Latest / CRYPTO 101 / Ep. 731 Crypto Is Down… But the Next Big Rotation May Already Be Starting with Bitwise Head of Research Ryan Rasmussen

Transcript

Ep. 731 Crypto Is Down… But the Next Big Rotation May Already Be Starting with Bitwise Head of Research Ryan Rasmussen · CRYPTO 101

0:09
[SPEAKER_00]: all right, everybody.
0:10
[SPEAKER_00]: Welcome back.
0:11
[SPEAKER_00]: Welcome back.
0:12
[SPEAKER_00]: It is another action packed high caliber episode here of the crypto 101 podcast.
0:17
[SPEAKER_00]: I'm your co-host, Bryce as always joined by my good buddy, Brendan Veman.
0:23
[SPEAKER_00]: Brendan, how are you doing?
0:24
[SPEAKER_00]: I'm doing pretty good.
0:26
[SPEAKER_02]: I'll tell you what, you know, Bryce, we're coming off of Father's Day and we were chatting it up before it.
0:30
[SPEAKER_02]: I am not a father myself.
0:32
[SPEAKER_02]: You sound like you had a great one.
0:33
[SPEAKER_02]: I saw some of the pictures and videos, but I'm sitting here pretty happy, not because of Necessarily, what's happening here in the crypto market, but I was pretty proud of myself.
0:42
[SPEAKER_02]: I think I got one of the best Father's Day gifts to gifts for my dad that I've ever gotten them.
0:48
[SPEAKER_02]: Some feeling good just knowing that he's probably gonna enjoy it.
0:53
[SPEAKER_02]: Um, but man, I'm feeling a little bit extra on top of the world here today at the time of recording this.
0:58
[SPEAKER_00]: I got to know what you got them.
1:00
[SPEAKER_02]: Well, you know, it's two things.
1:01
[SPEAKER_02]: He's been really big in the smoke and meats.
1:03
[SPEAKER_02]: So I got him all these different smoked salts, all these different sense and flavors.
1:07
[SPEAKER_02]: And then I got them, I got him this electric grill cleaner and smoke or cleaner.
1:12
[SPEAKER_02]: Wow.
1:12
[SPEAKER_02]: So it can like electrically clean this thing for.
1:15
[SPEAKER_02]: Make it a little bit easier for him, you know, love it.
1:18
[SPEAKER_00]: Yeah, my wife went all out.
1:20
[SPEAKER_00]: I got matching bathing suits with my two-year-old.
1:24
[SPEAKER_00]: My kids got some pottery stuff that they did for me.
1:27
[SPEAKER_00]: I got a spa day.
1:28
[SPEAKER_00]: I mean, I was totally pampered from beginning to end.
1:31
[SPEAKER_00]: So it was, it was awesome.
1:34
[SPEAKER_02]: I wish we had a good analogy to just segue us right into how this relates to the crypto market.
1:41
[SPEAKER_00]: You know, you got to take the sleepless nights, which again, when you have a two-year-old and a four-month-old, you got a lot of sleepless nights, you got a lot of peaks, you got a lot of valleys, good with the bad, and I think we're bringing on an absolute expert, a sharp shooter here in the crypto market to talk to us today about cutting it straight.
2:01
[SPEAKER_00]: Here's kind of what's going on in the crypto market.
2:03
[SPEAKER_00]: Why things are down, but what the future looks like?
2:07
[SPEAKER_00]: Why
2:08
[SPEAKER_00]: There's institutions that are here that are not building for the next quarter next year, but they're building for the next 10, 20, 30 years and really doing it on a bedrock of innovation and these trustless, permissionless public protocols we have, the head of research, Mr. Rasterly rock himself, Ryan, Rasmussen, head of research at Bitwise, joining us today, sir.
2:33
[SPEAKER_00]: Thank you for joining us.
2:34
[SPEAKER_00]: How are you doing?
2:35
[SPEAKER_01]: Wow, what an incredible, incredible intro.
2:38
[SPEAKER_01]: And I happy belated Father's Day to you, Bryce, thank you.
2:42
[SPEAKER_01]: It congrats to you, Brandon, on the exceptional gift.
2:45
[SPEAKER_01]: I thought you were going to say you got some Bitcoin in hype or something.
2:51
[SPEAKER_02]: Well, here's a segue, this should have been the segue into this, but he is a bit wise, you know, investor, I guess you could say he came to me months ago or his last year and he's like, hey, I decided to finally get in on one of those Bitcoin ETFs.
3:05
[SPEAKER_02]: I was like, oh, no, like, I wish you would have talked to me about this beforehand, like, there's some that you want, some that you might just, you know, maybe not want, there's,
3:13
[SPEAKER_02]: ones that are better than others and he's like, well, I went with PitWiser.
3:16
[SPEAKER_02]: They good.
3:16
[SPEAKER_02]: I was like, oh, you're good.
3:17
[SPEAKER_02]: You're good.
3:17
[SPEAKER_02]: You're good.
3:18
[SPEAKER_00]: You're good.
3:18
[SPEAKER_00]: Incredible.
3:19
[SPEAKER_00]: Wow.
3:20
[SPEAKER_01]: Next time you talk to him, please tell him, thank you and we appreciate him choosing us.
3:25
[SPEAKER_01]: Absolutely.
3:26
[SPEAKER_00]: Yeah, I love the, um, you know, not to get too deep into the weeds and the product or anything off the bat, but I love that you guys donate 10% of profits, I believe, to the Bitcoin Core developers.
3:38
[SPEAKER_00]: That's something that stood out to me.
3:39
[SPEAKER_00]: It's pretty pretty unique.
3:41
[SPEAKER_01]: Yeah, well, well, look, we love to do it and at a time where investors and the industry is worried about things like quantum risk.
3:50
[SPEAKER_01]: We think it's increasingly important to be giving back and contributing to the development of the Bitcoin protocol.
3:57
[SPEAKER_01]: There's some great groups in there that we donate to the human rights foundation, bring another one as well.
4:03
[SPEAKER_01]: And so I'm happy to give back and hope that it helps further the ecosystem for the long term, as you mentioned.
4:11
[SPEAKER_01]: 10, 20, 30, 40 years down the road and ensuring that there's funding towards Bitcoin court developers and continually improving and maintaining the system is really important to us.
4:23
[SPEAKER_00]: Love it.
4:23
[SPEAKER_00]: Well, I'm going to start with the hard question first, get it out of the way.
4:28
[SPEAKER_00]: But I think it's the question that's kind of burning in everybody's mind, burning a hole in everybody's pocket.
4:32
[SPEAKER_00]: We've got Bitcoin down.
4:34
[SPEAKER_00]: Something like 50% or more from its highs back in October.
4:40
[SPEAKER_00]: And many altcoins are kind of down 60, 70% unless you're hyper-liquid then you're up.
4:45
[SPEAKER_00]: Very few are up on the year or up on the past 12 month basis.
4:51
[SPEAKER_00]: But we've got an interesting divergence from traditional markets, RASMP, NASDAQ.
4:57
[SPEAKER_00]: A lot of these different sectors are up charging towards new all-time highs.
5:02
[SPEAKER_00]: And so I kind of want to get your take just with broad strokes on
5:06
[SPEAKER_00]: Can we say what went wrong or what is going wrong in the crypto markets and what might it take to kind of kick us out of this bear market?
