Bitcoin Would Be $20K If Not for the ETFs: Analyst | Video

I think if you take the Etfs out of the picture, the price of Bitcoin is like 20 grand because it was 30. When they, when Blackrock filed, they started to go up because oh Blackrock’s coming in, then they launched. There was little so the news but it hung tough. Now it’s, it went up a lot because of the flows. You take a, you unwind all that you’re at 30 K but you still have Mount Gox and some other in Germany and, and who’s there to buy it? It’s Monday, August 12th and this is Markets Daily hosted by me Jen Sani. On this show, we navigate the currents shaping the crypto markets, providing insights against the broader financial landscape. So whether you’re actively trading or simply fascinated by the volatile of crypto markets. This show is your compass to understanding what’s happened where we are and where we’re going. Good morning, everyone. I am excited to welcome back. Our next guest joining the show now is senior ETF analyst at Bloomberg Intelligence, Eric Balchunas, Eric. Good morning. Good morning. Happy Monday. Happy Monday. Now, the crypto markets have been a uh a little uh more spicy than they have in, let’s say the last month or two, talk to me about what you’re watching this morning. Yeah. You know, it’s interesting. Um, obviously last, if you, last Monday was a bad day, uh, anybody who is in ETF, they, they woke up Monday to a 15% decline over the weekend. That, that’s, that’s pretty major for one ETF, right. And it’s not leverage or anything. Um, and yet last week, uh the Bitcoin ETF saw 100 and 69 million of outflows. That is not bad. That’s 0.3%. So 99.7% of the assets hung tough. Uh I’m calling that a big win. Um So when it comes to um the ETF investors, you know, we had always said they’re gonna be stronger hands than people think. Um But this is like pretty like next level diamond hands here. Um And then I think part of why that’s good is that if when it comes to net flows, if you can just hang in there and tread water during a rough patch, it’s a lot. You keep your base low, a high that way when the, when the return, when the price comes back and flows are a little easier to get you, you didn’t have to come back to like square one again. And so the fact that the year to date net flow number, which is the on, it’s the most important number I’m watching all year for these is 19.3 billion. Um That is a big number and if there’s outflows, that number comes down inflows, it goes up and that number is net G BT C. It doesn’t include the price movement. So right now that 19.3 is amazing. Uh we predicted 10 to 15 billion in a year. So you’re at month 78 and you’re already way out of our range, top end of our range. So, um but I had said to people when it was like 17, be careful, there could be a nasty selloff. Those flows could come down and come back into our range, you know, years a long time. So for them to maintain that 19 billion ish during that last selloff is amazing. So I think if you’re in that world, uh that, that should be a very, very good sign because one of the fears was that people would get in because, hey, it’s, it’s a new thing. Black rocks chain, it’s safe or whatever. And then bam you get hit with one of these sell offs, you know, classic crypto style and they would run for the hills and never come back but doesn’t appear to be any that’s going on. So, um that would be the big thing I think of the past week or two that I’ve been watching, you know, I think I asked you this the last time you were on the show. But I think the question is warranted again. Given the sell off and the performance we’ve seen. But are you surprised at the spot? Bitcoin Et F’s performance since January? Uh, yeah, I mean, I guess what’s it up? Let’s see, that the performance since they came out looks like they’re, I’m gonna just put an IBID here. What is it? 25% maybe? I mean, that’s with the sell off, let’s see. 31%. That’s really good. I mean, think about that, that’s an annualized return of 61% a year. That’s amazing. I mean, that’s, you know, if I compare 31% since they came out to QQQ now in our world, in the stock world, QQQ is like, like the killer index. Like it’s got the mag seven at Big Rings. It’s hard to beat this thing. That’s up 11%. So it’s triple the Qs. Um That’s, that’s great and that’s with a couple selloffs. Um And so, uh it’s hard not to be pleased with this. Um I think what’s interesting to me sometimes is the uh emotion and mood of the crypto crowd, day to day, week to week. But after all the, you know, tears and, and, and crying out, you’re up, it’s up 32% 31% since the ETS in this industry. I, you know, I tell them like you gotta, yeah, just, it’s almost like they should force themselves to only look at one year rolling charts because the probably you look day to day, you can get depressed easily. But it’s true over the course of the ETF launch. We’re now exactly seven months. No, eight months, sorry. So 32%. Um that’s amazing. And that’s after I believe like a 50% jump in anticipation. So I was actually talking to somebody and I’ll say this, I’m not sure. Uh You probably have users who