I've heard it stated that even though Bitcoin ETFs were approved in mid January that most of the retirement Accounts and all the people that would Buy into these ETFs have not bought yet Is that accurate today I interviewed James safer ETF research analyst at Bloomberg intelligence bunch of these ETFs are some of the best launches in History uh I did is one of is arguably The best launch in history to talk about The success the Bitcoin spot ETFs have Seen like right now these things If you just look at the numbers they've Taken in on a net basis including the Outflows for gbtc they've taken in 12 $3 billion since they launched on January 11th and what comes next crypto Twitter is kind of in this bubble where They think it should be inflows every Single day and that is not going to be The case based on what we saw happen to Gold how big could these Bitcoin ETFs be If demand for these ETFs stays similar To what you expect where is that put Price by end of year top of cycle and Watch today's whole video we'll also Talk about the ethereum ETFs but Ethereum ETF do you think that'll happen By end of year if you appreciate these Conversations hit the like button and Let's start dude you've been covering You know the Bitcoin ETFs early early Bitcoin ETFs putting out great data you
And the Bloomberg terminal um just for The folks at home though could you go Over your background and how you got Into Bloomberg and ETFs yeah so um I Actually interned at Bloomberg while I Was still in college and had a full-time Offer while I was uh back at school for My preseason actually so like I went Into my senior year knew I was working At Bloomberg but you the way you go in You don't know where you're going to go I wanted to be on the ETFs and hedge Funds team they were connected together At the time I had done some work at Hedge funds uh prior to that as Internships and I basically pushed Really hard to be covering ETFs and Hedge funds I thought ETFs were the Future still do obviously anyone here Follows me um so I I worked on the back End the data side uh uploading bunch of Information and data maintaining Relationships with different fund Providers namely like like black rocket Invesco the names that everyone is now Familiar with um and then in 2017 I made The jump over to Bloomberg intelligence Which are is where I am now um and That's Bloomberg's research arm um so When I was there I actually split time Between Eric Bel chunis and Mike mclone Our senior commodity strategist uh and Basically within the first couple weeks Of joining Mike he was like what do you
Know about Bitcoin I feel like I need to Start covering it from the commodity Point of view and I was like I know a Decent amount because I had gotten Interested in late 2016 uh into Bitcoin Crypto more broadly so that's where it All started I'm full-time an ETF analyst Now but a lot of I do spend a Significant chunk of time covering Specifically the Bitcoin ETFs crypto ETFs globally um you name it um so yeah That's that was a little bit more Long-winded than I planned but anything ETF related yeah yeah and believe me I I Want this detail because obviously in The first 30 days after approval the Bitcoin ETFs were what everybody was Talking talking about and they're still We're still seeing inflows every day so Could you just give a current state of The Bitcoin ETFs today yeah I mean we're Kind of out of stag it's stagnating I Guess is what I would say um but just Looking but like right now these things If you just look at the numbers they've Taken in on a net basis including the Outflows for gbtc they've taken in 123 billion since they launched on January 11th um bnch bunch of these ETF Are some of the best launches in history Uh ibid is one of is arguably the best Launch in history uh fastest to the They're at 17.6 billion gbdc has whittel Its way down to 19.3 billion and then we
Have Fidelity that's right around the1 Billion Mark I mean this is this was an Absolute smashing success there's a lot Of liquidity and volume which is very Good for long term for these ETFs being Used as trading vehicles and long-term Asset allocators uh but in all in all These things have 5354 billion in assets um it's just been A smashing success that said like I said The beginning things have kind of Stagnated uh gbdc is still seeing Meaningful outflows around 100 million Per day on average um sometimes less Sometimes more most recently it was a Little more uh and things have slowed so Ibit actually I think it's 72 days Yesterday was the first day that ibit Did not have an inflow uh and so a 72 Day inflow streak is like one of the top 10 streaks we've ever seen for an ETF Period stop And it is the record for a launch we've Never seen an ETF launch and then Continually taking money every single Day day in day out the way that black Rock's I it did so if since this was for Black Rock the very first time we didn't See a net inflow we broke the streak if This goes on for a week or if we have The next few weeks where it's some on Some off I don't know is that the end of The world is that normal in ETFs I mean It should be normal I mean for the most
