset allocation.I know that it sounds crazy given the amount of money that's gone into Bitcoin, but the truth is that you've seen it.I mean, Bitcoin's still below $80,000.
There's no way in hell that anybody is allocating anything on the basis of the Lummis bill because no one really believes it's going to pass.
At best, they're hoping that it means they won't sell the Silk Road coins, and it won't be a signal to the world.There's a very material chance there will be a signal to the world, and that's not priced in Bitcoin.
As far as Ethereum, Ethereum makes sense because multiple major financial players have announced they're going to be using it for things that will now be legal.
You know, do not forget, people should remember the most important thing about what Trump has said, what SEC commissioners have said, what all the Republicans have said, what the fit 21 bill said, which, by the way, now they're going to get greedy and they're going to go back and rebuild it to include defy.
But the most important thing of that was a safe harbor, i.e.no regulation by enforcement and a path to regulation. John Reed Stark said it well on your show, you know, the cases are going to grind to a screeching halt in January.
So now the question is, what does that mean for innovators, for entrepreneurs that could actually use crypto?And the answer is quite a bit.
I personally have quite a lot invested in this, as we'll be talking about over the coming weeks, but I'm not surprised at all by a rally.Actually, if anything, what you're not seeing is arguably more important.
We've not seen major short liquidations.There was one graph, there was one big, major short liquidation day, which was which felt huge given how little we've seen since whatever, but historically isn't.
We had $426 million in short liquidations on the day of the election in a 24-hour period.We've had days in the past of rallies with billion-dollar ones.Since then, it's more or less back to trend.You're not seeing a lot.
You're seeing the funding rates are a bit higher, Well, I'm checking now, but nothing to speak of.I mean, you're not seeing big funding rates.
You're not seeing people loading up on FOMO, because every time people have loaded up on FOMO, they've gotten their heads handed to them. And what you're seeing is the trend.You know, this morning, you know, we dip down below seventy six thousand.
The U.S.market opens ETF flows start in and all of a sudden, boom, we're back over seventy six thousand.So, you know, we're building up.Believe it or not, this feels more like bathing for a rally than a rally, at least in Bitcoin.
And, you know, we'll see.I think the cream is going to rise to the top.I'm sure Mike and I are going to have a fun conversation about this on Monday as well.But I think the beef is being shown, to quote a phrase.
Mike is in the audience.Mike, I've sent you an invite if you want to come up as well.I'm not sure if you're on stage and I can't see you.Carlo, I'd love to get your thoughts.
Look, following along with what Dave said, I would encourage everyone to check out John Stark's most recent space that he hosted yesterday, where he essentially acknowledged, and I have to give him credit for that, you know, we've had him, he's been on many panels, and we know his position on crypto.
But he acknowledged that the war on crypto is over, and that the SEC has essentially been gutted.And if you want to understand the dynamics of how this is going to work,
I would encourage you to listen to the first 30 minutes of that space, because he probably knows the interworkings of the SCC better than anybody in this space.
And he kind of breaks down how the sausage is made and what it's going to look like between now and inauguration day.
Can you break it down for us?Absolutely.How fast will he get rid of Gensler?How fast will policy change?To what extent? Will there still be resistance within the SEC?
Is it really going to be that drastic of a shift from being completely anti-crypto to completely making the US the capital of crypto, the world's capital of crypto?
Yes.I think, and I have to agree with John, that going forward, there's going to be absolutely no incentive for the SEC to bring any further enforcement actions in the crypto sector.
He clarifies that it is vague and never been tested whether Trump can actually force Gensler to resign because he has a term and he can theoretically serve out the remainder of his term.
However, John very clearly lays it out that that's probably not going to happen because Trump could appoint an interim, which could then completely eviscerate Gensler's power to run the agenda at the SEC.
And that interim would probably be one of the two Republicans who sit on the SEC commission.
And more than likely, what's going to happen is, is that Gensler is going to resign because he's between the fact that the Republicans now control probably both houses of Congress and the White House effective January on Inauguration Day.
he's really going to have no mandate at this point.
And the other thing that's interesting about it, and why I encourage people to listen to it is because he sort of breaks down the fact that the SEC chair has never been this visible of a figure and this controversial figure.
And he has never in his experience, which goes decades, serving under several SEC chairs.He has never seen this much dissent between the commission members with respect to how they are approaching digital assets.
He's never seen dissenting opinions like this come out.And clearly, this strategy by Gensler has completely backfired.And I anticipate my humble belief, I think we will probably see and I know this is probably very, very, you know,
I think this is probably a little bit hyperbolic, but I think we're going to probably see them dismiss these pending suits against Coinbase, Ripple, and Kraken, and etc.Because there's just no momentum for any of this anymore.They failed.
