ETH ETFs Begin Trading | Matt Hougan

This episode discusses the launch of the first Ethereum ETFs, featuring insights from Matt Hougan, Chief Investment Officer at Bitwise, about the significance and impact of these ETFs on the market.

1. The launch of Ethereum ETFs marked a historic moment with over 1.1 billion dollars in trading volume on the first day.
2. The ETFs attracted significant inflows, with Bitwise's ETHW ETF standing out due to its lower management fees and donations to Ethereum open source development.
3. Ethereum's unique features, such as its utility and staking mechanism, differentiate it from Bitcoin and could lead to significant price impacts.
4. The episode highlights the growing interest from traditional finance companies in Ethereum, as evidenced by BlackRock and Fidelity's ETF offerings.
5. Matt Hougan emphasizes the importance of crypto-native asset managers like Bitwise in the ETF market and their positive reception from the crypto community.

1: Introduction to Ethereum ETFs

The hosts introduce the topic of Ethereum ETFs, emphasizing the historic nature of their launch. Quotes:

• "Ethereum has never had an ETF. Now it does." - Speaker A

2: Trading Volume and Inflows

Discussion on the significant trading volume and inflows observed on the first day of Ethereum ETF trading. Quotes:

• "There was 1.1 billion in volume on the first day of trading." - Speaker A
• "We saw over $200 million of inflows here at Bitwise." - Matt Hougan

3: Comparison with Bitcoin ETFs

Comparison between Ethereum and Bitcoin ETFs, highlighting the unique aspects of Ethereum that may influence its price. Quotes:

• "ETH does not have proof of work, sell pressure, and ETH is locked up on staking." - Speaker B

4: Marketing and Positioning by TradFi Companies

Overview of how traditional finance companies like BlackRock and Fidelity are marketing their Ethereum ETFs. Quotes:

• "BlackRock says meet ETH A, which is the BlackRock run." - Speaker B

5: Bitwise's Unique Approach

Matt Hougan discusses Bitwise's approach to launching their Ethereum ETF, including donations to Ethereum open source projects. Quotes:

• "Bitwise had an outsized showing with their ether ETF today." - Speaker B

6: Future Expectations and Price Predictions

Discussion on future expectations for Ethereum ETFs and potential price predictions. Quotes:

• "I have a above new all-time highs price prediction by the end of the year." - Matt Hougan

1. Monitor ETF Performance: Keep an eye on the performance of Ethereum ETFs to understand their impact on the market.
2. Consider Lower Fee Options: If investing in ETFs, consider those with lower management fees, like Bitwise's ETHW ETF.
3. Evaluate Long-Term Potential: Assess the long-term potential of Ethereum based on its unique features, such as staking and utility.
4. Diversify Investments: Diversify your crypto investments by including both Bitcoin and Ethereum to cover different aspects of the market.
5. Stay Informed: Stay updated on the latest developments in the crypto space and how traditional finance companies are adapting to it.
6. Utilize On-Chain Trading Platforms: Consider using on-chain trading platforms for better price discovery and decentralization.
7. Participate in Crypto Communities: Engage with crypto-native asset managers and communities for insights and support.
8. Leverage Tax-Efficient Accounts: Use tax-efficient accounts like IRAs to manage your crypto investments without incurring capital gains taxes.

The ETH ETFs have officially launched, but wen $ETH moon?
We saw $1.1B in volume and $100M in inflows yesterday. Is that good? When will this factor into price?
Matt Hougan, CIO of Bitwise joins Ryan and David midway through the show to go over the above and also how the ETH ETF launch went, predictions going forward, and much more.

People

David Hoffman, Ryan Sean Adams, Matt Hougan, Eric Balchunas

Companies

Bitwise, BlackRock, Fidelity

Books

None

Guest Name(s):

Matt Hougan

Content Warnings:

None

Speaker A
Bankless nation. The ethereum ETF's are here. I was out yesterday. So, David, I feel like I need to get fully up to speed. And there's a bunch of people listening who need to get up to speed on this absolutely historic event.

Ethereum has never had an ETF. Now it does. There was 1.1 billion in volume on the first day of trading. That was yesterday at the time of recording. 100 million, over 100 million in inflows.

My question to you is that good, we got to talk about this. And most importantly, when moon, when will all of this factor into price? David, it hasn't yet. Well, last time we got an ETF, first everything went down because of Grayscale and then it went back up. And I think one of the big questions is, is that going to be the same?

Speaker B
Is that the same path that we're about to take? Or is it different? Because we've already taken that path and now the future is always different than the past. Uh, we got Matt Hogan later in this episode to talk to you all about some of these questions and these answers before we get there. A message from our friends and sponsors over at Matcha for all of you with vanilla ether on chain in your custodial hardware wallets.