5:18
[SPEAKER_01]: Yeah, I mean, definitely, look, that's the question that I think is on everybody's mind certainly a bit wise, my team and myself spent a lot of times speaking with traditional professional investors, financial advisors, family offices, RAs, etc.
5:39
[SPEAKER_01]: 50% from all time highs when you see equities trading at new all time highs almost every other week or so this year and so I think it's really important to dissect and I don't think it's any one thing in particular that happened it's been a combination of several different negative factors that have
5:59
[SPEAKER_01]: brought the price of not just Bitcoin, as you mentioned, basically all crypto assets besides hyper liquid and maybe some hyper liquid competitors or Z cash, for instance, has drawn all these prices down.
6:10
[SPEAKER_01]: I wouldn't note that crypto equities is an area that's done exceptionally well over the past period, where crypto assets have drawn down, which I think is interesting, and we'd love to talk about later, but zooming out when I think about,
6:22
[SPEAKER_01]: What's happened over the past, call it nine months since we hit an all-time high of around 125,000 in October?
6:30
[SPEAKER_01]: I think it's several factors.
6:32
[SPEAKER_01]: We were heading into the fourth year in crypto's famous four-year cycles.
6:37
[SPEAKER_01]: I do believe that became a self-fulfilling prophecy, particularly after the October flash crash, which wiped liquidity out of the ecosystem, and of course, shop prices down and they pretty remarkable fashion instantly.
6:52
[SPEAKER_01]: Bitcoin holders took a step back and said, wow, we've been through this before.
6:58
[SPEAKER_01]: I've held this asset as it's gone up a tremendous amount, and then fallen 50, 60, 70% through perhaps three cycles in the past.
7:06
[SPEAKER_01]: And we finally hit 100k, which maybe was a mental hurdle that they had hung themselves to when they bought Bitcoin or over the years.
7:15
[SPEAKER_01]: And I think they just said, look, I'm out for now.
7:16
[SPEAKER_01]: I don't want to go through this again, and then wait another three years or four years for prices.
7:21
[SPEAKER_01]: to recover and I think the data supports that there was a lot of long-time holder selling their Bitcoin and I do believe that becomes a self-fulfilling prophecy to a certain extent.
7:31
[SPEAKER_01]: I know I don't think it's the only factor though.
7:33
[SPEAKER_01]: I think there's several other factors that played a role.
7:35
[SPEAKER_01]: Some macro, some crypto specific.
7:39
[SPEAKER_01]: Happy to unpack those if you guys are interested in my thoughts there.
7:42
[SPEAKER_00]: Yeah, certainly am.
7:44
[SPEAKER_02]: What were you going to say, Brennan?
7:47
[SPEAKER_02]: Yeah, no.
7:47
[SPEAKER_02]: I was going to say the same thing.
7:48
[SPEAKER_02]: I was curious because there does feel like there's so many different ways to look here, right?
7:53
[SPEAKER_02]: Do we look at just the crypto market?
7:55
[SPEAKER_02]: Do we just look at the four-year cycle?
7:57
[SPEAKER_02]: Do we try to look at the traditional financial markets and earnings?
8:00
[SPEAKER_02]: And are we going to get a rate cut or a rate hike?
8:03
[SPEAKER_02]: Are we going to look at the geopolitical stuff like there's so many different ways to kind of turn your head here and think This is what I should be paying attention towards
8:11
[SPEAKER_02]: But I'm curious, you know, how do you even manage a market like this?
8:15
[SPEAKER_02]: And what kind of catalyst or maybe points of data are you looking for in regards to potentially getting a turn around or at least an opportunity?
8:25
[SPEAKER_01]: Yeah, well, I think you're exactly right.
8:26
[SPEAKER_01]: You have to think about all those factors that you just mentioned.
8:30
[SPEAKER_01]: So if we zoom out and think about where we were at in Q4 when the price was declining, there were several other factors at play.
8:36
[SPEAKER_01]: We were heading into 2026 with the expectations that we'd have several interest rate cuts, and that we'd get the Clarity Act to pass in Q1 of this year.
8:48
[SPEAKER_01]: And we were coming off of these relatively strong tailwinds with the Genius Act being signed and very strong ETF.
8:56
[SPEAKER_01]: in flows and corporations like strategy and a bunch of other Treasury companies buying crypto assets like Bitcoin, Ethereum, Sloan, etc.
9:05
[SPEAKER_01]: So you had all of these tailwinds and then I think each of those Just kind of blew out going into the new year.
9:11
[SPEAKER_01]: I mean immediately in the new year We had a rise in geopolitical conflict with the US
9:16
[SPEAKER_01]: As actions in Venezuela, and then shortly thereafter, the Iran and US war, you know, reared its head and kind of shook all markets temporarily.
9:25
[SPEAKER_01]: But I think what that did in terms of macro drivers is it reduced the likelihood.
9:31
[SPEAKER_01]: And you see that reflected in the data from last week's FOMC meeting.
9:34
[SPEAKER_01]: It reduced the likelihood of interest rates.
9:36
[SPEAKER_01]: from being cut several, you know, several times to potential interest rate hikes.
9:41
[SPEAKER_01]: And I think that plays a massive force on the price of Bitcoin and crypto assets.
9:47
[SPEAKER_01]: And so I think people look at geopolitical conflict as like the driver, right?
9:51
[SPEAKER_01]: Oh, we had.
9:52
[SPEAKER_01]: the Venezuelan conflict.
9:53
[SPEAKER_01]: Now we have this issue with Iran, et cetera, which like those are drivers, but I think the knock-on effects is what really matters here is that you have prolonged conflict in the Middle East, which drives up the price of oil, which means the inflation expectations going forward or higher, which reduces the likelihood of interest rate cuts in that liquidity impact of higher interest rates rather than lower interest rates,
10:17
[SPEAKER_01]: comes full circle back to crypto assets, which have historically performed well in low rate environment.
10:22
[SPEAKER_01]: So I think that's a pretty strong driver of what's happening here.
10:27
[SPEAKER_01]: The reason why I think that's the case is because if you look at what happened with the price of Bitcoin, you know, use that as an example.
10:33
[SPEAKER_01]: for all crypto assets, it's immediately after the event is way large, geopolitical conflict.
10:39
[SPEAKER_01]: The price of Bitcoin performed recently well, right?
10:42
[SPEAKER_01]: Then you look at what happened immediately with the Iran conflict as the market digested the news, everything sold off, and then Bitcoin rebounded.
10:48
[SPEAKER_01]: And actually, outperform stocks and outperform gold in the period following
10:52
[SPEAKER_01]: the war and then you had the knock on effective okay this is going to have a big impact on markets it's going to have a big impact on inflation it's it's not going away anytime soon seemingly what does that mean for interest rates interest rates of course now are expected to be risen I think that's when you start to have this real negative force.
11:10
[SPEAKER_01]: on the Bitcoin and crypto ecosystem, which historically, as I mentioned, performed well in low rate environments.
11:16
[SPEAKER_01]: So I think that's a major factor.
11:18
[SPEAKER_01]: Other things, of course, that we talked about a briefly a second ago, is the Clarity Act.
11:22
[SPEAKER_01]: It went from like we heard that it was passing at the beginning of the year, to now having what three to four weeks left, of Senate floor time, that we need to get it through.
11:31
[SPEAKER_01]: I know there's a
11:32
[SPEAKER_01]: There's a session schedule to dig into it with the Senate in the next month or so, but the time in the window is closing there as well.
11:42
[SPEAKER_01]: That's a negative factor on a regulatory front.