would disagree. I think if you take the ETF S out of the picture, the price of Bitcoin is like 20 grand because it was 30 when they, when Blackrock filed, they started to go up because oh Blackrock’s coming in, then they launched, there was little so the news but it hung tough now it’s, it went up a lot because of the flows. You take you unwind all that you’re at 30 K but you still have Mount Gox and some other in Germany and, and who’s there to buy it? So I think the ETF S should be seen as nothing short of a Godsend, to be honest with you. And I know there’s, I’m not Bitcoin has other things going on for it. It’s, it, I read up a lot about it and I think it’s a fascinating currency, um secure uh way to store value. Um And I, I’m, you know, definitely intrigued that said pure price. I, I think that the ETF S really came at, came at the perfect time to be honest with you. Um, and I think that the, so when I see people get all crazy when it goes like 56 I’m like, honestly it should be about 20 you know, so just relax Eric. I was gonna say you gotta be careful with the Bitcoin crowd. Oh, I know. Yeah. No, I think you redeemed yourself there. I think you redeem yourself there. Well, I got to ask you that, you know, Morgan Stanley recently told its financial advisors that it’s gonna allow them to offer the ETF to some wealthy clients, I guess. Um, from your perspective, does this drive the price of Bitcoin up? I hate, I can’t really, I can’t make predictions and I hate to do it anyway, but I don’t see how it’s bad that you now open up, you know, depends on how you do the math, but I’m talking 7 $8 trillion. That’s the total Wire House advisor Morgan Stanley is the biggest one though. I believe there are like two of just pure advisors. Then you got e trade on top of that. I think it’s four total four trillion. But the idea that an advisor can now solicit it, I mean, they can call up a client and talk about it major because these guys move in herds. So if Morgan says they’re cool with some of the ETF S, you’re probably gonna see Wells Fargo Bank of America and these other institutions follow suit the big dream though. So one is the solicitation, the next thing that may happen, which would be amazing is if the ETF S get included in their models. So, like if you’re a Morgan Stanley, they have uh people in the home office who make these models, it’s almost like they tell you what ETF S to use and what waiting and then all the brokers who are out in like Oklahoma and Oregon and all this, they are busy getting new clients and doing other things. They’re like, I’m just gonna use the home of office model. And if the model includes the Bitcoin ETF, that it, it radiates out to all of the advisors. So that’s also something that could come later. So I just think, and the other thing that I, I try to tell people who are get a little, I don’t know, like emotional in their feelings so far, Eric, you’ve called the crypto community very emotional and I do not disagree with you. They are a very emotional crowd but, and I really hope they don’t come for you on X. I really, honestly, there’s other factions within crypto that are way more, that will beat you up more. I think the coin honestly is probably the most reasonable. But anyway, you should, I once called the E three TF Small Potatoes. I have not heard the end of it still. I never and I apologized anyway. So the one thing I tell the frequent people is that, it’s not just that these ETF S are out there, it’s that there’s Black Rock in Fidelity because a company like Morgan Stanley, if there were just small issuers involved, I, you know, I’m not sure they would on board them or even or definitely as quick but Blackrock and Fly brand name are, you cannot overstate how much cover this gives people. These are the, these are, they use ETS from these firms in their other portfolios or for their other investments. So they, there’s a trust there that doesn’t exist with pure Bitcoin, but Blackrock brings an ime enormous amount of trust and cover for, you know, these are like 50 to 70 year old people managing funds, they go golfing, they have nothing to do with the Cross Blackrock. So Blackrock and the ETF S to me are a bridge between those two worlds and that and Blackrock Philly want to get assets in these ETF S. They have people dedicated to marketing them. I wouldn’t really uh make it any less simple than that or you know, any more complicated than that. It just, there’s gonna be, as I said to them earlier, two steps forward, one step back, right. There was a Paul Abdul back in that song back in the day that had that lyric two steps forward, one step back. If you look at it that way when the step back comes, it’s no big deal. Yeah. So, and I feel like the flows have shown that the price has shown that. And I think over the next like time period, so I can’t predict price, but I would say I see it two steps forward, one step back uh process playing out for the next couple of years. As you said that I was doing a little dance in my, in my head. The ETF dance. We’ll call it now. I um I, I should have an ETF dance. I’m that involved. Like, I probably should have