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If we get price discovery to happen on chain, we can get out of the shadows of the sexes. And Masha's v two is making that happen, making sure that you have the best pricing possible for your on chain trades. You don't got to go to a sex, you don't got to go to Blackrock. You just go to Masha. David, that is a great show for an on chain Dex.

Speaker A
Now, the rest of this episode, we're not talking about decentralization. We're talking about ETF's. The Ethereum. ETF for all the people who haven't. Made it on chain.

Yeah, look, I got some Ethan or retirement accounts, so. And there's people out there like that and they want to buy more. That's allowed. Thank you, David. So let's talk about the launch.

This was the tweet that I saw first to launch things. This is from Eric Balchunis. It's official. The spot eth ETF's have been made effective by the SEC. The day is finally here after being gaslit and plot twisted by the SEC for months.

Speaker B
No, no, no. The ether ETf's are here. James Safer put out this meme of the classic horse race with the nine ether ETF's. Eth eth, ez, e t, eth, v eth, w ce eth, feth eth a q eth. All of the ether spa ETF's that you can now get on the New York Stock exchanges.

We're also getting the website pages launches because of course we were bitwise opens up their website to focus on their ether ETF. Blackrock says meet ETh A, which is the Blackrock run. Blackrock also drops this eth ETF investor video, which is the first words. Remember when we had this big game of like, how will tradfi pitch to their investors? Hey, I do remember that.

Speaker A
Don't you still owe me an nFt, David? You know what? I'll mint it today, I promise. Okay, so now we can finally get settled. We have some material, some glimpse as to how Blackrock and other trad five people are selling ether since we have this video.

Speaker B
So let's watch. Let's watch for like the first, like 45 seconds of this video just to kind of hear how they sell it to tradfi investors. Here it is from BlackRock. Ethereum is the second largest cryptocurrency by market cap after bitcoin, and has key characteristics that make it distinct. While many see bitcoin's key appeal in its scarcity, many find Ethereum's appeal in its utility.

Speaker C
Ethereum is a highly programmable blockchain that provides infrastructure for a diverse range of assets and use cases. You could think of Ethereum as a global platform for applications. This platform enables applications referred to as smart contracts to run without a centralized intermediary. Transactions on Ethereum require a transaction fee to be paid in the networks native token ether investor interest in ether has been expanding as more people adopt digital assets. And thats why were introducing ETH, the iShares Ethereum Trust ETF, which provides investors convenient exposure to ether.

Speaker A
Then he gets into the mechanics of it. What do you think of that pitch from BlackRock? Honestly? Like who am I to judge Blackrock's or have more of ether to their client base? I think it left more to be desired.

Speaker B
Okay. I think other people can do it better. Van of course, also launching their marketing material as well. Van Eck a little bit more crypto native. They're into the Ether campaign.

They are ETh v. But then Bitwise, who we have Matt on the show today, Matt Hogan. We're about to get into that conversation with him. Bitwise launches ETHW, the bitwise ETF with some standout properties about their ETH ETF 22.2% management fees. So on the lower side of the fees, that's 20 bps for all you bippers out there.

But 10% of this 0.2% management fee goes to Ethereum open source development. That is protocol guild and the proposer Builder Separation association as well, which is a new open source advocacy group, which is pretty cool. Bitwise had an outsized showing with their ether ETF today. Not only are they donating to protocol guild, but also they have all of their addresses under Bitwise ETH. So they have five relevant Ethereum addresses that are associated with your Ethereum ETF's and it is one bitwise ETH, two bitwise eth, three bitwise eth.

They are using their ENS subdomains to label their ETH ETF addresses, which I think is really cool. Oh, they're Eth, aren't they? They are eths. That's right. Yeah.

Speaker A
Even Vitalik was excited about this. He always appreciates donations to public goods. He said, I really support this, that he's talking about the protocol guild donations from, from Bitwise. I look forward to seeing more projects and organizations follow your lead and donate to this important ecosystem wide public goods initiative. David.

So let's get to Matt Hogan because I think there's more analysis to do with respect to day one. Volumes, inflows, the letter grade for like how the Ethereum ETF's are performing is. How did we do? Yeah, ABC, are we excited about nothing or are we excited about a very big day? And look, most importantly, I want to hear when moon, when is price going to go up?

Bring in Matt right now. Bankless nation. We got Matt Hogan here, chief investment officer over at bitwise. Matt, howd yesterday go? Better than expectations.

Speaker B
Met expectations, first impressions. As to the ETF launch day, I. Would say better than expectations. These new Eth ETF's traded over a billion dollars. We had positive inflows despite significant outflows from Ethi.

Matt Hogan
We saw over $200 million of inflows here at Bitwise. There's a chance that these things came into the market. No big response. That's what we saw with eats, futures. That's not the world we're living in.