And for John Stark to acknowledge the war on crypto is over, is a pretty important thing for him.I don't think his views on crypto have changed, but he acknowledges that the voters have spoken.
He was impressed with the fundraising efforts in the crypto sector and how they were able to change the narrative and flip critical seats.And Trump is behind crypto.There's nothing more to debate anymore here.I couldn't be more bullish on the sector.
Yeah, well, Carla, you know, we were obviously on the same page.I just want to clarify a couple of things having dealt with the SEC and been in that building so many times over the years.First, Gary's term is as an SEC commissioner.
He could stay if he wants, but he will on January 21st not be the the chair.
But if he does, then by law, then Crenshaw's gone, because there have to be, you know, by law, there are two Democrats, two Republicans at all times, and the chair is appointed by the president, and generally is either independent or of the president's party.
Now, it's important for people to understand, Jay Clayton was an independent, and Mary Shapiro, who preceded him, was an independent.So we've often had independents.We've also often had partisans.
I think, considering where we are, I think it's highly likely that we will get a Republican as opposed to an Independent under Trump, but he has not said boo about it.My guess is that's highly likely.
If you get an Independent, it will be someone who is pro-digital assets, pro-innovation, which therefore translates to pro-crypto.So that's the actual thing.
So Gary can't be forced out as a commissioner, that's true, but he absolutely can be forced out as chair.He's gone on day one of the Trump administration after he's sworn in. And he knows it.So the question then is his political calculus.
Is he better off serving his term and waiting it out until there's a chance of a Democrat Senate?
So does that mean the SEC will be dropping, and maybe kind of a legal question here, will the SEC be dropping all their existing lawsuits?
Okay, well let me get to that, because that was my third point.Yeah, please, go ahead, Dave.
My second point, which is very important, and it's something that on this show, John and I had a really good interchange, it was in July, I remember it, because I complimented John on something and he had to admit I was right, which is when he was Director of Enforcement in the SEC,
Pretty much every case was based upon provable harm to investors or fraud. And that matters.That is exactly where it's going to go back to.There will be cases in the crypto world, 100 percent.They're going to go after fraudsters.
They're going to go after people who either are accused of manipulating the markets and they're going to go after people who are committing fraud and investor harm.
So if you're planning, if people think that this is going to be a free fraud, no, it will not.But what it will mean is the entire enforcement divisions available manpower will be able to go after fraud as opposed to
technical violations that are after jurisdiction.So what does that mean for the existing cases?It means Ripple will get settled on the, you know, that settlement will go through.
Because if you remember, the basis of the settlement was disgorgement and personal and profits made based on bad disclosures. And that's highly likely to go through.I don't think that Brad is going to want to fight that.
But I think everything else, the appeal that the SEC just filed, will, I'm almost certain, be dismissed.
I'd be stunned if Coinbase and Kraken, where there's no allegations of harm, same with OpenSea and all of them, you know, MetaMask, et cetera, those are going to go bye-bye because there's been no allegation of investor harm.
And so that's where Carlo and I agree.
And that's a small nuance, but it's kind of an important one for people in the space, because actually, if what happens is what I think, is it means there will be more enforcement efforts against potential frauds.
And that's kind of, which is definitely good for investors.
Now, at the same time, what Hester basically promulgated and Mark is behind, and the FIT Act enshrined, although they're gonna cut the FIT Act and redo it, was a safe harbor for firms that are deemed to be security, digital securities of some sort, giving them time to help them craft new laws that will actually work.
Meaning, if you want to be a broker dealer in the crypto space, it's going to be open season.And you're going to hear a lot more from me about that as the weeks roll on.But it is, there is a lot of potential businesses.
I mean, people made the, I forgot who made the tweet.I think it was It may have been Eric Turner from Missouri.I was thinking about New York is going to be open for business if you need help relocating here, yada.I mean, I don't know.
Personally, I like no taxes, no state income taxes in Miami.We'll see.But all the promise that was existing four years ago, you're going to start to see a land grab in the United States.All of this
Is long term on the crypto markets, none of it affects, you know, day one.And so day one, you're seeing people euphoric that US people might be able to invest again.And that will happen.
But it's going to be, you know, there's gonna be a lot of nuance.
So I am a color, I want to go to you.And then I see Mike here.And by the way, there's also an interesting tweet from Dennis Porter, I want to dig into a bit later.I'm not sure if you guys saw it.He essentially tweeted, let me open it up.
Where is it at?There it is.Breaking.I can confirm that in 2025, multiple states will have strategic Bitcoin reserve legislation introduced.So this came out from Dennis Porter earlier today.But Carlo, I'd love your comments on what Dave just said.