Part most ETFs don't first of all most ETFs don't see a flow every day in or Out for the most part it's going to be Zero if we look at ETFs for yesterday The only ETFs that saw inflows were Fidelity and Arc at 5.6 and 4.2 million Every single other one was zero and then Gbdc was an outflow of 130 for example That's probably going to be more along The lines of what's normal going forward Uh it's standard and normal procedure For an ETF just not to have flows on a Given day right um there are going to be Days and weeks where these things see Meaningful outflows we just haven't Really seen it yet aside from anything From CH like aside from gbtc but going For like these things that's what They're built to do they're built to Track the underlying value of the assets So if there's enough demand and the Demand outstrips the current supply the Amount of shares that we have out in the Market the the market makers the Authorized participants they're going to Create new shares which is inflows to Meet that demand if the demand is lower Than the current Supply they're going to Destroy shares and we're going to see Outflows in selling of Bitcoin so like That's all these ETFs are going to do They're just indicative of what's going On in the overall Market particularly For demand for these ETFs and over time
That's just the way things are going to Play out so I think I think crypto Twitter is kind of in this bubble where They think it should be inflows every Single day and that is not going to be The case uh long term uh I think over The long term they'll be net inflows I Think there'll be plenty of times where We're going to see meaningful inflows Come to these things uh but it's going To be coincide with also some outflows But over the long term I think the Inflows will win is my my guess I've Heard it stated that even though Bitcoin ETFs were approved on in mid January That most of the retirement accounts and All the people that would buy into these ETFs have not bought yet is that Accurate um somewhat misleading but Mostly accurate as guess is the way I Would characterize that so if you think About this right a lot of this we'll Have more information in so right we're Recording this at the towards the end of April we have more information by miday About exactly who has bought these Things and where this money has come From BAS on anecdotal evidence and Talking with different people it's small Independent advisor shops so it's just a Couple people running money for a Certain amount of uh clients or it's Retail investors buying for their own IRAs their own brokerage accounts things
Like that um that's anecdotally what We're hearing some of the data is Showing this there's some meaningfully Decent sized investment advisor groups That have bought this that we've seen From some of these 13f filing so I said Miday because that's when the 13f Filings are due to come out and we'll Know for sure uh a good chunk of like How much who bought these things that Said the huge platforms the wealth Platforms uh I think UBS Morgan Stanley JP Morgan those types of advisor Networks and brokerage platforms they Everyone thinks like these things get Approved and all a sudden everyone can Buy it it's it's kind of the opposite It's like a lot of these platforms it's Like you can't buy this until it's Expressly gone through a due diligence Process we know everything the ins and Outs of these different ETFs and we'll Approve a handful for buying so a lot of Them have been approved for buying but It's there's it's not allowed to be like Pitched essentially so the way that a Lot of this works is these independent Advisers that are small shops they can Be nimble they can do what they want They could have bought this thing like Pretty much from day one just like a Retail investor could these larger shops These adviser networks these brokerage Platforms um it's more like uh it's the
Opposite like you need to go through That process and usually there's levels Of it so right the first level is like No one can buy this under any Circumstance until we look at it a Little bit closer um for the most part Seems like most of the platforms are not At that level they've gone past this to The second level which is like this Middle range of like there's some Restrictions on who can buy it there's Some hoops you have to jump through you Cannot recommend it to clients but the Clients come to you maybe you can buy it After you fill some paperwork explaining Why you're buying it there's like this Middle Ground of like yes you could Probably buy it if you really want it But it's not something you can pitch to Your clients uh and it's not something You can just put into a model portfolio For your clients the final level of Approval is you can go out and tell your Clients that I think this would fit as a 2% allocation your portfolio 5% Allocation that is not happening pretty Much anywhere at this point as far as Wew there's very few places where There's allowing these platforms and These advisers and Brokers to go out and Recommend these these ETFs so when will That happen who knows um usually you'd Say at least three months likely even Six months for that to happen we're