We learned yesterday that people want ETH exposure in an ETF. It was a great day, Matt. I saw over a billion in trading volume, which. A billion in inflows. Is it inflows or trading volume?

Speaker A
Sorry, I was out yesterday. I'm still catching up. Inflows would have been phenomenal. Trading volume.

On the podcast, Eric Baltunis gave this an a. He said, it's not an a, but a solid a for the first day. What would you let her grade? First day for the Ethereum ETF? I mean, that's a harsh grade.

Matt Hogan
Let me put on my ETF hat. You think an a is a harsh grade? Well, let me explain why a is. The best you can get a plus. We live in an era of great inflation.

We're talking a pluses here. Let me put on my ETF hat, and then I'll put on my crypto hat, because it depends which perspective you're looking at. So just to level set for the non ETF experts, the average ETF trades about a million dollars in its first day. $1 million. We got over a billion.

Yeah. This is a thousand fold better, right? That is. That's pretty phenomenal. I think it's the second biggest debut of any ETF in history.

There have been 5500 ETF's that have launched, covering stocks, bonds, countries, sectors, et cetera. No, ETH was the second best of all time. That sounds pretty good. It's only from the lens of the bitcoin ETF, which was absolutely historic, first in its class, $4.6 billion in volume, that it's, you know, maybe only an a, but this was, this was a great debut. It says a lot of good things about where this is going.

Speaker A
I feel like that that's always Ethereum's case. It's always like the middle child syndrome. It's always like the little brother trying to catch up to big brother. And maybe that's just like destiny. For a very long time, it seems.

Matt Hogan
To be the case that is right and graded on a curve adjusted for its market. Captain, it's right in line. It was a great, it was a great first day. What would have been like if you had said like this, met expectations? It didn't blow anyone away.

Speaker B
It didn't disappoint. It was just par for the course. What kind of trading volume number might that be in the range of. Yeah, 400, $500 million. Okay.

And we're over double that. We're over double expectations? We're over double expectations. And also, I can't stress how important this is, even for someone inside the industry. There was a chance you get to the starting line and it just fizzles.

Matt Hogan
There's 50 million, there's $100 million in trading volume. You don't know for sure. And so we completely removed that negative case, and we ended up on a very good case. We did 86% of the inflows that bitcoin ETF's did on day one on a net basis. That's way bigger.

Speaker A
Wait, so trading volume was about 23%, but inflows, give me that again. It was, I think, in the mid eighties versus bitcoin for day one inflows. We had a very good day percentage wise. Like mid eighties percentage wise. Like 85%, something like this.

Matt Hogan
Yeah. I mean, I should say this is probably obvious to everyone out there, but there's a big difference between trading volume and inflows. The product launches, people can trade it back and forth, but that doesn't mean money is coming in. We had, what was it, $590 million come into the new ETF's. Thats a very, very lot.

And even if you adjust out for the money that came out of ETH, it was north of $100 million. Thats a great day. Thats $100 million that didnt own ETH yesterday and owns it today. Lets extrapolate that out for a year. Not that well continue at that pace, but extrapolate net new buyers coming into the market.

It's really significant. I think this is some of the things that we're processing on Twitter, is that in comparison to the total trading volume, the net inflows into Ethereum have surprised into the ETH. ETF's have surprised to the upside. Have we understood as to why we are getting more net inflows than what would be indicated by the trading volumes? I think we're still figuring that out.

You could have firms that had pre wired expectations. Sometimes you get inflows that aren't tied to trading volume. Or you could have just maybe it's a more ownable asset and a less tradable asset. Maybe there were more traders in the bitcoin product on day one. Cause they expected high volatility, whereas maybe the people positioning here just are buying ETh for the long run.

We don't know for sure. It's hard to tease that out with public products on day one. So, Matt, Nate Jarcy put out a tweet. Hopefully I'm pronouncing his last name. I think, you know, he says, look at bitwise putting on yet another masterclass on how to launch an ETF.

Speaker B
You love to see it. And then it has a tweet saying that Bitwise had $203 million of flows. Just. Just your guys as ETF. What did you guys do?

What is. What is a masterclass in an ETF launch? And how did you guys go on executing one? I love Nate's commentary. He's covered efts for a long time, so that means a lot.

Matt Hogan
And it is great to see us ranked in flows, right behind Blackrock and ahead of fidelity. On day one, Bitwise is 65 crypto native people. Those companies are tens of thousands of people. Wait while we pause there. I want to get you to finish, but let's just go over the benchmark.

Speaker A
Ishares as Blackrock. 266 million in inflows after the first day. That's the number one. Number two is ew. That is the Bitwise Ethereum ETF 204, within striking distance to Larry Fink's Blackrock.

Pretty impressive. And then number three is fidelity, with 71 million. I got to say, that's a distant third. That's a. That's a.