And then I don't want this to become just kind of an echo chamber of optimism.I want to get a different perspective, Mike, if you do have a different perspective or if you've changed your mind on the outlook.
But let me go to Carlo first and then we'll go to you, Mike.
I love what Dave said, and I have a question for Dave and kind of a general thought.
If this is the direction it's going in, and if we have a complete sea change in how these assets are being looked at, would it be the CFTC that is going to be more involved in the investigation of fraud?
Because the SEC's mandate is to investigate fraud when it comes to securities.But if we're going to finally get beyond this nonsense about the Howey test, and the decentralized nature and all of this that has been bantered about.
And if we're going to finally get clarification that the vast majority of these tokens are not securities, but are instead commodities, is that going to change the enforcement agenda for the SEC?Yes, I agree.
They'll have more resources now to actually go after fraud when it comes to securities.But are they going to still be, are they going to regard the vast majority of tokens as being securities?I think that's a big unanswered question.
which, again, has huge consequences for their mandate and for the sector.What do you think, Dave?Because I'm curious on that.
Well, I mean, in October, I had conversations with both Republican commissioners of the CFTC and conversations around the SEC.I think that there is a belief among the Republican side that there's a need to work together to delineate.
Understand when you invest when the SEC investigates fraud like Ponzi schemes a Ponzi scheme Could it could have to do with just about anything?
It doesn't matter if the underlying was a security It's still an investor that becomes an investment contract.
So people who are raising money by definition Raising money from investors for something they can they can go after that but I do think that what you're going to see is more coordination and just between the two.Neither one has infinite resources.
I think that it will be interesting.The CFTC and the SEC division on how to oversee markets for market manipulation, that's a much more interesting question.I think at this point, it feels like it's going to be mostly CFTC, but we don't know that.
Until the first hundred days comes and goes and the team that Trump promised Which you know, I have obviously very strong thoughts on Defines what's a security and what's a commodity and you know, the CFTC's mandate is very clear on commodity derivatives It's less clear on commodity spot and you know, we'll see how all this goes, but instead of it being adversarial I think it's going to be much more cooperative and
It just makes sense for it to be that way.And common sense, I think, is going to be the hallmark.I mean, you know, you could believe them or not, but I think that that's kind of been the mantra on the transition team members that I've talked to.
So I do think that there will be both.So the real question is, will the CFTC, how will they be vis-a-vis foreign derivative exchanges that do not have their FCM and other sort of structures, will there be carve-outs for U.S.
people to be able to invest abroad or on DeFi exchanges, etc.?That's going to start getting much more interesting.That is not clear at all.And the reason it's not clear at all, to be blunt, is because of lobbying. Right.
You know, there's a lot of money being made by by the U.S.financial markets in the derivative space.And so there's going to be that's going to be that's a story for another day.
But I think 100 percent, you're going to see more cooperation between the two.And they're not going to they're going to do their best to avoid letting bad actors kind of skate, because neither one believes that the other is going after it.
I think that that's going to get coordinated.Does that answer, Michael?
Yeah, and let me go to Mike.Mike, I know you and Dave are going to debate this on Monday, but we can preempt this today.Where do you stand on the latest developments and the market's reaction to Trump's win?
Well, no debate with Dave on this one.Hats off to Dave.Dave nailed this, and he completely gets the credit for it. And it's about moving forward now.And to me, this is a major paradigm shift on a global stage.Re-election of Mr. Trump as president.
It's a complete shift.I can dig into what it means for commodities, but for cryptos, I completely agree with what Dave has said and for the technology, the overwhelming technology of this
And, you know, not finally, you know, people like Trump not pushing back on what's great for the U.S.dollar and tokenization and everything.It's probably great for good for the alts, although they've been underperforming in Ethereum.
But the main problem I have with Bitcoin is I'm putting on the finishing touches on a note I have tomorrow is sometimes Bitcoin trades more like digital gold and sometimes it trades more like leveraged beta.
And right now it's clearly trading more like leveraged beta, meaning And Dave and I have discussed this before that I think it's been a great thing for portfolios.
Let's say if you have 100 units in a portfolio and you chunk in one Bitcoin in there, you can eliminate a decent portion of that portfolio and still have beta on the upside with less dollar exposure.But that's the problem now.
Stock market made new highs. Bitcoin's made new highs, and I'll keep saying the same things.I think Bitcoin's fine, as long as the stock market keeps going up.But the problem is, if you look at the last time now, we have a complete consensus.
It's the human nature.You have to be careful of what's going to happen now compared to the last time President Trump got elected.Now, we've got a complete bullish consensus for the equity market in Bitcoin.Yes, I get it.
But the markets are so stretched.One good example, as I'm putting this out now, is When President Trump was elected last time, the consensus was bearish and the stock market was basically hovering the S&P 500 at its 100-week moving average.