Beyond the three-month Mark um but Sometimes it just takes different time And also it's a little bit different Here uh just for some of this stuff Because um it it when you're doing this Do diligence process it's a little Different because it's just like you're Buying one asset sometimes it can get Very complicated if you're looking at an Active portfolio manager or different Things you're trying to understand Exactly what they're buying and selling In this case you just need to understand The risk of Bitcoin and the risk of the ETF rapper it's not as complicated um But yeah we'll like I said we'll see in Miday is we'll get a better idea of who Owns this and if some of these big Platforms are allowing people to buy it Uh but we're not there yet back when Gold got its very first ETF back in 2004 I believe re evolutionary at the time And gold's price even though day-to-day It varied to me it looks like virtually Only went up for the next 5 years as Institutions are finally able to buy in Is that a reasonable expectation you Know for a hard asset like Bitcoin uh I think that's a little bit It's it's way there's way more Nuance to That like you got to realize that this Thing launched in 2004 right before the Great financial crisis um central banks Were buying a ton of gold um during the
Financial crisis and after uh there was A lot of demand for gold itself not Necessarily so yes one the ETF Democratized gold investing so before That the only way to get gold was like Going down to your like Corner pawn shop And like go I buy gold and like selling Or buying gold manually and physically Um so one just being able to buy in your Brokerage platform like that was is Hugely beneficial for people who wanted Exposure to the shiny yellow metal right Um it's a little different with Bitcoin Like you could always have bought it in Your pocket this wasn't like completely Democratizing the exposure it does put Bitcoin on the traditional fin own for Rails it does make it easier for people Who don't have like a coinbase account Or Kraken account you name it um so I Don't think it's like for like there but Like I said there were there was a lot Of other circumstantial things that like Caused gold to run up aside from just The ETF but the ETF definitely helped um Just because it made it easier for People to buy it ironically the GLD the Gold ETF is the only ETF in history to Be larger than the S&P 500 ETF spy so For like two or three days in 2011 I Think it was gold actually surpass spy And Assets Now it's a fraction of the Size of spy but um yeah and also just to Add on and I want get your take on this
A circumstance that's would be Beneficial to bitcoin versus gold is I'm Sure when the gold ETF was approved the The big money invested in more miners They inflated that Supply put mined more Gold into the ecosystem with Bitcoin as Investor Lawrence leapard says hard Asset they cannot make more of it no Matter what happens to demand yeah That's yeah that's correct so gold you Can increase you can increase the supply Over time if there's if the price goes Up enough and it becomes more profitable Get to harder deposits things like that Um but yeah like you said gold is Completely capped so they're they're not Obviously like for like in many Different different ways when however You look at this but um there are some Analogies you can look to James what are You most passionate about in the ETF Space is it Bitcoin or what aspect of Bitcoin like in the one time Frame um I mean recently it's been Crypto and Bitcoin but largely that is Not necessarily just from like I'm 100% A Bitcoin Maxi or crypto wholehearted Believer I just view the way that the SEC has handled this whole process is Completely dropping the ball I think They've handled this completely wrong um I think the SEC has handled a lot of Things completely wrong over recent Years I think Gary gendler and this
Administration has damaged the sec's Reputation going forward um so like That's why there's a there's a lot of Stuff going on around this you have Politics involved you have billions of Dollars at stake you have the largest Asset managers so it was just genuinely Exciting and then also the flows coming In made it super exciting um but I don't Just cover crypto like right now I'm Writing about passive management and the Passive ownership of different Individual stocks and different like Passive index rules um things like that So like I do a lot of traditional Finance type research I don't just do Crypto um but I would say recently the Most the hottest topic has obviously Been crypto and both from our client's Point of view from we see it in our Reads and I see it in my the interest on Whenever I tweet about it uh people Whenever I tweet about regular Financial Stuff people seem to get mad at me well I can certainly understand being most Excited about Bitcoin that's why our Channel exists in crypto um I want to Ask you a question that your your Clients are probably asking you and this One's just for fun nobody can see the Future but if demand for these ETFs Stays similar to what you expect Where's that put price by end of year Top of cycle I'm actually not allowed to