That's a bronze medal. Very, very bronze. And then, like, after that, no one is very impressed. Very. So you guys got the silver for this, Matt.

And, like, closing in on the gold. Of course, that's just day one. You know, it's. It's a. You know, a longer race than.

Than one day, but, like, punch it above your weight class here. I appreciate it. Thank you. It feels good. I think there are two big factors at work.

Matt Hogan
You know, one is bit wise. I think we executed well. We've been in this market for seven years, building relationships. We had good media and advertising campaign. We did an extensive amount of media yesterday.

We did things like the public donation program to ETH developers. We published our ETH addresses. We gave them ens domain names. The other piece of it, though, really goes to the community, because the lane that bitwise is in is we are the crypto native ETF issuer in this space. Blackrock is a big, traditional asset manager with a huge brand.

So is fidelity. We're crypto native. I think what we learned yesterday was that resonates with a lot of people. People want someone who's going to embrace what crypto can do from a transparency perspective, that's going to donate back to the ecosystem. It's a victory for bitwise, but it's also a victory, I think, for the crypto community, showing that it recognizes and wants there to be a crypto native asset manager.

We happen to be that horse. Yeah. I asked this question on Twitter because I do have some full confession for everyone who didn't know. Both David and I do have some, like, bank accounts here somewhere. Okay.

Speaker A
Not completely bankless. So you have one of those. One of those is some IRA accounts that I have, like, Roth Iras, 401 ks, that sort of thing. And so I have some grayscale ether inside of those, some eth. And I was asking crypto Twitter, hey, if I'm considering swapping for a, like, lower fee ETF, which one should I do?

And the resounding answer was, ETHW was the bitwise Ethereum. And the reason for that was because protocol guild donations, because is it? 10% of the management fees are going back to protocol guild. And so there is this niche, and apparently it's not kind of like a small niche of crypto native capital that's tied up in retirement ETF's, and that is just glad to participate with bitwise. So that's got to be a big source of the inflows, at least.

I mean, from my small bubble of the world, it was. Yeah, it is a big source of the inflows, and we just. We love to see it. It makes us feel very good. Maybe less transparent.

Matt Hogan
Is also on the, you know, family, office, Ra, professional investor side. There's often a crypto champion at those firms who is crypto native himself, even though he exists in a larger firm. And the same things that resonate, you know, with you resonate with. With them as well. They care one of us, right?

Well, they are one of us. We also can't ignore the impact on the marketing material that you guys have been putting out. Right. Like, that's got to have something to do with it. The marketing team's incredible.

We got a lot of credit for our ETh ads. Thanks for calling out my Twitter profile picture. I appreciated that. That was an oversight. But the team's incredibly creative, and we've gotten great resonance.

ETH is decentralized, doesn't have a team that puts together those ads. So we're able to do our little piece of that. And there are plenty of other people doing their piece of that as well. Matt, as we move forward with the story arc of the Ethereum ETF, I think we're really looking for the differences between the bitcoin ETF to really allow ether the asset to stand out. The fact that ether the asset is materially different is what attracts a specific investor to ether the asset.

Speaker B
And so while it's great to have another ETF shoulder to shoulder with a bitcoin ETF, now, I think people on Wall street and Tradfi are looking at two crypto asset ETF's. And you're like, well, now there's two of them. What do I do about this? How do I think about the differences here? Bitcoin.

I think I understand bitcoin. And now there's this ethereum thing, and everyone in crypto understands that the Ethereum story is a little bit hard to tell. So I'm kind of looking for like, as we move forward, the differences between these two story arcs of these ETF's. There's a headline from an article that was citing you and your some analysis that you gave a bit wise, saying that the ETH ETF's will have a larger price impact upon ether than the bitcoin ETF's had on bitcoin. And you cited three main reasons ether's inflation rate effectively amounts to zero.

ETH does not have proof of work, sell pressure, and ETH is locked up on staking. Now, I would call all of these reasons more like, you kind of need to be in the know in the world of crypto, but one thing you don't need to be in the know about is that that it can impact the price faster, better, quicker. Maybe you can unpack this and how these narratives, these ideas might permeate through Wall street. And as well as your job of just educating Wall street on what is ether. Yeah, I think this idea of price impact on flows is really important.

Matt Hogan
People ask questions about that all the time. Some of them are obvious, right? Net inflation rate of ETH is zero. So the same amount of flows is going to have a larger impact than it did on bitcoin. A significant portion of the ETH market is locked up and therefore not available for sale.

It's not in the public float. It's staked, it's used in defi assets, it's bridged to layer twos. That's you get to 40 45% of the market that's just not available. The thing that I think is really powerful, which isn't well understood, is that middle one, which is this difference between proof of work and proof of stake. The way I think of the market is there are two types of people.