It's great.Now it's a 26% premium.I mean, that's just a relative thing.It will go back there.At some point, we'll get some kind of trigger.I don't know what it'll be, but that's the problem.
And at the same time, the key thing I've been watching overall all the time, still watching and worried about is the Bitcoin to gold ratio.Sure, it's finally catching up. But finally, we had that definitive election.
Good reason to take some profits on gold.But that's where I'm still quite concerned about things like that.So again, hats off to Dave.But the problem, again, I'll point out is with Bitcoin as a risk asset is I think most managers get it.
The 60-day correlation is the highest ever on the way up with Beta is going up, so Bitcoin is going up.And to me, it's just the next big trade is when we have a bit of a backup.We flush out some of these aggressive longs and all risk assets.
And that's a good opportunity.The question is how and when that happens.So I'll tilt over.The key thing is I've been indifferent somewhat between what's happening with Bitcoin record highs and same thing with copper.
I mean, it has very high correlation to the stock market and it's lagging.Still quite bullish gold, still bearish things like crude oil.
But again, it's in, again, we have- Yeah, can you give us a- Also, you said earlier, you could comment a lot on the commodities, what that means for commodities, Trump's win.Can you expand on that a bit more?
Just being very brief on this, because this is a crypto show.
Yeah, so his focus has basically been drill at will.And the thing is, let's pre-examine, and just the uncertainty of a Trump administration potential for greater geopolitical tensions. will fit into an enduring trend in commodities.
That is gold going up, crude oil going down.And that's what's been happening.The key question is what stops it.I think this Trump, his reelection just accelerated.
The key point is, if we are seeing a global recessionary contraction, deflation, a kick in on a global basis, if you look at commodities, gold up, most commodities down, most notable crude oil.
And what his reelection is doing is with the tariffs, it was really pressured, most notably the most largest exporter of goods to US, China.Crush them hard.So it's bad for the global economy.
And you see that every day that we have to depend on more stimulus from China, more cuts from OPEC to keep things just stable, which is bad.So to me, the tilt I see is
the tilt towards global deflation, and that will probably be on the back of copper.Copper has to go up, and it's not.And then you have Bitcoin and gold in the middle.That's where I look at Bitcoin.It's the leading risk asset.
It's making record highs.It's great.But it's been lagging gold for almost three years now.And gold has been outperforming the S&P 500 for almost three years now.That's not good.And that's why I look at Bitcoin as a great leading indicator.
It's popped up in knee-jerk.It makes sense.It should have.But remember, remember what's happening here.People are jumping on the last big trade. And we all learn the lesson from that.
We know that lesson in life, and that is the stock market is so expensive.When we have a little bit of normal back control, Bitcoin will probably lead the way.
And again, this is only a few days since we've had this paradigm shift of a re-election of Donald Trump.
Yeah, I do want to dig into the ETF inflows as well.Dave, I'll let you respond quickly and then we do have, we do have, I think he dropped out.Where is he?Oh, Andre's here.
Andre's here to dig into the record inflows that we saw yesterday and the day before.But yeah, go ahead, Dave, we'll respond.
Yeah, really quick.I'm going to ignore everything he talked about with oil, geopolitics and all that.I'll save that for Mondays.That's a long conversation.But the quick comment is,
Bitcoin being leverage beta, the word beta, for those who don't mean it, it means correlation to, you know, the magnitude of its correlation to other assets.I think Bitcoin's biggest beta is it to its own adoption.And that matters.
And I know I'm stealing Simon's thunder.I can see the 100%.I kind of wanted Simon to say it.But, you know, because I like listening to other people who agree with me at times.But that to me is a big difference.
And that is the major sea change here in terms of everything Mike said.Oil, no doubt, is going to be under pressure for a lot of reasons.We'll talk about that in detail on Monday.
The fact is, I think the trade, and I know Trump won't want to hear it, but I think the trade right now is probably long Bitcoin against a basket of equities that are the most stretched in terms of valuation, as Mike was putting it.
Because I think that at a certain point, stocks are tethered to their valuation and Bitcoin is tethered to what is it actually backing.And we all know that there is 15 times upside on Bitcoin to become digital gold.
So it's not really tethered to anything.So that's kind of the point, the meta point.And I'm going to let everybody else talk now.
Yeah, Andre, I want to dig into more exciting news.We've got a record inflows yesterday. Again, always appreciative of someone from Bitwise being on stage with us, especially on days like today.
We'd love to get your analysis on the discussion so far, the markets in general, and of course, the inflows that we saw yesterday.
Yes, thanks for the invitation, by the way.Happy to be here.I just want to quickly I have a comment on Mike's thoughts about gold, right, and Bitcoin as digital gold.