11:46
[SPEAKER_01]: The interest rates is a kind of macro-negative factor.
11:50
[SPEAKER_01]: And then you have,
11:51
[SPEAKER_01]: slowing ETF flows reversing corporate purchases.
11:54
[SPEAKER_01]: You have the worries about strategy.
11:56
[SPEAKER_01]: I think what Aldrich combines to is the perfect storm for crypto that aligned with this four-year cycle prophecy that clearly became self-fulfilling and all of those things put us smack dab in the middle of a classic crypto winner.
12:11
[SPEAKER_00]: Well, hopefully if the self-fulfilling prophecy worked on the way down, it will work in reverse back on the way up as it typically does, right?
12:19
[SPEAKER_00]: Because, you know, typically there's like the drawdown for about a year, you know, anywhere 300, 400 days after that, so October, two october, we'll have a bad year, and then we'll start that sort of three-year chug back on the way up towards new all-time highs.
12:40
[SPEAKER_00]: Very curious to see the, yeah, but the whole 10 10 thing, right, the October 10th, like, I think, I mean, that really seems like a day that it broke a lot of the correlations to M2 money supply as well.
12:51
[SPEAKER_00]: I mean, if you guys remember Bitcoin was tracking and the crypto market cap was like, if M2 was going up, Bitcoin was going up, if M2 was going down, and then that day happened, and it really did rock the world.
13:02
[SPEAKER_00]: And that correlation broke the correlation with, with equities broke
13:10
[SPEAKER_00]: actually a little bit before then like we've dropped our basically one year rolling correlation to equities and so that you know has been something typically when risk on is in the markets you know crypto goes up and it's just like this correlation trade and that's completely broke.
13:25
[SPEAKER_00]: And when I feel like and I'm curious if from your standpoint you saw this like I don't know if market makers got scared out of the market or if some just got completely wiped out I know funds that you know got wiped out during that period auto de leveraged that was a really defining moment and it seems like.
13:43
[SPEAKER_00]: You know, I don't know, it kind of was the the wizard of Osmo when the curtain gets pulled back and you see like who's behind the curtain you're like, oh my gosh, Binance is like running on, you know, twigs and sticks practically compared to the traditional markets.
13:57
[SPEAKER_00]: And so we're just not going to touch this until it gets real regulation because there was no recourse.
14:02
[SPEAKER_00]: You can't go knock on Binance's door and say, hey, like give me my money back.
14:06
[SPEAKER_00]: You know, I'm going to do this.
14:07
[SPEAKER_00]: I'm going to do that.
14:08
[SPEAKER_00]: I mean,
14:08
[SPEAKER_00]: it's just a lot more difficult.
14:10
[SPEAKER_00]: Whereas if you're on the CME or you're using interactive brokers and like there's much more security around like the leverage that you're using and margin and all that kind of stuff.
14:20
[SPEAKER_00]: Whereas you know people just realize like oh we can't be using coup coin for 50x leverage and like all these you know whatever.
14:29
[SPEAKER_00]: not to throw any of these guys under the bus or anything.
14:31
[SPEAKER_00]: It was just a big moment that people realized.
14:34
[SPEAKER_00]: And so market structure kind of got just decimated and I think we're healing from that.
14:40
[SPEAKER_00]: I think it's good.
14:41
[SPEAKER_00]: You alluded to the Clarity Act.
14:42
[SPEAKER_00]: That's going to be like the first next big step to getting like, you know, institutional money comfortable.
14:49
[SPEAKER_00]: Um, but I also saw like, um, you know, some of these other companies like yourself and, um, T-Row price was one that I just saw on the news, just the other day launching a new ETF where it actively manages 15 different commodity cryptos, um,
15:05
[SPEAKER_00]: And so, you know, you could see sort of the writing on the wall, the big asset managers.
15:09
[SPEAKER_00]: You know, I think they got two trillion under management.
15:11
[SPEAKER_00]: These guys are going to start coming in as there's more clarity and launching these more, you know, innovative products and stuff that are going to be trying to outperform indexes.
15:20
[SPEAKER_00]: But, um, yeah, it just seems like, you know, you know, you know, you know, you know,
15:23
[SPEAKER_00]: That 10, 10 day was really a bad day, sad day, but we're slowly starting to make our way back.
15:31
[SPEAKER_00]: I think the clarity axe can happen.
15:33
[SPEAKER_00]: But yeah, at the end of the day, this has been a really trying period here in the market.
15:38
[SPEAKER_00]: So,
15:39
[SPEAKER_00]: Yeah, definitely, you know, curious to kind of get your thoughts on, you know, is there going to be something in particular that kind of kicks us out of this bear market as opposed to, you know, just time.
15:52
[SPEAKER_00]: And is it going to be something like people starting to value altcoins or value cryptos based on cash flows and like that narrative to start kicking and
16:03
[SPEAKER_00]: Um, or is it just we got to wait for the rate cuts.
16:05
[SPEAKER_00]: We got to wait for, you know, the war to like officially come to an end.
16:09
[SPEAKER_00]: Like how are you kind of thinking about it.
16:11
[SPEAKER_01]: Yeah, I mean, I think these are all really great points.
16:12
[SPEAKER_01]: This isn't kind of point.
16:14
[SPEAKER_01]: It speaks to this.
16:18
[SPEAKER_01]: Combination of negative factors that have put us to where we're at today, right?
16:22
[SPEAKER_01]: It's easy to see in hindsight, but when you look back over these several cycles that crypto's been through, there's always been this kind of market structure decimating catalyst.
16:34
[SPEAKER_01]: Right?
16:34
[SPEAKER_01]: It was the ICO craze in 2017.
16:40
[SPEAKER_01]: It was the collapse of Luna, then C5 Lenders, then FTX in 2022.
16:47
[SPEAKER_01]: Totally.
16:47
[SPEAKER_01]: I think this 10, 10 moment where you saw a massive leverage wipe out in the crypto ecosystem, the biggest that's ever occurred in crypto is another one of those moments.
16:58
[SPEAKER_01]: And of course, you have knock on effects of those that
17:01
[SPEAKER_01]: For funds and firms that were overexposed, even individual investors who got wiped out because maybe they were using platforms or vaults that were unregulated or underregulated.
17:12
[SPEAKER_01]: And those kinds of things have the snowball effect to take down liquidity in the ecosystem, sentiment, et cetera.
17:20
[SPEAKER_01]: So I think that's exactly what sparked this fire.
17:24
[SPEAKER_01]: I mean, the other thing that we haven't talked about yet, which I definitely think is contributing to
17:28
[SPEAKER_01]: the lack of performance or the underperformance of crypto relative to equities is this capital rotation that's clearly happened into AI equities and IPOs are we just have the world's largest IPO of all time two weeks ago right and so you can't you can't think about what's happening
17:47
[SPEAKER_01]: to crypto in too much isolation in terms of capital rotation.
17:51
[SPEAKER_01]: I mentioned that we spend a lot of time at the why speaking to Wall Street and financial advisors all around the country and really the world and what I can tell you is they are 100% focused on equities and very few of them are hyper-focused on crypto at the moment.
18:08
[SPEAKER_01]: Now that doesn't mean any all advisors and all wealth managers are ignoring crypto.
18:12
[SPEAKER_01]: It just means that most of their attention is going elsewhere and with that attention capital follows and so I think that that's a big factor here.