There are people who are forced to sell and people who sell if they want. And in bitcoin, you have miners that are forced to sell because they have hard costs. And so every day you have to buy a certain amount of bitcoin to keep it. Here in ETH, you don't have any forced sellers. No one has to sell ETH.

And the result is flows. You just don't start in a hole, you start level. So $100 million had to buy ETH yesterday from people who didn't have to sell, who would only sell if they want to. And that just means, particularly if we get a bullish market, if the market is going up and people are disinclined to sell their ETH, it's going to be hard for ETF's to find ETH to buy. I mean, we will, of course, I don't mean they're illiquid.

Of course you can, but you're going to have to chase up price. And I think that's. I think it's a really big deal. I think it's going to become apparent if we see strong inflows. Okay, so I have maybe a dumb question at this point, but I think some listeners are asking.

Speaker A
So we had 1.1 billion in volume, we had 100 million in inflows. Let's focus on that. Inflows number 100 million in net new buying activity. And yet, Matt, the price is kind of where I left things at the opening of the day. I checked at the beginning of the day and I checked at the end and it really hadn't moved.

If what you're saying is true, wouldn't 100 million in net increase inflows buying activity? That's effectively like, there's like not a lot of supply out there. Wouldn't that affect price? And how come it hasn't? Yeah, great question.

Matt Hogan
I would just say patience. It hasn't because we knew these ETF's were launching trading desks, build up inventory in the run up to this period, and they're ready to sell it. Of it's not one for one prices. Money doesn't come in and price goes up the next day. But I can guarantee you if there's three not guarantee.

Compliance says I can't guarantee anything. I believe that if we see billions of dollars of inflows. It's going to push the price of ETh up to new all time highs. It eventually overwhelms. Give us a number.

Speaker A
I saw you quoted recently. Five K and then I was looking at by end of year maybe I was looking at where that prediction was. I couldn't quite find it. Is that a true source? Did you really say that?

What are your current price predictions? Yeah, I have a above new all time highs price prediction by the end of the year. The reason it's that vague is in short term price. I think what matters is supply and demand. And I think there's significant sale pressure at any all time high.

Matt Hogan
Right. When we get to an all time high there will just be people who want to sell. We've seen that in bitcoin, we'll see that in eat. I think there'll be enough demand for these ETH ETF's to push it up to all time highs and then get through that sale wall. I think that's how much demand there is.

If that happens, I don't know where it goes above that. So the thing I'm confident or feel confident about is we'll get 5000 or so this year if we see strong inflows. And who knows above that? Above all time high is my favorite chapter in any crypto bull cycle. I mean is that obvious?

Speaker A
Is that everyone's pick too? Everyone's favorite movie? It is. It's like price discovery because you just don't know apart from that because we've never been here. You're forging into new territory.

Right. And to your point, that reflexivity loop is now investors see oh, ETH is making a run. I better like sell some Nvidia stock and get in on this crypto thing and like maybe that's my fantasy, but like who knows where it could go from there. Now that we have this, this pipe open to traditional investors that we didn't have in previous cycles. That is right.

Matt Hogan
I want to stop on that Nvidia thing because I know it's a fantasy, but I think it's actually true. I've been telling professional investors every time I meet with them that if you're investing in technology and you don't have ETH, you're missing a portion of the market. Look at the smartest tech investors in the world. Look at venture capitalists. They invest in AI, they invest in chips, they invest in biotech, and they invest in crypto and blockchain.

If you only have the cues and you dont have eth youre missing what some of the smartest investors in the world say is one of the most important areas of technology. So I dont think its a pipe dream. I think you are going to see people sell some Nvidia and buy some eth just so they have tech covered. Preston well, how about this from a narrative perspective, Matt, because I want to ask you around narratives, but how about ether is money for AI, its money for the robots. I mean, the least banked class of entities on the Internet, it got to be bots.

Speaker A
I mean, they can't go to Wells Fargo and go apply for a bank account, can they? And so maybe that's something that can take hold, but not yet. We've got some other narratives to work on first. And so I know last time you came on, Matt, you gave this brilliant elevator pitch for Ethereum that I thought was like one of the best I had ever heard. And I've noticed that now that we're getting into tradfi and some of these issuers, they're testing out ways to talk to their investors about Ethereum.

I saw a Blackrock video that's pretty good, where their main thing was, if bitcoin is about scarcity, Ethereum is about utility. And so they focus in on this utility. I got to say though, this word utility, I mean, like, what does that mean? I don't really know what that means. I've seen bitwise really double down on the, like a lot of different things, but almost like a more bankless theme.

It's just like, yeah, you know, Tradfi takes weekends off, they take bank holidays. Ethereum's always going, right, or tradfi. Deep platforms like the pickleball player is sort of like the joke, but, you know, they pick and choose who the winners are in this game. So bitwise has taken a bit more of a crypto native type take. Anyway, what's your theory of narrative?