Talk about price period stop um the one Thing I will say on this is that I think A lot of people in the crypto world uh Misconstrue and this doesn't happen in The tral financial world is like the ETF Flows are just a piece of the overall Pie like they are just one one area of Buyers like they are one small sliver Actually I guess it's a big sliver now With the amount of money they the amount Of Bitcoin they bought over the last Three months but they're just a piece of The overall Market they are not Dictating where price is going and also People are looking at flows and trying To like talk about where them where like That means the price is going to go for The most part once the flows happen like Once we see what the flows are it's Already that has already impacted the Market the bitcoin's already been bought There's already been hedging made to get Exposure to bitcoin like it's all Already done so everyone's like super Focused on flows and what's it's going To do the price and by the time we get The flows like it's already impacted the Market like we the trading has already Happened all that information has Already happened yeah yes it can be good To look back and see what sentiment is Like like right now sentiment doesn't Seem to be very strong considering we're Not seeing much inflows into these ETFs
Right now um but for the most part People tend to overestimate what these ETFs can do uh to the price in my point Of view I mean and the demand obviously This is heavy on the demand side of Things impacting the price of Bitcoin um Particularly when you're seeing billions Of dollars coming every week it's going To be positive uh but that said it's Going to take um it there's no way to Know exactly what the price impact will Be but I do think um even if we stopped We didn't get a single dollar of flows In for the rest of the year at 12 Whatever it is 12.3 billion dollar in Assets that have come in like that's Still an extremely successful launch for A group of ETFs um so that that is the One caveat I would Give let's talk about ethereum ETF um Final question and and feel free to pass On this just last one on bitcoin can you Say do you think Bitcoin will be higher Than 73 you know in the next two years Are you allowed to give it range no I'm Technically not allowed to yeah I Respect I have my views but I'm but I Will I'm not allowed to talk about it Unfortunately I respect it and by the Way that's why I follow you on Twitter Links are down below so I can get those Breadcrumbs um but ethereum ETF do you Think that'll happen by end of year by End of year probably not I think it'll
Happen in 2025 but we need we'll have More information so we've been very Vocally bearish uh ethereum ETFs getting Approved in May May 23rd is the deadline Uh my Eric and I have been very bearish On this happening for the last couple Months much to uh eth Maxi's Disappointment um it's not happening We're not seeing any movement there it's Very unlikely to happen our official Stats are 25% we're going to have to Lower that in the near future because We're not seeing any movement whatsoever So I don't think it's going to happen uh In order to give you like a timeline and We do think it's going to happen like I Said I think 2025 is more likely but we Need to see what the SEC denies on right So we're going to get denial letters and They're going to explain why they're Denying um if they deny so so they have Three options right they can approve Which I just said not happening the Second option is or third option it Depend anyone order it but the the one One main option is go nuclear and say That ethereum is security and then you End up in a bunch of court cases and That could take a very long time I do Not think the SC is going to go there That'll open up a battle between them And their sister agency the CFC uh a Whole host of other reasons the has made It uh and made implicit moves that
Accept ethereum as a commodity in my Point of view so I don't think they're Going to go that route I do think they Might they could try to uh thread a Needle there in different ways and say Parts of the ethereum like stake Ethereum could be um a security in some Way I could see them trying to thread That needle I don't know exactly what They're going to do that said even if These things do get approved they're not Going to have staking not anytime Remotely soon uh they're not going to Allow for inine TR uh creation Redemption just like the Bitcoin ETFs You can't actually give over ethereum And get shares of the ETF or vice versa Um so the the final option which I think Of what they're going to do is they're Going to basically come up with a word Salad uh maybe lean on correlations and Say the correlations were weak uh a Couple years ago and it's not enough for Us to approve the problem with doing That leaning on like a word salad Talking about correlations all of a Sudden you're like you're not actually Full on like stopping this you're just Kicking the can down the road again so I Think that's what they're going to do I Think they're going to kick the can down The road um and then they'll have to Come up with a different reason if they Lean on correlations or whatever else