18:22
[SPEAKER_01]: I mean, you mentioned the relationship between global money supply and Bitcoin performance breaking down really starting in Q4 of last year and that's actually something we've been asked about quite frequently over the past few months and you know the the interesting thing that I that I point to when I speak to wealth managers who are trying to understand what's going
18:51
[SPEAKER_01]: The growth in global money supply, rather than changing global money supply, is responsible for driving about 50% of Bitcoin's returns.
19:01
[SPEAKER_01]: But what that means is that there's another 50% of drivers of Bitcoin returns that is not related to money supply.
19:09
[SPEAKER_01]: And I think those are other macro factors like interest rates, which of course have an impact on money supply, but have a more direct impact on things like investor sentiment, et cetera.
19:20
[SPEAKER_01]: their regulatory factors, the clarity acting one that we spoke about in terms of crypto-specific regulatory factors.
19:28
[SPEAKER_01]: And then there's other things like demand versus supply.
19:31
[SPEAKER_01]: And of course, we've had a huge slowdown in ETF purchases.
19:35
[SPEAKER_01]: very huge sodium and corporate purchases.
19:37
[SPEAKER_01]: I think the ETF purchases is explained by both the price action and the capital rotation.
19:43
[SPEAKER_01]: The corporate purchases is of course one of the things that got crypto out over at skis last year.
19:48
[SPEAKER_01]: We had this crazy wave of treasury companies coming in and in raising a ton of capital buying crypto, now they're trading a massive discounts.
19:56
[SPEAKER_01]: Everyone's worried about strategy and stretch and
19:59
[SPEAKER_01]: Tom Lees at the area and treasury company and their similar products, et cetera, et cetera.
20:03
[SPEAKER_01]: And so I just think that all of these things right now are creating a crazy kind of time to understand what's driving crypto and really impacting sentiment.
20:13
[SPEAKER_01]: What I will say is doing out is that I think all of these things will turn positive for crypto over the long term.
20:20
[SPEAKER_01]: And I think absolutely what happens with capital rotation is it eventually finds its way to rotate out of the hottest thing and back into other things.
20:29
[SPEAKER_01]: back into crypto and other asset classes.
20:33
[SPEAKER_01]: I think that the uncertainty around interest rates is probably overblown.
20:39
[SPEAKER_01]: Net net, my expectations is that we don't get any hikes or cuts this year.
20:44
[SPEAKER_01]: Now, that's my expectation.
20:46
[SPEAKER_01]: I could be wrong about that, but just the change from having the likelihood of several interest rate cuts to no rate cuts impacts investor sentiment and how investors allocate
20:56
[SPEAKER_01]: capital.
20:56
[SPEAKER_01]: If you think about it on a personal basis, perhaps you've been waiting to buy a house for interest rates to come down, and now you think they're going to go up.
21:04
[SPEAKER_01]: Are you going to stay out of the market for a couple more years, or for a couple more months in waiting to see, are you going to rush to buy?
21:09
[SPEAKER_01]: I don't really know everyone's different, but the reality is it changes.
21:14
[SPEAKER_01]: The way investors think no investors like uncertainty markets hate uncertainty, so I think that causes some issues.
21:19
[SPEAKER_01]: I think we'll turn through the Clarity Act noise over the next few months.
21:23
[SPEAKER_01]: I don't say noise to imply it doesn't matter, but I just think the uncertainty of whether it's going to pass or not needs to work its way through.
21:30
[SPEAKER_01]: the market.
21:31
[SPEAKER_01]: I think it's about a coin flip.
21:32
[SPEAKER_01]: I know you mentioned Bryce.
21:33
[SPEAKER_01]: You think it's likely to pass some days.
21:35
[SPEAKER_01]: I feel the news flow indicates it is.
21:37
[SPEAKER_01]: I will say that we spend a lot of time talking to folks that spend time in DC and recently they've been pretty pessimistic about the likelihood of it passing in part because the window to pass is short but also there's this big divisions on things like ethics provisions and d5 and so far all the focus has been on
21:58
[SPEAKER_01]: And then I think eventually, as I mentioned, capital rotates back, strategy, other Bitcoin Treasury companies will continue to find ways to accumulate Bitcoin.
22:06
[SPEAKER_01]: Traditional investors who allocate through model portfolios or use wealth managers who are just now getting approval to allocate to Bitcoin ETFs and crypto ETFs, they will soon start adding one, two, three, five percent allocations a crypto to their portfolios and these are long-term.
22:23
[SPEAKER_01]: kind of passive inflows into the assets and so like those are long those are short-term headwinds that will turn in favor of crypto just as they turn against crypto that happens all the time in markets and in cycles.
22:34
[SPEAKER_01]: The long-term drivers are still there like if you think what I like about the money supply data that shows that it drives up 50% of a big coin performance is that like you can just do mountains they look do you think money supply globally is
22:50
[SPEAKER_01]: And I think if anyone said they think it's going to shrink, I would, I would call them crazy, because it's just not going to.
22:57
[SPEAKER_00]: Yeah.
22:57
[SPEAKER_01]: And I think that makes it easier to zoom out and say, what, what assets do I want to own in that environment?
23:04
[SPEAKER_01]: And how do I think crypto perform in that environment?
23:06
[SPEAKER_01]: And then you have all these other things which create short-term tailwins, which I think will turn in favor of crypto over the long term.
23:13
[SPEAKER_00]: Yeah.
23:14
[SPEAKER_00]: That's incredible.
23:16
[SPEAKER_00]: I love all that.
23:16
[SPEAKER_00]: You know, kind of double-clicking on the ETF stuff.
23:20
[SPEAKER_00]: I think we're coming out of a period last half, back half, a last month, first half of this month.
23:26
[SPEAKER_00]: There was a period where we had like 13 days of net outflows, which was a record for the ETFs.
23:32
[SPEAKER_00]: And so these products are great.
23:34
[SPEAKER_00]: They still have accumulated, I think, over $50 billion of
23:41
[SPEAKER_00]: And so it's still, you know, one of these, you know, BlackRock's most successful product in terms of how quickly it got $200 billion under management.
23:52
[SPEAKER_00]: I think Morgan Stanley said it was their quickest, you know, best launch on day one.
23:57
[SPEAKER_00]: You know, you guys have had a blowout, but this does cut both ways.
24:01
[SPEAKER_00]: When investors get really bearish on the market, they could just as easily sell it.
24:06
[SPEAKER_00]: Um, you know, they don't have to go fumble through their cold storage and, you know, send it to Coinbase any more and then halfway through like, Is it even worth it?
24:13
[SPEAKER_00]: I'm just going to sit it out, right?
24:14
[SPEAKER_00]: So it's like the ease of the product, the leverage on the product that you can get, the options you could write on it.
24:20
[SPEAKER_00]: All this is kind of suppressed volatility.
24:22
[SPEAKER_00]: Um, you know, do you see this?
24:25
[SPEAKER_00]: Uh, and by the way, since that 13 day outflow, we've had, you know, some positive days, some negative days.
24:31
[SPEAKER_00]: So it's kind of started to, to oscillate.
24:36
[SPEAKER_00]: Is there any signal in any of that or is it just, you know, hey, this is, you know, when the market's down, people are going to be selling when the market's up, people are going to be buying.
24:44
[SPEAKER_01]: Yeah, I mean, I think it's a little bit of both.
24:47
[SPEAKER_01]: I mean, certainly the ETF inflows, which led directly to a ton of buying of Bitcoin because as you operate in ETF, you take in inflows, you go and buy the underlying spot on crypto asset in terms of Bitcoin or crypto spot ETFs.