one. Yeah, there’s, it’s funny just side note. ETF right back in the early days of Twitter when people use hashtags and I was trying to get really up to speed. I would do hashtag ETF and I’d see all the things to a posting about ETF S but there was a band called Escape The Fate. Like a really bad emo band like metal emo like, you know, and, and these, like, these like 16 year olds were like quoting these like really depressing emo lyrics. So it’d be like flows, flows and then some crazy lyrics. So, so I was just like, so if there was an ETF dance or I always said that that band should play the, the ETF conference because they’re, they’re known as ETF Escape the Fate. So if you Google, escape the fate, enjoy, I’m going to Google that afterwards. Um Yeah, I’ll try and find the, the best ETF lyrics. Maybe that could be something we do on the show, like, find an escape, the fate lyric that matches the mood for ETF S that week we could just bring it all together. Yeah. There’s a lot of despair. It’s like I said, it’s like, it’s like I’m on the edge emo everyone kind of is no matter what aspect of the history about the edgy. It’s true. Yeah. Well, I gotta, I gotta ask you about, um, a tweet. It’s to do with regulation. I know that you probably don’t have much to say about regulation. But let’s just see, John. John Reed Stark. He’s a former sec office of internet enforcement chief. I’m sure you saw this tweet. He wrote that uh Morgan Stanley has now voluntarily subjected themselves to what will likely become the largest sec and finra examination sweep in history. This is, of course, because, um, of the news that you and I just discussed, what do you think of that? Do you think that it’s gonna scare away others? No, this guy, you know that meme of the Simpsons, the guy yelling at the cloud. That’s, that’s all I see here. I mean, this is a guy who just something about this just pisses him off. There’s, there’s people, there’s, there’s people who are agnostic, like, I don’t see the point but whatever, but then there’s just people who just like they can’t live with this. Like, it’s, they are the inverse to some people who are so hardcore they can’t live without it. And this guy seems like one of those guys and I got to write off a lot of it is just hurt feelings and bias. He didn’t want the ETS to get approved. So he’s been taken L after L he didn’t want the flows to come in. He didn’t want there to be demand. He didn’t want, you know, people to be happy and like LLLLL. So, you know, if you’re like, oh and eight, you’re gonna get a little cranky. So I think all this is just a, you know, uh him just being upset about everything that if somebody who was bullish or like moderate had said it may, might, might, might mean more. But um probably gonna, we do, we deal with locations in certain people who have been fear mongering on ETF S in general for a long time and every now and then there’s somebody in the middle who makes a good point, but there’s a couple of people who like this is their thing and a lot of times it’s an active manager who is upset that ETF S taking their business. So like you have to unwind that and sometimes the press will run with it and use a headline that’s like, um, you know, uh some worry ETF S could blow up the market. Then you look at the article and you realize, OK, who said it, oh, it’s this guy from like, you know, XYZ asset management. I look up, he’s got an active fund that charges two percent and he hits it outflows. Well, he’s just pissed. The headline should be pissed off active manager slams competition. So I think in this case, you have to really look at his whole like mo with this, the other part of it is, you know, if, uh Morgan Stanley, uh advisor or broker misleads anybody that’s a problem. But again, look who’s, look who’s behind this, the SEC approved them. I mean, that’s one. So any kind of investigation, you gotta go back to the SEC and be like, well, you approve them. Um Number two, the exchanges are letting them list, number three, Black Rock and Fidelity are in there, you know, Larry Finks, you know, you’re going against the entire system here. This isn’t he, he might have a better point if they were going to, I don’t know, like o off uh OTC market to buy actual crypto, like almost like on the side and there was no regulation, but these are like regulated instruments with prospectuses and risk disclosures. I, I wouldn’t worry about it. Um I would just again, go back to SCC approved. These are mainstream ready for middle America kind of uh structures. The ETF and you’ve got the most biggest and established companies involved who are making sure nothing goes wrong. Blackrock does not want anything to go wrong. This would ruin the good thing they have going Right. They’re not, they, because some people will come with me and say, well, how do we know Blackrock even holds the Bitcoin or sometimes the, I bet would see flows but the price wouldn’t go up and they’re like, Larry is, he’s just holding the money like he’s not buying Bitcoin with it. They are buying Bitcoin. Ok. These companies are not going long or short. All they wanna do is get a little