I mean, obviously, Bitcoin is not yet digital gold and not yet a kind of safe haven store value.But what we've been seeing structurally is, of course, like,
the character of bitcoin has been changing right i mean we we're looking at an asset that had a realized volatility of around 200 percent right in 2012 and now if you look at realized volatility it's only around 50 to 60 percent right so the character has been changing
And Bitcoin has become more like a safe haven kind of store of value with less realized volatility.And my personal expectation is that this trend will continue, this kind of structural trend, this downtrend in realized volatility.
And Bitcoin will become less of a risky asset and more gold-like over time.I mean, obviously, we all know stock-to-floor ratio is already double as high as that of gold.
And talking about inflows, I mean, if you compare Bitcoin versus gold ETF inflows, for instance, we can talk about trading launch inflows, Bitcoin versus gold, but also the year-to-date inflows since the SPOP Bitcoin ETF launch.I mean,
They've been 20 times as large.I'm looking here at the data across all kinds of gold ETFs.
Correct me if I'm wrong, Mike, but I'm seeing 1.1 billion net inflows into global gold ETFs versus 28.6 billion into global Bitcoin ETPs, so includes US, Asia, and so on.
So it's 20 times as large, and I think you've all seen the charts about the first year flows, second year flows, and so on, right?I mean, the trading launch knocked it out of the ballpark, right?
I mean, even if you adjust for inflation, it's been the most successful ETF launch ever. And the Bitcoin ETF flows year-to-date already surpass gold ETF flows in year one, right, by a factor of 10.10 times.10 times, exactly.
But more direct question there, Andrej.So Dave mentioned earlier that it takes time for big fund managers to start shifting their allocations towards Bitcoin through the ETFs.
Does that mean the inflows that we saw just now is just an initial reaction to a long term, you know, continue a continuing record highs over the next few months?
I mean, it's it's quite obvious that there's so much money sloshing around just if you look at the trading launch itself, how much money has already has already been funneled into Bitcoin ETS.But even if you do a very simple
calculation right for instance if you just look at passive etf wealth in the us alone right based on ici data i mean if even if you do tiny allocations and tiny substitutions of this passive etf wealth into existing us for bitcoin etfs i mean the numbers are huge right i mean if you look for instance at um
Let's say US ETF allocators invested 20%, right?Let's say, so every fifth asset allocator
decided to invest, right, and they decided to invest around 3% of their wealth, right, which is a very conservative assumption, because we've seen RIAs that allocate up to 10%, for instance, as well, right, we've seen endowment funds that invest between five and 10%.
So but let's say they invest between, they invest around 3%. And it's only every fifth, so 20% of existing investors, which is also a very reasonable assumption because we know retail adoption in the US is around 20%, right?
And so the amount of passive ETF wealth in the US is around 9.1 trillion US dollars, right?9.1, only passive investments.
And so if you multiply this high number, 9.1 trillion by 20%, for instance, times 3% allocation, you already end up with a very, very high number, which is around 58 billion.
So just by substitution alone, I mean, we've already seen, let me check the latest numbers. We've already seen around 27 billion, 27.5 billion net inflows since trading launch, right, into US-bought Bitcoin ETFs.
If you assume that this substitution continues, right, of these passive products, then there's still around 30.7 billion left, which is around 28% of global income.
Based on that conservative estimate of 3%?
So you're saying inflows would essentially double, we're halfway there based on that assumption, correct?
Yes, we're not even halfway there.
Okay, so what would that mean?How much buying pressure would that bring to Bitcoin?So if you had to base it on that assumption, all else being equal, what would that mean for the price of Bitcoin in the markets?
So if you do a quantitative analysis on the sensitivity of Bitcoin's performance, with respect to global Bitcoin ETP net inflows, it's around a one-to-one relationship.
So for every 1% increase in global AUM, it's associated with a 1% performance per week.That's at least historically.I mean, the sensitivity can change over time.
Based on this assumption again, what would the total percentage be?
But based on this assumption alone, you can expect around 28% upside just by the substitution flows alone.But we have to keep in mind that, I mean, the pie is growing, right?The global wealth pie is growing.
This passive ETF pie is growing, this 9.1 trillion.I mean, if equity markets keep rallying, this pie will grow, right? there's even more potential.
So you're looking at money.
But based on that, and over the two last questions, and then I've got one more ETF question, talking about the potential Solana ETF, for example, if that increases the likelihood of us seeing that, or even a Memecoin ETF that some people are talking about, just to get really excited, really deejaying here.
But just one more question, over what period of time, if you had to make another assumption to add to your previous two assumptions, over what period of time would you expect to see those inflows being, let's say, mildly conservative?