25:01
[SPEAKER_01]: And so that creates demand for the asset and that drives the price up and then the inverse is true without flows, go out.
25:08
[SPEAKER_01]: Look, ETFs are going to have inflows.
25:10
[SPEAKER_01]: They're going to have outflows.
25:11
[SPEAKER_01]: We spoke a lot with investors and publicly saying that yes, it's incredible that we've had news record setting inflows in terms of Bitcoin ETFs.
25:19
[SPEAKER_01]: But we should make sure everyone's aware that there will be periods where you see outflows.
25:25
[SPEAKER_01]: It's not only true for Bitcoin ETFs.
25:28
[SPEAKER_01]: The same was true for Gold ETFs or other ETFs.
25:31
[SPEAKER_01]: Zoom me out over the long terms, ETS has seen an incredible amount of inflows, not just for crypto, but they've grown from like zero to 20 plus trillion over the past 20 to 30 years.
25:43
[SPEAKER_01]: And so, you know, a lot of that has to do with passive inflows from 401k's or investors that just allocate every single paycheck index funds drive a lot of inflows into assets.
25:53
[SPEAKER_01]: You mentioned earlier, Bryce, that, you know, we've moved kind of beyond spot crypto, ETS,
26:00
[SPEAKER_01]: Some asset managers, including Bitwise, launching Index Fund ETFs.
26:06
[SPEAKER_01]: I think that will be a long-term massive source of buying pressure and demand into the leading crypto assets.
26:13
[SPEAKER_01]: And that spreads out beyond Bitcoin.
26:16
[SPEAKER_01]: It also makes the decision easier for a lot of allocators.
26:19
[SPEAKER_01]: You don't spend that much time thinking about crypto, but want to have broad exposure.
26:23
[SPEAKER_01]: It's the same way they allocate to other asset classes, like equities, like other alternative asset classes, like private credit, real estate, et cetera.
26:34
[SPEAKER_01]: And so I do believe that index funds will be a massive, an index fund adoption by traditional investors will be a massive long-term tailwind.
26:42
[SPEAKER_01]: But yeah, the flows matter.
26:43
[SPEAKER_01]: Certainly, I do think there's signal inflows, but a lot of, you know, with a lot of things, flows follow price, both up and down.
26:51
[SPEAKER_01]: I'd give an anecdote from what we're seeing when we spend time with some of the major wealth management platforms.
26:57
[SPEAKER_01]: Is that there, you know,
26:59
[SPEAKER_01]: I, uh, what was this two weeks ago now?
27:01
[SPEAKER_01]: Yeah, two weeks ago now.
27:02
[SPEAKER_01]: I was at a conference of going to a leading wirehouses in, uh, in the world, right?
27:06
[SPEAKER_01]: There's four major wirehouses.
27:07
[SPEAKER_01]: These guys manage trillions of dollars.
27:09
[SPEAKER_01]: They have the best wealth managers, uh, in many cases, uh, in the world.
27:13
[SPEAKER_00]: Is that like Bank of America, uh, like who, who were the main wirehouses?
27:16
[SPEAKER_01]: Yeah, Bank of America, well, as far goes, there's four of them.
27:22
[SPEAKER_01]: and they control like trillions and trillions like such a huge number.
27:25
[SPEAKER_01]: I don't think we'll wrap them on from how big trillions are, but they keep on.
27:30
[SPEAKER_01]: Yeah, well, they control it.
27:33
[SPEAKER_01]: I don't know.
27:33
[SPEAKER_01]: I don't know.
27:34
[SPEAKER_01]: I don't know if it's come back down over the past two days or so, but we don't like so much.
27:39
[SPEAKER_01]: Well, they control.
27:40
[SPEAKER_01]: And so I was meeting with several of these at a conference.
27:43
[SPEAKER_01]: And the questions they're
27:47
[SPEAKER_01]: Our questions that you would hear typically early in someone's journey into crypto, right?
27:52
[SPEAKER_01]: For example, I was asked, how do you know 21 million Bitcoin will ever exist?
27:56
[SPEAKER_01]: Can't they just create more?
27:58
[SPEAKER_01]: Right.
27:58
[SPEAKER_01]: Now for those of us that have been in crypto for a long time, that's a hurdle we got over.
28:03
[SPEAKER_01]: very, very early on in our journey, and if you think about how much of you invested in crypto once you've gotten through that hurdle, and then the other questions that were asked around can't the government just regulate this away, like just before mining even mean, like how are they pulling these like digital things out of the ground?
28:20
[SPEAKER_01]: It was like actually a question that I was asked two weeks ago.
28:24
[SPEAKER_01]: And so I think you have to level certain from how early they are in their adoption cycle and of course after the understanding then comes the allocations and I bring that up because I bring that story up because that's indicative of where the traditional wealth management industry is in terms of crypto adoption and if they're there with Bitcoin
28:45
[SPEAKER_01]: Many of them haven't even heard of Solana, definitely haven't heard of HyperLickWit, many of them haven't heard of Ethereum, that doesn't mean they'll never invest in them, but I just think it means that it's much slower than people.
28:56
[SPEAKER_01]: Assume, it's also why I think index funds will be really big is because you can just buy an index fund to have exposure to all the things in crypto without having and and pick and choose winners on a one by one basis.
29:09
[SPEAKER_02]: Well, one of the things you mentioned earlier was crypto equities and for the listeners out there that's basically referring to these crypto based stocks for the most part and you mentioned that they've been performing pretty well and it sounds like a lot of different portfolio managers are kind of focused over there as well.
29:28
[SPEAKER_02]: I'm just curious, which crypto equities or which type of crypto equities do you like the most or are you the most interested?
29:36
[SPEAKER_02]: Because you have minors, you have brokerages, you have service providers, there's dots out there.
29:42
[SPEAKER_02]: What do you find the most interesting and which ones are you maybe paying the most attention to?
29:47
[SPEAKER_01]: Yeah, I mean, I think this is a really interesting topic to explore.
29:49
[SPEAKER_01]: I'm just pulling up some data real quick to kind of show the difference, right?
29:53
[SPEAKER_01]: I mean, so Bitcoin is down what, I don't know, 40% year-to-date, something like that.
30:00
[SPEAKER_01]: Yeah.
30:01
[SPEAKER_01]: The white innovators index, which tracks 30, publicly traded crypto companies, is up 30% year-to-date, 33% year-to-date, right?
30:11
[SPEAKER_01]: I'm like, that's a crazy divergence.
30:15
[SPEAKER_01]: a year ago or four years ago, this launched in 2021, they moved somewhat in lockstep with crypto accuracy as being high beta to Bitcoin.
30:25
[SPEAKER_01]: And I think the reason for the divergence is too fold, and then I'll get to kind of the specific companies that we like or types within there.
30:33
[SPEAKER_01]: But I think the reason that you've seen crypto equity is diverged from crypto assets.
30:37
[SPEAKER_01]: is because you have a wider breadth of crypto companies going public these days than you did three or four years ago, right?
30:47
[SPEAKER_01]: You have companies like figure which give you tokenization exposure.
30:50
[SPEAKER_01]: You have circle which gives you stablecoin exposure.