They lean on uh at some point um but Yeah I don't think it's going to happen Later in the year the odds are slightly Higher as you get later in the year I Guess I would be crazy to say there's Not like some way that things could Sneak through um but yeah it's it's 2025 Is more looking possible but we'll have I'll have a better idea after I see the Denial letters um the other part of this Is where I don't think there's going to Be any decisions made uh until the um Election happens uh so we have the Election in November um if the Biden Admin stays in power that's not very Good for the prospects of some of these Things um it's not necessarily guarantee I guess the Republican admin coming in Would do something better but it's Probably more likely that they'll do Something positive on the crypto space And with the SEC so who knows exactly What will happen um but yeah I don't I Don't think it's happening um this year Unfortunately and just to be clear one Of the reasons you were so sure that Bitcoin ETF would get approved is Because we saw in those months leading Up to it the conversations and the Refiling between the issuers and the SEC We're seeing Zero that with ethereum Correct yeah we've seen a couple Reilings but you got to realize like When we were looking at the other ones
It was like all of a sudden everyone was Filing like an update and the up the Changes were very similar you could see Like this was obviously due to Conversation with the SEC the stuff now We've seen updates over the last few Months here and there but for the most Part it's like pretty standard stuff it Looks like it's just bringing it in line With the stuff they learn from the from The Bitcoin ETF filings so yeah we're Just not seeing any movement any any Interaction between the SEC and when we Ask uh our sources what's going on and Ask for information uh they've got that There's basically nothing happening so Uh it seems like Gary gedler and the SEC Just aren't going to approve this thing Without essentially a court case um So that's where we stand here but the Other part of this is like you got to Realize Gary approved this thing and he Was the deciding vote in a five m Commission the two Democrats voted not To approve Bitcoin ETFs and Gary did and He was basically backed into a corner by The federal courts and even with the Federal court ruling um for grayscale And against the SEC Caroline khaw and Another Democrat commissioner still Dissented and thought they should have Denied them even though like any lawyer I spoke it was like the SEC really Doesn't have much of a choice unless
They want to virtually defy a federal Court order um so uh that that's Basically all you need to know in the Sense of like how the Dems and the Democrats Commissioners reviewing this They they do not want anything to get Through they we wouldn't even have Bitcoin ETFs if were up to them and Correct me if I'm wrong but the the Crux Of the grayscale case and the SEC lost Against grayscale and then we have Bitcoin ETFs is because the argument was Uh we have Bitcoin Futures and that Tracks the price if we have Futures Products why can't we have spot Products yeah that's pretty much what it Comes down to I mean the FCC approved Futures ETFs Bitcoin Futures ETFs um you Could make the same argument now for Ethereum because they approved ethereum Futures ETFs but when they approve so When the when Grace scale won their Lawsuit is basically like you can't Basically approve something that is a Derivative on these actual spot markets The the derivative the Futures are based Are derivatives of the spot pricing and Then so you're going to allow this Derivatives market and these derivatives ETFs to trade but not allow the actual Spot Market to trade and not to mention Like no matter how you look at it Derivatives are inefficient ways of Getting exposure those Futures ETFs were
Efficient when compared to a spot ETF Over time they underperform by Significant margins over any over longer Time periods particularly in bull market So they're just not good for end Investors so the fact that the SEC was Supposed to be protecting investors in Our view was also just insane in the Fact that they were allowing Futures ETF To trade but not spot ETFs it was a case Of uh Missing the forest for the trees And I mean for a very long time we were On the side of grce scale saying that They had a shot at winning this lawsuit I remember my colleague Elliot Stein Wrote a note basically saying that that Uh he thought Grace scale had a 40% Chance of Victory and that was in um When was that early in the early in 2023 And I had people berating me I had even Our clients telling us that this was a Frivolous lawsuit and that Grace scale Was going to lose and then after or oral Arguments Elliot Stein and I and other Colleagues sat together we decided to go To 70% odds of victory for gray scale And I can't tell you how many people Thought we were insane um so I I my my Only thing is like I feel like a lot of People in this space and covering this Space have such like builtup uh emotions Whether Pro or con so a lot of people Just refuse to accept the fact that it Looks like this thing is going to get