Because based on what you said, that's a price action that will bring Bitcoin to about just under 100K.And that's all of being equal, no other buying pressure and the pie not increasing further.
And so, yeah, my curiosity now is over what period of time could we see that?Again, being conservative.
So I think because we've seen $27.5 billion in net flows since trading launched over the past, yeah, around 11 months, right?
And that's during a Biden administration and a Gensler SEC.
Exactly.I mean, and during a sideways market most of the time, right? sideways shop market.
And so I'd say, because we're entering a bull market, and it's not only about ETFs, I mean, it's generally this kind of supply shock, right, that emanated from the halving originally, right, which happened in April.
And based on our statistical analysis, the halving effect usually starts to become statistically significant around 100 days after halving.It's not felt immediately, it starts to accumulate over time. and only gradually starts to kick in, right?
And we are, I think, around 202 days after the halving, after the 20th of April, and now it starts to become increasingly significant.And I think...
Based on this supply shock alone, we should approach 100k by the end of this year and 200k by the end of next year.But with that being said, I think that the ETF demand overhang that we're seeing right now, I mean, just yesterday, ETFs bought
I think by a factor of 36, I mean, the ETF demand was higher by a factor of 36, higher than daily production, right?I mean, the demand overhang is so significant that this just adds to this supply shock narrative, right?
So let me dig into it.I just found out I've got an interview I have to go to.I'm driver's here in 15 minutes.So over the next 15 minutes, I do want to have a discussion with Tom, Simon, Eladio as well.I see your hands up.
Tom, my next question, thank you, Andre, for this overview.I see it was really, really interesting analysis from the ETF inflow perspective.So that's, again, considering all else being equal and what you could expect.
And talking about 100,000, as I put in the title, 100K before inauguration, I would say it's a fair kind of a fair goal to have and a pretty pragmatic assumption that it is possible.
Obviously, there's too many factors in play and that's pretty on more on the optimistic side.But I do want to go to Tom.
Tom, general thoughts on the discussion, but more importantly, if we can dig into the rest of the market, because we've talked a lot about Bitcoin.Bitcoin dominance is still not too far off 60%, even though also rallying.What do you expect that would
you know what would happen for the rest of the markets what do you think that would happen to meme coins which have performed really well what do you think that would mean to i think vc back projects remember i think it was dave dave you said prior to to the elections you're saying how if kamala wins this you know you know not all coins will be impacted equally and he said like defi and deepin will probably be hit the hardest from a regulatory perspective
But now that we've got Gary Gensler on his way out, and we've got Trump's administration coming in, what does that mean for VC-backed projects that me and you guys at Master Ventures invest in?
a lot to unpack here, and I'll hit on some of the points beforehand.So we were really vocally long, and actually, at least some of the team's PAs leveraged long into the election, because we were really confident in the polling data.
And not only, which I think is still being a bit underestimated, a Trump win, but a win in the Senate and the House and what that can mean for not only crypto, but risk assets more broadly.
So when you have a united government, particularly under Republicans, you have about a 12% annualized expected return.And that's over the past 70 years, you've seen that return profile.
And a lot of that comes actually within the first nine months of the Republican administration when it's united.So you have a lot of front loaded kind of price action.So you've seen these moves, but I think they're just getting started.
You've seen it in Bitcoin, but alts, Solana and Ethereum have followed.But if you look at kind of like the mid to low cap alts, they really haven't followed yet.
I think that's probably still to come as folks are unwinding a lot of the trades they had.
So the popular trades kind of going into this year would be like short Ethereum, long whatever, pick your other L1, like long Solana or long Bitcoin or whatever.And you've seen a lot of the unwind of that Ethereum trade.
And then additionally, I think you're going to see... And everyone keeps talking about the institutional money through the ETFs or otherwise, but I was at the TIE event, which is an institutional-focused event where big names in the space, Dan Tapieros
Mike Novogratz, all of the big TradFi adjacent allocators.I'm sure some of the folks in this room are there.And everyone was talking about that morning.Dan Tapiero said it specifically.I got calls from 20% of my LPs seeing how I get more allocated.
I'm caught flat-footed by this.So Everyone's trying to figure out now from the Tradify side is like, oh crap, I need to get risk on, I need to get really risk on.How do I get into crypto?
And the easy way to do that is like, okay, hey, let me just snag some ETH and Bitcoin exposure and ETF and then leg out through my VC fund or through my hedge fund or whatever. We've talked about those flows coming.
I can tell you those flows are actually coming now because people understand how risk on Trump is going to be more broadly for the administration.
And just to add a bit more color to that, so we actually did a survey of 100 allocators within crypto, so hedge funds and VCs to see how bullish folks were and how over allocated they were, among other questions we asked.