30:52
[SPEAKER_01]: I mean we've had several mega IPOs
30:54
[SPEAKER_01]: Of course not to the tune of space X, but I say mega IPO in terms of crypto world this year and before that you really have this huge slow down an IPO is traveling back to the Coinbase IPO Of last cycle and so that you have more public traded companies in crypto that are high quality entering the space
31:14
[SPEAKER_01]: you also have some other tailwinds around AI because many of these Bitcoin miners have spent the past decade building out massive data centers that now all of a sudden they're extremely high demand by by AI companies right and so they're able to diversify their revenues and grow their businesses in other ways outside of just Bitcoin mining and price appreciation
31:41
[SPEAKER_01]: business where margins are really tough.
31:44
[SPEAKER_01]: So now they have this other tailwind and they can toggle back and forth between the two and as Bitcoin price action comes back, they'll toggle on Bitcoin mining and as it moves, they'll you know, allocate to AI and so that's an example of why you've seen this decoupling of other drivers that push crypto equity's higher than you do crypto assets.
32:04
[SPEAKER_01]: Some drivers are the same, some drivers.
32:06
[SPEAKER_01]: are different.
32:07
[SPEAKER_01]: I think within the crypto equity sector, you have some really interesting areas.
32:11
[SPEAKER_01]: I actually find Bitcoin miners super fascinating.
32:14
[SPEAKER_01]: Many of these Bitcoin miners I doubt thought about AI as a secondary revenue stream 10 years ago when they started building these data centers.
32:23
[SPEAKER_01]: But they've ultimately created a really successful business in building out these data centers and locking down these these agreements with power and energy companies.
32:32
[SPEAKER_01]: And I think that'll continue to be a tailwind for them.
32:33
[SPEAKER_01]: So I find them super.
32:35
[SPEAKER_01]: Interesting.
32:35
[SPEAKER_01]: I think we'll see consolidation in the minor space both in terms of the mom and pop miners continue to be absorbed by the larger miners.
32:43
[SPEAKER_01]: It's, you know, harder for them to compete with lower Bitcoin prices and an already tight margin business.
32:48
[SPEAKER_01]: I also, you know, as we're seeing some miners are actually pivoting fully away from AI.
32:53
[SPEAKER_01]: I think that leaves room for land grabs for miners who want to do both or want to stay pure plain miners.
32:58
[SPEAKER_01]: So I think that area is
33:04
[SPEAKER_01]: feet in both worlds crypto and AI, stable coin issuers like circle, tokenization platforms like figure, crypto exchanges like Coinbase on massively bullish on all three of those companies in the financial services sector within.
33:21
[SPEAKER_01]: Crypto, if I zoom out and think what's going to happen to stablecoins and tokenization over the next decade, right, those are going to at least in my opinion, and I think many people believe this grow many, many, many times over as they grow into trillion dollar plus markets, and a lot of investor Jaskas, where will that value accrue?
33:40
[SPEAKER_01]: And of course, some of it, we believe will accrue to the underlying infrastructure, the Solana, as the Ethereum, the hyper liquids, the chain links of the world.
33:49
[SPEAKER_01]: But of course, some that will also crew to the service providers, he's publicly traded companies who have licenses and provide the business facing and institutional facing products.
34:00
[SPEAKER_01]: And I think getting exposure to those mega trends is really important.
34:03
[SPEAKER_01]: In crypto activities help you do that in a really compelling way.
34:08
[SPEAKER_01]: And then I would just last thing I'll add here is that the convergence of crypto and AI creates this really, really interesting.
34:15
[SPEAKER_01]: space with crypto equities that I think most of Wall Street has completely missed outside of the miners.
34:22
[SPEAKER_01]: In my view Coinbase for instance is going to at some point the scent of Coinbase's AI
34:31
[SPEAKER_01]: Opportunity is going to be caught on to by Wall Street.
34:34
[SPEAKER_01]: And I think it will massively catch up these other names that have rallied in the AI tailwinds.
34:39
[SPEAKER_01]: They're X402, which allows agentic payments from agent to agent on HTTP.
34:45
[SPEAKER_01]: Super fascinating.
34:46
[SPEAKER_01]: That's a massive market.
34:47
[SPEAKER_01]: Agentic finance is going to be.
34:49
[SPEAKER_01]: huge.
34:50
[SPEAKER_01]: They're going to need ways to pay.
34:52
[SPEAKER_01]: They're going to use stablecoins.
34:54
[SPEAKER_01]: Well, Coinbase has massive stablecoin exposure.
34:57
[SPEAKER_01]: Who knows if Coinbase gets into the data center space, but I wouldn't be shocked to see that.
35:03
[SPEAKER_01]: They just rolled out the worlds.
35:05
[SPEAKER_01]: I think first,
35:07
[SPEAKER_01]: Regulated investment advisor agent, which is like incredible to me as someone in the wealth management industry for over a decade, like that is So fascinating to me and is clearly the next evolution of wealth Management at least for a portion of the market So anyways, I'll stop there, but but I think crypto equities are fascinating because they have several different
35:30
[SPEAKER_01]: tailwinds or they combine several different tailwinds that maybe aren't as clear for crypto assets as they can be with with crypto equities.
35:38
[SPEAKER_00]: Yeah, no, I love that.
35:39
[SPEAKER_00]: And I could definitely see the next big winners of this next bull cycle kind of concentrating the bulk of the gains in equities or in, you know, these crypto equity ETFs and things that you offer, which I want to dive into
35:58
[SPEAKER_00]: I'll call it the altcoin question right where it's just like, hey, at the end of the day are these things of viable.
36:06
[SPEAKER_00]: investment instrument are these things you know and obviously we've got some that have done extremely well hyper liquid we've mentioned who didn't pioneer the buyback in burn by any method by any means but they mastered it I would say you've got things like sky formerly you know maker dow which has been around for years and years ten years now at this
36:36
[SPEAKER_00]: or add to a liquidity pool, certain, based on a certain percentage of their fees, a lot of these have the fee switch kind of there, just in case they want to switch over, but I guess the long-winded way, all kind of narrow it down is basically what will define the winning altcoins.
36:58
[SPEAKER_00]: What will it be a certain metric will it be a certain model like if you had you know 1,000 bucks or whatever that you were going to buy you know 10 different altcoins like not saying what with those altcoins be but What would they look like you know they would all have great network growth or daily active users like what is it that really is attractive to you right now.
37:20
[SPEAKER_01]: I love this question in part because I think the answer is very different today than it was three years ago.
37:26
[SPEAKER_01]: A lot more clear today than it was three years ago and I think a big reason for that is the regular tournament to behind the crypto industry.
37:34
[SPEAKER_01]: You mentioned things like hyper liquid, which of course we run the world's largest hyper liquid ETF.
37:40
[SPEAKER_01]: A bit wise, we have, you know, we also use 10% of the revenue generated
37:45
[SPEAKER_01]: from that product to buy an old hype on our balance sheet, so we're going to leave it in the hyperlink with ecosystem.
37:51
[SPEAKER_01]: But I think, you know, that's one great example of this kind of post pro crypto regulatory shift.
38:00
[SPEAKER_01]: It's one of those assets that's come out of that that's benefited from that because now
38:05
[SPEAKER_01]: the these platforms and these tokens can say look we are going to accrue value from the underlying network and products we are creating and we're going to pass that value on to our investors.
38:20
[SPEAKER_01]: They couldn't do that before because Gary Gens there was a haunting them, you know, in their dreams and nightmares and like they thought Senator Warren was going to take her army and like break down their
38:35
[SPEAKER_00]: So now you're a Gensler and Elizabeth Warren memes here.
38:41
[SPEAKER_01]: Exactly.
38:42
[SPEAKER_01]: I mean exactly.