Denied these ethereum ETFs just like a Lot of people on the opposite side Refuse to accept that the Bitcoin ETFs Were going to get approved and great Skill is good in the lawsuit so people That can't like put away their personal Put aside their personal feelings and Look at the facts on the ground um They're the ones that keep getting Things wrong James I appreciate this Perspective again links for all your Stuff down below final thoughts for the Altcoin daily Army um I guess my my last thing I would Say is the the Hong Kong ETFs are coming Yes so there are Hong Kong ETFs coming Big spot Bitcoin spot ethereum they are Going to be in kind unlike the US ones But there's a lot of people that are Overhyping the the value that that will Provide I think longterm that could be Huge the problem is the Hong Kong market Is very small Mainland Chinese investors Will not be allowed to invest in China Is very strict on this stuff it's not They you're not just going to get to be Able to buy access using a VPN and Different things like this is China We're talking about so in the near term It's unlikely to be hugely impactful um That said uh they do look like they're Going to be cheaper than we thought Which is going to be very competitive But to put it in perspective the Hong
Kong ETF Market is about 40ish 45ish 48 Billion dollars in assets all ETFs Listed in Hong Kong the US ETFs are over 50 so the US ETFs that we have here the US spot Bitcoin ETFs have more in assets The entire assets space in um Hong Kong That's not to say like if these things Get a billion dollars in Assets in the First year that would be an absolute Smashing success right so there's not Saying it's not gonna it's going to be a Negative impact it's definitely going to Be positive it's just not going to be to The same level of positivity that the The spot pickling ETS here in the US Played even though they were cash Creed Only um so we'll see what happens uh We'll be watching those are going to be Launching in the very near future um It's kind of unfortunate that the SEC And this ad are treating crypto the way That they currently are but you kind of Have to play the hand at your dealt uh And we just don't think the SEC is going To allow eth anytime soon not without a Battle and even still like I said I Think if they lean on correlations that Correlation argument will fall apart Within a year so by this time next year They won't be able to deny on Correlations anymore and if they deny on Different factors then all of a sudden Uh you're going to end up back in a Fourth case battle again and I think the
SEC will lose and very very quickly can You talk about why in kind is is better For Hong Kong CU I remember when the American ones were not in kind everybody Said oh not a big deal they still have To buy the Bitcoin why is in kind better Yeah so in kind is better because it's Just more efficient for everyone and Also if you have Bitcoin you can just Basically send it over to the trust if You're an authorized participant uh it Just makes things slightly more Efficient um so what what inine means is Rather than so essentially if you have a Certain amount of Bitcoin um this five Bitcoin equates to 500 shares of the ETF That's not how it works but you can Exchange 500 shares for five Bitcoin and You can exchange five Bitcoin for 500 Shares at all times that's how this uh These ETFs track the underlying price if Demand and Supply get out of whack They're going to create more Supply or Destroy Supply to meet demand within Kind it's just more efficient there's Way less steps that have to be involved You're just handling over Bitcoin and Getting shares of the ETF with the cash Create process it's cash that's going Over and you're getting uh you're Getting shares back you need way more Lead time when you're doing creation Redemption because you're sending cash To the big the Bitcoin ETF issuer and
Then they have to go out and buy the Bitcoin in the open market they have to Use different mechanisms there's just Also way more things that you can do When it's allowed to do in kind there's Efficiencies that are created um but the SEC was not all not okay with it they Wer about uh money laundering uh know Your customer laws getting broken Potentially but really it comes down to The fact that the SEC doesn't want Brokers touching Bitcoin and there's no Like real uh there's no real uh guide Guidelines for how this should happen or What should happen so they were like no We're definitely not allowing this um so But honestly the the fact that they did This in this cash only is the reason why You have you have Goldman and some of These other massive Banks uh JP Morgan Ironically enough despite uh Jamie Diamond hating Bitcoin they're all Involved because it's cash create um so These ETFs in C in China are going to be In kind or in cash so you'll be able to Do both um there's no way to know Exactly what that is from our point of View but it it it just adds a little More Flexibility cool James I want to have You back in three four months revisit Some of this thank you again and links For your stuff down below