And that's going to be coming out on Monday for folks interested. And the price targets were actually really low for allocators within the space.The top most people thought for Bitcoin was in that 100 to 125K range.
Ethereum folks only thought it was getting to 5,000 to 7,000.So just pull it all together.You have allocators, even within crypto, who are under allocated, not as bullish as you probably thought.
And then you have all this tradfine money that's scrambling to say, like, oh my god, how do I get exposure to this asset class?So
Yeah, really, really strong signal for for altcoins going into the next kind of month or two, especially as folks trying to get exposure before the year end and kind of the Santa Clause rally.
And what do you think that would mean for startups as well?I thought that would be most bullish for meme coins and even more so is for startups in the ecosystem.And yet we haven't seen that shift yet.I don't know.
I haven't looked at the markets in the last couple of days.But have we seen beyond the top 100 else?Have we seen?
startups that launched in the last cycle or launched in the last few months start to perform better than they have been over the last eight months?Or do you think that will take longer?
Flat to down for most of those tokens that have launched.
Why exactly?That's a weird one.Why is that?
I thought they'd be benefiting the most. Yeah, it's really tricky.It's because of the attention economy we live in right now.We're still PVP trading and people are just leveraging up on the majors right now.
It's going to come to those other assets, but now it's all the marketing game.What I think is actually more interesting to invest in is new projects that are launching that have that attention right now.So like Grass is a great example.
Grass is a deep end.L1 focused on, among other things, leveraging compute from local resources.
Did we do... I think it launched 40X or something.
Yeah, they're around the $3 billion range.They launched at $100 million valuation.
You're about to see all the projects that have delayed from April to now launch in the next six weeks, because if they don't, they're going to get caught up on the holidays.
We saw a lot launched today, immediately after Trump's win.Literally, over the next 48 hours, we saw a whole bunch of launches.It paused for two days prior.I was looking at it yesterday.It paused for the two days prior to the election.
Everyone's waiting for the results. And as soon as Trump won, we saw a lot of projects launch.But the performance is still not what you'd expect, at least not a mania phase.But I'd expect it to at least improve.
And talking about meme coins as well, I know it's not an area too deep in, but your thoughts on what that would mean for meme coins?
Not a real high conviction play here on meme coins.I think meme coins have gotten way too far over their skis.
And I think if I had to bet on a current administration doing something on their way out of the door, it would be something surrounding meme coins.So I would be very careful there.
Yeah, the only point I'd make on meme coins, and it's too early, is the one thing you can be certain of in terms of regulation in the U.S.
and in terms of where things go is that this nonsense where people, you know, because of the Howey test, effectively created meme coins to try to build communities which explicitly cut investors away from any economic value is going to go away.
And so what does that mean?That means that projects or memes that build communities that actually have the ability to monetize those communities are going to be the ones that ultimately win.
It's gonna take long, but it means that ones where you're buying it as a beanie baby, and you don't know the tokenomics, you don't know the limit supply, you don't know the bags that could be dumped on you by the initial holders, those are all gonna be problematic.
And the next time when the bull market slows, those are the ones that you could be looking at 99.95% drops.So I do think there's a sea change going on.
So the ability to create, and I love the way Tom said it when we talked about it at Mainnet, the attention economy is very real, and you could monetize that, but if you can't, the ones that don't are gonna get slaughtered.
Now, I mean, I could slaughter it immediately.In fact, it probably won't get slaughtered at all.They'll get swept up with the rising tide as things are going up.
But when the music stops, that's where the, that's the distinction that I think it's really important from an investment point of view to keep in mind.From a trading point of view, trade them, have fun.Investing, you really want to be careful.
Yeah, what was weird for me is when we saw the immediate reaction of the markets that Mean Coins did really well. Fair, that's not too surprising.
But then you saw all these different altcoins that I'm talking about, you know, projects, startups that launched over the last 6, 12, even 3 years, just not perform well at all.And that's something that surprised me.So, do you expect to see a shift?
And as Tom said, do you expect the administration to make an example of MemeCoin as well?They're a lot more friendly to startups.
I think that they're going to go after fraud, and we'll see what actually happens.I mean, it depends how things are marketed.I mean, look, in crypto people, there's one thing that people in crypto kind of take for granted.
that were it to be securities and or investments in any form would be absolutely verboten, which is the notion of the whole culture of telegram groups, coordinated pumping and all that sort of market dynamic.
That is not going to be looked upon favorably.We'll just leave it that way.I think that they're going to try to make an example about that to let people go back to investing based upon What's real news and what's real real economic value?
I mean this is gonna take time, but when you say I want a regulatory structure I forgot who said it in the beginning, but it's very true what you're talking about is that you're talking about giving people enough information and to not have hordes of people pump us not to pump something up those those sorts of things and
are not legal under US law.Frankly, they're not legal under quite a few of the investment laws around the world.