38:43
[SPEAKER_01]: We use those memes or we've seen those memes, but like those were real feelings that these people had and you saw that reflected in the geoblocking of US users or the moving off shore of all of this crypto infrastructure and in the way that these tokens were designed from a tokenomics perspective and I think you couldn't have these
39:02
[SPEAKER_01]: foundations or these labs companies, which now are kind of merging back and really putting all of their effort behind building a valuable ecosystem that accrues the underlying token.
39:13
[SPEAKER_01]: You couldn't have that back then because the risk to those individuals and to those companies was just too high and you didn't have
39:22
[SPEAKER_01]: investors putting capital there because the risk was just too high and now what we've seen is a pro crypto SEC and CFDC in a lot of ways a pro crypto congress and of course White House come in and say look we're going to create the sandboxes and innovation exemptions to allow this industry to come back on shore be accessible by U.S. investors and find ways to
39:46
[SPEAKER_01]: crew value from and generate value with this innovative technology.
39:50
[SPEAKER_01]: So I think HyperLick would as a great example of that.
39:53
[SPEAKER_01]: Of course, using 99% of fees to buy and burn the token is an incredible buyback.
40:00
[SPEAKER_01]: When you stack it against things like the S&P 500, average buyback of like 2% or something, HyperLick with is like 5% of the market cap.
40:09
[SPEAKER_01]: So it looks more attractive to traditional investors.
40:13
[SPEAKER_01]: It is more attractive than crypto assets typically have.
40:16
[SPEAKER_01]: And in terms of passing value on to investors, I think that's one reason why hypergluggets done so well.
40:20
[SPEAKER_01]: And it's why you're starting to see, I don't want to call them copycats because I don't want to disparage the projects that are kind of pivoting this way, because I think this is a great way to think about it.
40:29
[SPEAKER_01]: But you've seen a lot of models replicating hyperlink with in terms of increasing the buyback.
40:35
[SPEAKER_01]: You've seen others who focus on using revenue and cash flow to investing growth.
40:41
[SPEAKER_01]: That's also typical of startups, and I think that's a really good strategy as well, but zooming out and starting to kind of weave through the answer here, but to answer your question, I think the projects that are really going to benefit over the long-term and do well are those that focus on growth and monetization as if they were traditional startups.
41:03
[SPEAKER_01]: It's incredible to build a network that is used globally 247 that the world's largest enterprises financial institutions are building on top of, but there's not a big reason for investors to put capital into that ecosystem in own the underlying asset, unless they expect to see some monetization of that network.
41:24
[SPEAKER_01]: I used a lot of buzzwords there, so what do I mean by that?
41:26
[SPEAKER_01]: It's like they need to figure out ways to generate revenue and pass that revenue onto investors and grow their businesses.
41:32
[SPEAKER_00]: Yeah, I love that, and I hope that some of those gives me TFs.
41:38
[SPEAKER_02]: And it sounds like what you're saying here is that it kind of comes down to two things.
41:42
[SPEAKER_02]: Number one, actually producing some real revenue, right?
41:45
[SPEAKER_02]: Making money, and then the other thing is somewhat just tokenomics, right?
41:50
[SPEAKER_02]: How can the projects themselves actually deliver value back to the holders?
41:55
[SPEAKER_02]: If you go and you look at the stock market, well, if your own share is your own, you know, a very small fraction of the underlying company, if it's publicly traded, and thus you're getting kind of a piece of the pie in that way.
42:06
[SPEAKER_02]: Now, some pay dividends, some don't, there's a lot of nuance that can be involved with it, but
42:12
[SPEAKER_02]: I'm curious if with crypto equities becoming more popular and there's more of them coming out there and the space is becoming more mainstream, I'm curious if because crypto equities are judged off of earnings, if maybe now people are starting to look at crypto projects and judge them off of a similar base as well.
42:33
[SPEAKER_02]: The other thing here is that maybe in addition to just that thought, that crypto has started to be around for a little bit longer now, right?
42:41
[SPEAKER_02]: It's not one year, five years, ten years old.
42:44
[SPEAKER_02]: You start having the crypto space mature.
42:46
[SPEAKER_02]: It's reached at one point a multi-chilling dollar market cap.
42:50
[SPEAKER_02]: You have a lot of these different projects that have been around for years now.
42:53
[SPEAKER_02]: And people are starting to say, I think kind of like what you said is more of like an investor or traditional mindset when it comes to this stuff, which is, hey,
43:02
[SPEAKER_02]: How can I benefit off of this underlying token and how is it going to give back to me?
43:09
[SPEAKER_02]: And in order to do that, there has to be some sort of money coming in as well, and some sort of activity more than just saying, hey guys, here's the potential in hoping that maybe it comes.
43:20
[SPEAKER_01]: Yes.
43:21
[SPEAKER_01]: I think that's exactly right.
43:22
[SPEAKER_01]: We're moving from the phase of here's a cool concept.
43:25
[SPEAKER_01]: Let's see if it gains traction and we'll figure out how to monetize it later.
43:29
[SPEAKER_01]: I believe we're moving from that phase of crypto, which was important to grow awareness and adoption and grow the industry.
43:36
[SPEAKER_01]: But I think we're now moving to a show me how that system and that innovation and that new product and that growth captures value as an investor.
43:47
[SPEAKER_01]: And I know that there's a cohort of crypto enthusiasts and builders who hate that, right?
43:56
[SPEAKER_01]: And like that is the reality.
43:57
[SPEAKER_01]: There are many people like Ghana crypto because of its desire to not extract value and create public goods.
44:06
[SPEAKER_01]: But I think investors are investing in crypto because they want to derive value from this innovative technology.
44:13
[SPEAKER_01]: Like they wouldn't be investing in AI companies as an example, if these AI companies weren't generating revenue to the tunes of tens or hundreds of billions in run rate, right?
44:23
[SPEAKER_01]: So if you're competing with investors,
44:25
[SPEAKER_01]: All right, sorry if you're competing with AI companies for capital from investors, that's what you're competing with right and that's why capital is rotated away from crypto this doesn't apply to Bitcoin, because of course Bitcoin isn't really comparable it's more of a gold like asset, but it compares to all the other crypto assets which are built around providing a product and generating fees on that products usage and growth and so I think it's been going to become increasingly important there are some.
44:51
[SPEAKER_01]: blockchains and apps that have incredible modes but I think they'll have to defend those modes increasingly when it comes to investors around how are you monetizing, how are you growing revenue, you may have to increase fees in order to compete right or drive additional usage but I think we've left the days behind us, all you have to show is product market fit and now you
45:16
[SPEAKER_01]: You know, desire to generate profit and grow your profits and that can be net positive for society and net positive for investors.
45:25
[SPEAKER_02]: Yeah, dude.
45:26
[SPEAKER_02]: I completely agree.
45:27
[SPEAKER_02]: I think what we're going to see here is a whole new breed of altcoins come up.
45:31
[SPEAKER_02]: We're already seeing like a whole new breed of crypto-based equities where now you can get exposure beyond just like one, two or three different crypto stocks out there.
45:40
[SPEAKER_02]: And I think what we'll see kind of usher in with this is just that just again a whole new breed of crypto projects come out and be born from something like this and
45:50
[SPEAKER_00]: I was going to say just to piggyback on that, and I know we only have about five minutes left before the top of the hour, but I can't imagine, like when the clarity act eventually kind of comes to pass, I think there's going to be a lot of new altcoins that actually get launched in the States.