Because it is true that bitcoin has had this single, cohesive, coordinated narrative of digital gold, and everyone just repeats that and parrots it, whereas Ethereum, we don't have consensus yet from traditional investors on what the one big narrative to invest in really is. And maybe that's just the nature of Ethereum, but it would be nice to have some cohesion here and some coordination to really figure out what works. What are you thinking at this stage in the game as far as what narrative is working? Yeah, I love it. And I note that bitcoin went through a number of narratives, right?

Matt Hogan
It cycled through as well. So this is part of the process. What we find that's working best is it's a technology platform that most of the interesting applications in crypto are built on. If you're interested in tokenization, it's built on Ethereum. If you're interested in stable coins issued on Ethereum, if you're interested in DeFi, most of that is built on Ethereum, deep in nfts, etcetera.

It is the fundamental platform for rewiring the Internet. And if you want to invest in tokenization or stable coins, or the growth of DeFi or the growth of nfts, you need to own some Ethereum. I think that really resonates with investors. The other thing that really resonates with investors is you just want to be diversified. You just want to own crypto, own some bitcoin and own some eth.

And I recognize there are flaws with both of those analyses. The tech platform doesn't talk about ETH money ness, which I think is very real and a very big part of the story. But that's probably a second or third meeting. The first meeting is bitcoin digital gold ETH technology platform for what? For all these things that you read about in the news.

And I think that resonates with a lot of people. So, Matt, now that the opening day of the Ethereum ETF's are behind us, what does work look like at bitwise? Are you guys on the just the ETH campaign trail? Like, what's going on? What are the next steps?

Speaker B
What are you guys all heads down doing? Yeah, 100%. I use this stat all the time. We do 20,000 meetings a year with professional. Sorry, thank you.

Also. Yes. So today I'll speak to, I don't know, three 4500 investors that manage north of $100 million, talking them about Ethereum and ETHW and the team, the sales and distribution team, 20 plus will do all the same things. And we'll be doing that for the next few months, and we'll be writing about ETH, and other firms will be doing the same thing. You don't see all that.

Matt Hogan
People get very excited when they see Larry Fink on tv talking about Ethan, or, you know, less excited when they see Matt Hogan on tv talking about ETH. We get excited, but behind the scenes, there are, there are literally tens of thousands of meetings. There's a huge education platform now moving forward, and you're going to see that in the flows. What number should we be looking at, do you think, in the, in the coming? Let's just give it a month in terms of like flows.

Speaker A
Like what would maintain our a to a plus grade with respect to this. Etfemen, man, if we did a billion dollars in the first month, that would be outrageous. Even if we did half of that, it would be really significant. So 500 million to a billion. In inflows.

In net inflows would be the a to a rate. That is right. Yeah. Because you got to remember, money is going to come out of ETh, so it has to be net flows. But yeah, if we can do that, it's a home run.

Matt Hogan
It's a home run. Well, Matt, thank you so much for your time. This has been really cool. Congrats to everyone. Ten years after the Ethereum ICo, it's like same week, and here we and you are going to be gonging the bell on the New York Stock Exchange for this Ethereum ETF on Friday.

Speaker A
Is that correct? That is right. Imagine that ringing the bell at the New York Stock Exchange for Ethereum. So weird. What a day bell ringing.

Speaker B
The juxtaposition is, I think the word oxymoron is there. But like, hey, we're here for it. We'll take it. We'll take it. Well, best of luck, Matt, with the bitwise ethw asset.

Speaker A
And thanks for coming on. Thanks for having me, man. I'm really glad that we have Matt Hogan and bitwise on our side. That was really helpful. That was really educational.

Speaker B
Every time I talk to Matt, I feel like I get educated. I feel like there's a lot left though, Ryan, in this conversation. We got the grayscale and the grayscale minitrust that is getting in the way of us in the moon. So when does it get out of the way? We have some tweets to pull up and some things to talk about.

We got Hill Dobby's work in progress dune board for the Ethereum ETF's, which is just so glad to see it like a dune board for the Ethereum ETF's. And then amidst all of this, bitcoin has had some record inflows for the last like two months. So the bitcoin ETF is also awakening at the same time that the ETH ETF's are launching. You got to love it when things line up. And then also since it's politics season, we have to invoke some modicum of political content because that is also bullish.

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Speaker A
We said grayscale was going to be in the way of our moon and our price, and that's because it's a source of outflows, isn't it? With ethere and David, I have some ethere in retirement account, as I mentioned earlier in this episode. Can you tell me how this works? Because there's not just ethere. Now, Grayscale has a mini trust, I believe, with lower management fees.