We'll see what happens, but I suspect that you're going to see the coins that are dependent upon promotion underperform the ones that are dependent upon actually delivering value.
And let me go to Eladio.Eladio, you made a tweet kind of very similar to what we put in the headline.Your general thoughts on the markets and when you think we'll hit 100k to kind of wrap up the space in the initial discussion.
Thank you, Mario.Let me tell you. The Fed made a serious mistake.There was a discussion earlier today that it might even be punitive.Why would you want to lower rates if we're going to deregulate and we're going to increase business activity?
We're going to keep the Trump tax cuts, keeping the competitive edge that we have over the other 37 OECD countries that Janet Yellen tried to destroy.The fact is liquidity is rocket fuel for Bitcoin.Bitcoin arrived as an asset in November of 2021.
You have a perfect teacup and a handle now going all the way to that last high.And then you have one even more recent that took place, I believe, when we crossed 70,000, I believe in May.I forget when it was exactly. It just looks good.
The regulatory environment now is gonna be great.Lena Kahn's going, so is Gary Gensler.The only person standing will be Elizabeth Warren.
And I think that with Robert Kennedy and with President Trump, you're gonna see Bitcoin become a bigger part of what is happening.But what is interesting is,
Bitcoin was created to be a counter to the Fed, and I don't know, I just felt like yesterday the Fed fired a shot with a unanimous vote.
I trust Powell as an honest man, and he was doing a great job, but I'm wondering if there's something behind this move of lowering rates when we're going to have increased economic activity.It doesn't add up.It's only going to add fire to BTC.
And BTC is going to probably hit 100 as early as this year after Thanksgiving or as late as the first quarter of next year.I just don't see how we're not going to get there.We get another rate cut in December.That's more fuel to the fire.
We're going to see Bitcoin hit 100K early in 2025.
Interesting.And if I ask you, Dave, Andre, Carlo and Dan, oh, Dan, sorry, I didn't go to you earlier, Dan, I wanted your comments on Dennis's discussion.But Dan, we'll do that on Monday, because I do have to jump off.
But I want to get your general thoughts on the markets.And also the question I want to ask the rest of the panel, maybe you can kick it off, is if I asked you to predict when you would hit 100k, would you say it's before Trump's inauguration?
So do you expect it in the next couple of months?
Fine.Yeah, please go ahead.Dan, you got to unmute if your mic is working.Go ahead, Carlo.
Yeah, I think it will.I don't think there's any reason to wait for inauguration.The headwinds have shifted.I think there's a clear mandate going forward.We have clarity that we are going to see better regulation and legislation.
So yeah, I think I think absolutely between now and inauguration day, I think we can we can definitely see 100,000
Because even by the supply shock alone, right, which has been building up in the background by the supply shock alone, if you look at quantitative models for having supply shock, they apply 103,000 in December, right, late December already.
So that means before inauguration day.
Sorry, the only reason that I hesitate to be specific is because so many people believe that it will go there.But I will continue to say that I think 100, give or take, is sort of natural trading.
And if Dennis is correct, and if what happens evolves the way I think it will be, I think that game theory says that in addition to more corporates allocating, which is not in any of the conversations we've talked about,
and sovereigns allocating to it, I don't think any of that is in the price.And so I think we could see a very interesting first quarter of next year as this story develops.But between now and the end of the year, before the inauguration,
It feels technically like we could get there.My gut tells me we'll probably underperform, you know, in the short run because those things won't be definitive unless somebody does something definitive.
I mean, if there are, if a sovereign, you know, decides to start putting money in or the states actually pass the things that Dennis is talking about now, that is a very big signal because game theory means that you want to be the first.
You don't want to be the last to put your, you know, your strategic reserve in Bitcoin in.
Appreciate it.And last quick question, Dave, Bitcoin dominance up or down?
Well, my prediction, I'm not changing anything.I think Bitcoin dominance will ultimately go down slightly as the all clear is given for more altcoin projects.
But if I'm right, on the next bull run, Bitcoin dominance will go up again as, you know, if it's driven by sovereign wealth and corporate balance sheet adoption, because none of the other altcoins are going to participate in that.
Cool.On that point, everyone else, we'll see you again on Monday.I think we've discussed, there's a few more points we needed to discuss today.We'll do it on Monday.
Congratulations on everyone that was, you know, had their bags pumped after the Trump selection.And we'll dig into, I want to dig into the rest of the markets a bit more on Monday.So that'll be my main focus.Scott will be back with us as well.
Appreciate you all.Thank you so much for joining us and enjoy your weekend.Congratulations.Bye everyone.
Sign in