46:07
[SPEAKER_00]: I think people are just waiting for that regulatory clarity before like all new business models, like in existing companies and new companies, I think there's going to be
46:16
[SPEAKER_00]: another Cambrian explosion of altcoin innovation once we get past that because then the rules are going to be written everybody's going to know the right regulations to adhere to and who to report to and like those might be the winners of the next cycle the ones that haven't even been created yet but anyhow just a side thought.
46:35
[SPEAKER_02]: No, it's a good point and what I hope is that for a lot of these old projects that they either adapt or I think they'll die, right?
46:43
[SPEAKER_02]: I think you're going to have a lot of these old projects that maybe are making money, but aren't giving anything back to token holders.
46:48
[SPEAKER_02]: People are going to say, well, why would I put my money in this, you know, token holders get nothing back?
46:52
[SPEAKER_02]: sure there may be being successful, but they're the ones benefiting.
46:55
[SPEAKER_02]: I'll go invest and put my money into the ones where I know I'm going to benefit more from this.
47:00
[SPEAKER_02]: Again, we'll kind of see, but as the space gets competitive, I mean, that's how you get more innovation.
47:06
[SPEAKER_02]: One final thing I just had to ask you about Ryan was,
47:09
[SPEAKER_02]: I've seen the team over there, I think yourself, and maybe some of the other team members, still kind of call for this, maybe 100 plus different crypto ETFs that could launch here inside the US over the course of the next year.
47:21
[SPEAKER_02]: I've got asked, does a drawdown like this change the pace?
47:26
[SPEAKER_02]: of those kind of products or change the way that you maybe look at this and say, oh well, maybe we should delay launching all these other things that are in in store or maybe we should change up what we have in store.
47:37
[SPEAKER_02]: Does that throw a wrench in any of this or are you still saying, let's let's try ahead.
47:41
[SPEAKER_01]: No, it's a really good question, you know, so yeah, we put out at the beginning of the year our predictions for 2026 and one of those was that 100 plus crypto ETFs would would be launched this year if you look back at what's launched since January it's been a phenomenal meal and I don't have the number in front of me, but it's it's there's been so many new ETFs that want to know we've launched a lot and there's other in the space as well.
48:03
[SPEAKER_01]: And these aren't just like spot crypto ETFs, these are income options income ETFs or momentum or factor-based ETFs or indexed ETFs or staking ETFs, et cetera, right?
48:13
[SPEAKER_01]: So there's a wide range of different ETFs that fit this prediction, if you will, of ours.
48:20
[SPEAKER_01]: I don't think the market sentiment changes the approach, at least at bitwise it doesn't.
48:26
[SPEAKER_01]: The way I think about it is that we've had a decade of pent up demand for ETFs without the ability to launch them as an industry.
48:35
[SPEAKER_01]: And with the,
48:37
[SPEAKER_01]: launch a Bitcoin TS in January 2024, then the theory image of lie 2024, then a huge delay until we started seeing things like Solana and HyperLick with ETFs.
48:47
[SPEAKER_01]: We've slowly seen that demand trickle into the market, but a lot of it today is
48:53
[SPEAKER_01]: really held up by how much attention and time that regulators can focus on crypto ETFs and approving these things against the other things that they're focused on right and it is a big initiative for the SEC like the SEC cannot with a thing called project crypto and a crypto task force
49:14
[SPEAKER_01]: like that's an incredible thing to say like three years ago, we were going to be like you guys are crazy or you would have heard crypto task force and like ran the other way.
49:22
[SPEAKER_01]: Yeah, you would have hidden your closet and like called your like mom and cry or something.
49:26
[SPEAKER_01]: But like no, it's to support the growth of crypto.
49:29
[SPEAKER_01]: and crypto innovation.
49:31
[SPEAKER_01]: So when I use that analogy, I guess just around it, I was like, I think there's a huge demand of crypto ETFs to come to market because investors want access and many traditional investors use ETFs and they aren't going to use self-cost to the or crypto exchanges.
49:44
[SPEAKER_01]: They're going to go through their brokerage account or their wealth manager, which for the most part buys ETFs.
49:49
[SPEAKER_01]: It's like a dam and there's a huge flow of water waiting to come through and regulators just slowly let water through based on how they can review and turn through these applications, which is a long and slow process.
50:03
[SPEAKER_01]: So, do I see us as an industry launching a hundred crypto ETFs in 2026?
50:08
[SPEAKER_01]: Yes, do I think it's slowing down because of the market it might be for some firms, but it's not for us a bit wise.
50:19
[SPEAKER_01]: for traditional and retail investors to get exposure to crypto and that includes ETFs and includes vaults and includes staking products and includes private funds.
50:29
[SPEAKER_01]: We're here to support investors gaining exposure to what we believe is one of the most innovative asset classes and innovative technologies of the past few decades and our view is very long term.
50:40
[SPEAKER_01]: So whether the markets down today or this month or this year versus last year or yesterday or last month,
50:45
[SPEAKER_01]: Doesn't matter to us.
50:47
[SPEAKER_01]: Our view is that the markets can grow many many many times over over the next few decades and we want to be there to support investors on their journey.
50:54
[SPEAKER_00]: brilliant.
50:56
[SPEAKER_00]: Really, really appreciate all this really unique insight that folks just couldn't find anywhere else.
51:02
[SPEAKER_00]: And so Ryan, look, we really appreciate your time.
51:06
[SPEAKER_00]: And I've got a whole list of questions that I didn't even have time to go through.
51:10
[SPEAKER_00]: So that means we're going to have to bring you back on whether you like it or not.
51:12
[SPEAKER_00]: We'll set up some more time in a quarter or two.
51:15
[SPEAKER_00]: I know our listeners are going to love it, but um,
51:17
[SPEAKER_00]: Where could people subscribe to your research, whether they're institutions listening or retail guys and gals, and where could people just find out generally a little bit more about the products you offer as well?
51:29
[SPEAKER_01]: Yeah, well, everything that we do is available at bitwiseinvestments.com.
51:33
[SPEAKER_01]: All of the research that we produce is publicly available, and I would urge people to go there.
51:39
[SPEAKER_01]: Matt Hogan, our CIO, writes a weekly newsletter called the CIO memo.
51:44
[SPEAKER_01]: It's five minutes or less read on how we're viewing and what we're seeing in the market.
51:47
[SPEAKER_01]: Would urge everyone to subscribe to those to get our latest thoughts in your inbox every single week.
51:52
[SPEAKER_01]: You can check out everything about our suite of products and different services we provide on our website.
51:57
[SPEAKER_01]: And of course, you can follow us on Twitter.
52:00
[SPEAKER_01]: At Bitwise is our corporate handle, and then I'm available at Rasterly Rock on Twitter.
52:06
[SPEAKER_01]: And would just urge anybody also to reach out to us with any questions.
52:10
[SPEAKER_01]: At research at bitwiseinvestments.com if they want to chat with us.
52:15
[SPEAKER_00]: brilliant.
52:16
[SPEAKER_00]: All right, well, we really are looking forward to the next time we get to chat and everybody at home watching or listening, Spotify, YouTube, Apple, wherever it is, we really appreciate all of your guys' support.
52:28
[SPEAKER_00]: Hold strong through this little bear market.
52:32
[SPEAKER_00]: This two shall pass.
52:34
[SPEAKER_00]: All right, everybody.
52:34
[SPEAKER_00]: We'll see you guys back at same time, same place next week for another great guest.