tiny expense off of the total assets. So the bigger they grow the pie, the more they get, they don’t, they don’t wanna be long or short, uh the crypto and they don’t wanna get sued and they don’t wanna have apr problem. They got many other ETF S too. This is not their only thing. So I sometimes think that um, Crypto Twitter, uh isn’t used to like, uh the sort of mainstream le l like legal world and how rigorous it is. I think the approval of the ETF, you saw all those documents that had to be filed and all the tweaking in the legalese. That is a ton of work, right? And, but once you get through that you are uh in a regulated instrument and can be available anywhere. So I think this guy’s point, he’s all the institutions and companies that he’s now saying are like in some kind of like, it’s like almost like they’re selling drugs or something. I mean, it’s just too much is too powerful um, and it’s, again, let’s go back to, it’s too regulated. Um, these ETF S are regulated. So, um, I, I, I just don’t, I don’t really see it but I, it’s important people have voices. I’m not trying to shut him down or whatever, like he should say what he wants. That’s just my take on when I read it. Right. And I think we should take what we read on X with a grain of salt and it all comes back to doing your own research, right? Eric. So I’m happy that you provided that other point. So folks can take both and kind of figure out what they think and where they stand, Eric. It is always a pleasure having you on the show. It’s always so much fun. So just before we wrap up here, I want to ask what you’re watching towards the end of the year, I know that we have the Bitcoin ETF options that could happen before the end of the year. We have the potential for a soul. ETF, what are you watching? What’s next when we look at crypto? ETF S? OK. We’re looking just crypto. OK. So, um so we have another round of 13 F’s about to come in. So we’re starting to see who, who else bought it in the second quarter or the second quarter of the ETF S life. Um That should be interesting. We’ve already seen two new pensions. How many more institutions will get involved. That’s what we’re watching. Also looking at the flows, they held up nicely. I would guess that if we go flat or the price goes up a little bit, you should see some steady flows coming in. And how big are they? Because how much is mortgage Stanley, I believe. Uh Fidelity and IBI are the only two in mortgage family. It’s interesting to see if those two see like an anomaly of flows in versus the rest because we have a control group. Now we’ll know that the Wire House effect is real and we can sort of judge how big the Wire House effect is that we’re watching that as well. The options, we just wrote a note uh saying that we think they’ll, you know, 75% chance they’ll be, they’ll be approved this year. We just saw that um Cboe refiled their, I think 19 before I believe it is after getting comments. So we confirmed and talked to some of the people that the sec did give comments to the options, peop the options filings. That’s really good as he’s not gonna engage if they just were gonna deny it. Remember with the Bitcoin, that was our, our big that we hung our hat on that. The communication spoke to approval and it was right the ether, they had no communication until the very end. That’s when they did communicate, our odds went up and then you, the rest is history. So the communication to me is really good. Um, I would, I’d be pretty optimistic but you can’t really be 100%. We have a little less information on this than we did the Bitcoin and Ether together. Um, but it looks, looks pretty promising given and the new document they filed is like six times longer and like position limits was something I heard the SCT was worried about and the word limit was in the first document five times. It’s in the next 165 times, something like that. So that tells you the lawyers got crazy. Yeah. Um, so, yeah, that’s what I, that’s so we’re watching to see how that plays out and, you know, um, we think, uh, it’s looking good. Are we gonna see a sole ETF next year? Do you think it’s just depends if the White House stays the same. Uh, I think if you have, uh, democrats staying in power, they’re go, I don’t know if Genzler will last, but let’s say he does no way. Let’s say they, they do Gensler 2.0 no way. I think if the Republicans take over anything’s possible because especially Trump has been making sort of some relationship and inroads with this crowd and he may be much more open to like all kinds of stuff. If Hester Purse was the chairman of the SEC, I think you’d have to look at, you know, at least decent odds of a sole ETF she’s a lot more libertarian. You know, she dissented all the, all the way since 2012. She was dissenting on the denials of the Bitcoin ETF. So you have to imagine if she’s the chair, all kinds of things could happen. So we’ll November big catalyst for your question there. Eric, like I said, it’s always a pleasure having you on the show. Thanks for joining this morning. Yeah. Thanks for having me, of course. 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