Does that, like, automatically convert over, or does a portion, like, how does all of this work? And what do we need to get out of the way in order to have this pure price discovery moment that we were just talking about with Matt? So say you have 1000 shares of ETH, the Grayscale trust, which is now an ETF. If you had 1000 shares, you now also have 1000 shares of the ETH mini trust. And so you doubled your shares.

Speaker B
Congratulations. Oh, yeah, that's great. Yeah. Now, but also the Grayscale ETH trust has also devalued by 10%. So because 10% of the Aum of the Grayscale trust has been transferred by Grayscale to the minitrust.

And so this is why in the order of Aum, it goes grayscale ETH, number one. Number two, grayscale minitrust, number two, because it took 10% of the grayscale trust, followed by Blackrock, followed by bitwise. Okay, well, but that's a confusing way to say, I think, what happened, which is for my eth e position now, I have 90% of that, you know, like position, the total value in eth e with the higher management fees and 10% in the minitrust. Right. Which means I'm still paying the high management fees on, like, 90% of, like, the assets that I held there.

Yeah, that is correct. Okay, so now if you had a ethi, you have $900 of ethy now and $100 of ETH. Interestingly, the grayscale minitrust ticker is Eth eTh. Oh, nice. Somehow they won that one kind of like, lucky for them.

When I was talking to Eric Baltunis yesterday, he was saying that the brand damage of greyscale by kind of cornering their ETH holders and not letting them out due to either they don't want to pay a very high capital gains tax or I can't remember the other reason, but there are people who are just cornered into, oh, wait, you said. Away from keyboard, is what you said. Oh, away from keyboard capital. Yeah. So, yeah, the people who are just dormant and just aren't aware that they're paying a very high management fee to Ethihen will be the people who hold Ethi.

And then the other people who hold ethy are the people who don't want to pay the capital gains tax. So of your capital gains tax, 10% that got rolled into the minitrust, you don't have to pay capital gains tax on that because that happened automatically. But if you want any more to roll into it, then you're going to have to pay capital gains tax on that. Which is why people are like, with Grayscale now and Ethi now, and they might buy non grayscale and ETTF. Maybe they go to bitwise and pay five more bits and fees.

Because I think according to Eric Baltius, it's just like an FU to Grayscale. It's like, we don't like, you guys are intentionally cornering us. I'm just not going to buy your cheaper fund. I'm going to trade mine out. But one thing, of course, is if you're in the US and this is in a retirement account, you don't have to pay capital gains on any of it.

Speaker A
So you could trade whatever you want and it doesn't even matter. So you just bypass the capital gains because it's in that, like, 401K or IRA type shield. So not applicable. So I can't wait to swap mine out for lower management fees. I was away from keyboard yesterday, so I didn't get to do that.

Speaker B
Yesterday you paid one whole day to. Grayscale all those gains. So now the big question is, we needed for the bitcoin price to go up last the bitcoin ETF. We needed the grayscale GBTC to clear out. And we're watching this happen.

So when the ETH ETF's launched yesterday, we went from $3,500 ether to $3,400 ether. Like we went down in price, didn't meaningfully dump. But now, like everyone is, the traders are looking at, is this a sell of the news event? Like, now the grayscale is going to unload. No one really knows because we've seen this movie play before, and so now this movie is different.

But we did see 5% leave Grayscale in just one day, which was a larger outflow out of the grayscale eth trust on day one than was an outflow out of the grayscale GPtrust on the bitcoin etfemen. We're seeing a faster flushing so far just of day one of trading, which is good. So we need to clear these eth skies and they're clearing faster, and it's only gone down, like a little bit of price. And so that's optimistic. We don't really know what flows are going to be like.

We need a week of trading activity to really see. But we have some kernels of positive indication that this is going better than, uh, the grayscale, uh, GBTC trust. Mainly because we did not have the grayscale mini trust, uh, for bitcoin as fast as we do have it for Ethereum. Well, but isn't. Isn't.

Speaker A
Isn't that what I heard? Like, the, um, inflows day one net inflows were actually like 80% of bitcoin. Like, that's something I just learned from our Matt Hokin conversation. Yeah. So 80%.

And again, when we say net inflows, that is already taking into account the grayscale outflows. Right. And we're just saying which was larger? The grayscale largers were larger than expected compared to the bitcoin ETF's. And the ether inflows into the ETF's were also larger than expected.

Yeah. It does seem to me like Grayscale is going to be less of a factor on this than bitcoin, but we'll have to see what the net inflows look like. That is the number to watch. And what Matt said is, if you're looking for that, a plus grade, 500 million in a month's time, by the end of August, let's say, of net inflows would be like a. A plus grade, a billion would be absolutely, like, phenomenal.

Speaker B
It would be s tier. S tier. Hill Dobby, who is something that we use to watch many, many dune boards. He's putting his Ethereum ETF's dune boards together. This is very much a work in progress, but the fact that we have an Ethereum ETF dune board is something to celebrate, I think.

But Hill Dobby, I'm going to need you to finish that up by the time tomorrow, please. Yeah, you know, this is like the ETF's are like tradfi's version of an ERC 20, isn't it? And that's why when you, when you ask belch units yesterday in your conversation with him whether he was like, how he felt about the tokenization narrative, he was like, now we have ETF's, right? He's like, that already is token. That's tokenization, dude.

That's what that is. Yeah. So he's, he's like, he's doing tokenization via ETF and that's why he's more. On that tokenization via fax machine. Well, let's talk about this convergence of things that might happen as we close this episode out.

Speaker A
So the bitcoin flows have been impressive, particularly lately. While we've had the summer doldrums, right, where price hasn't been at all time high in crypto, we've taken a bit of a hit. Bitcoin was down 25%, yet the inflows into the bitcoin ETF have kept coming. Give us an update on this and how this might affect ethereum etfeminal. So this was Monday, just Blackrock on Monday had $523 million of net flows.

Speaker B
Not trading volume net flows, just Blackrock. And so that's one of the bigger days in bitcoin ETF flows history. And it's coming after like a very long era of just like, nothing we had. There were like, ignoring this June 5 and fourth big days, respectively, $880 million of inflows and then $480 million of inflows. We have been flat on inflows ever since middle of April.

And so we are now waking up. We have consistent inflows into the bitcoin ETF's since July. July has been inflows only. So we're approaching 30 days of inflows only. And it's been crescendoing throughout July.

Maybe this has to do with the election season, because now people are just kind of pricing in a more favorable outcome to crypto no matter what. But we're seeing bullish flows into the bitcoin ETF's at the same time that we are now also seeing the opening gate for the ether ETF's. So you really just got to appreciate when stars line up, because that's how a bull market happens, is when we get enough stars to line up, bull markets just happen. And so I'm just noticing these very two big stars line up perfectly with each other. Well, let's end it there on the bullish setup that we have going into this week, the last week of July, and the roll up tomorrow, which we're going to record, this insanely bullish setup.

Speaker A
This is what you tweeted, the Trump election locked in. He's, of course, pro crypto, in addition to JD Vance, the most pro crypto vp possible. David, you didn't include it here, but now Kamala Harris, I saw yesterday, is talking about going to bitcoin conference, considering. Talking at the Bitcoin conference in Nashville, which starts tomorrow. So maybe that's a, that maybe that's a pivot on the Democrats kind of anti crypto posture.

They, they see crypto as an election issue anyway. Crypto as an election issue. The prospect of a crow, a pro crypto president. Also, Jamie diamond is turning bullish because of Trump and because of this political influence. Gary Gensler, resignation this rumor is in the air.

It's nothing confirmed yet. I, the ETH, ETF's have just been approved. Trump wants bitcoin on the balance sheet. Talk about a central bank buying crypto. That would be absolutely crazy.

Particularly the US, the Fed and the fed rate cut cycle also looming. All of this points to an incredibly bullish setup as we move into the second half of this year. There needs to be some asterisks on most of these. Like, is the Trump election locked in? No, actually, like, polymarket has been at 63% odds, which is pretty good, but it's not locked in.

Speaker B
JD Vance, the most pro crypto vp possible. I think that's right. I think that's a very fair statement. Jamie Dimon bullish bitcoin because of Trump. That actually might be just a rumor that got circulated.

And so this one actually might need to be stricken from the record. Sorry about that. GarY GeNsler resignation this is under the assumption of a Trump victory. I think if it's a Trump victory, it's a very safe assumption that Gary Gensler will not be the SEC chairperson and understanding that Kamala Harris is poking her head up just two days after getting the Democrat nomination by Biden. And like two, within two days, she's now considering crypto and she is considering going to bitcoin conference in Nashville.

The fact that that's on her in her brain space so quickly after receiving the Biden nomination, I think is very indicative of she needs to write some wrongs that the Biden administration accidentally stumbled into. Regardless of whether she is a pro crypto president, the fact that, like, she's considering crypto so quickly into her candidacy, I think is very telling. ETF that just happened. Speculation that Trump wants bitcoin on the fed balance sheet. Definitely speculation.

But you can see it. You could definitely see it. And then the fed rate cut cycle looming. Don't hold your breath for that one. But it's definitely coming.

It's definitely. I think this is a fantastic setup of catalysts. Let's end it there. Of course none of this has been financial advice. We have no idea what crypto is going to do in the future.

Speaker A
We have no idea what the future future volumes for the Ethereum ETF look like. You know that crypto is risky. You could lose what you put in. But we're headed west. This is the frontier.

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