Bitcoin Extends Retreat From Record as Bubble Talk Escalates
Summary
TLDRThe discussion revolves around the significant impact of ETFs on Bitcoin and the broader cryptocurrency ecosystem. It highlights the projected $220 billion in net inflows into ETFs over the next three years, opening up access to crypto for retail investor advisors managing $25 trillion in assets. The transformational effect of substantial capital inflow is emphasized, with a bullish outlook on blockchain technology and its applications. The role of Coinbase as a key player in the industry's growth is also underscored, with expectations of innovation and development in blockchain technology over the coming decade.
Takeaways
- 🚀 Projected $220 billion in net inflows into ETFs over the next three years, a significant increase from the $10 billion seen in the first two months of launch.
- 💼 Retail investor advisors, managing around $25 trillion in assets, are now able to invest in Bitcoin through ETFs, opening up a previously untapped market.
- 🌐 The approval of ETFs is expected to accelerate capital inflows into the cryptocurrency market, despite potential volatility.
- 📈 The transformational impact of substantial capital inflows into new markets is highlighted by the speaker's 20-year experience in financials and fintech.
- 🤔 Speculation on the future success of various blockchain technologies is likened to investing in early-stage technology or biotech stocks.
- 📊 The ETF for Bitcoin is seen as a separate entity from the broader crypto ecosystem, with potential to attract investments from over $100 trillion in capital.
- 💹 The discussion suggests that the Bitcoin ETF will not cannibalize trading on platforms like Coinbase, but rather increase overall interest and trading volumes.
- 🌐 The potential for an ETF ETF and the performance of other cryptocurrencies like Solana indicates a spillover effect that could benefit the entire crypto market.
- 🏦 Coinbase is positioned to benefit from the growth of the crypto ecosystem, with involvement in tokenization, payments, web3 applications, and staking, beyond just trading volumes.
- 📈 Other brokerages like Robinhood and Galaxy could also benefit from the growing interest in crypto, with retail and institutional investors driving demand.
Q & A
What is the projected amount of net inflows into ETFs over the next three years?
-The projected amount of net inflows into ETFs over the next three years is $220 billion.
How much net inflow has been observed in the first two months of the launch?
-In the first two months of the launch, there has been about $10 billion of net inflows.
What is the significance of the ETF approval for retail investor advisors?
-The ETF approval allows retail investor advisors to access and invest in Bitcoin and crypto, which they were previously shut out from due to custody concerns.
What is the total asset value under the management of retail investor advisors?
-The total asset value under the management of retail investor advisors is about $25 trillion.
How does the speaker describe the current stage of the market in terms of Bitcoin and the broader crypto ecosystem?
-The speaker describes the current stage as being in the 'first inning', indicating that the market is still in its early stages of development and growth.
What is the speaker's stance on the future of other cryptocurrencies besides Bitcoin?
-The speaker believes that many of the other cryptocurrencies may end up being worthless over the next couple of decades, but acknowledges that we are in the early stages of development and people are speculating on which blockchains will be successful.
How does the speaker view Coinbase in relation to the crypto ecosystem?
-The speaker views Coinbase as a significant player in the crypto ecosystem, benefiting from the broader application of blockchain technology and being involved in various aspects of the industry's growth.
What is the impact of the Bitcoin ETF on Coinbase's trading volumes?
-The Bitcoin ETF has led to increased trading volumes for Coinbase, with a reported increase of over 100% in the first quarter compared to the previous year.
What is the potential spillover effect of the Bitcoin ETF on other cryptocurrencies?
-The Bitcoin ETF has increased interest in the broader crypto space, leading to more trading and investment in other blockchain technologies and altcoins.
Which other companies besides Coinbase could benefit from the growth in the crypto market?
-Other companies that could benefit include Robinhood and Galaxy, which are also public market plays in the crypto space.
What is the estimated breakdown of retail versus institutional inflows into ETFs?
-It is estimated that of the $220 billion in net inflows, $160 to $170 billion will come from retail investors, whether self-directed or advisor-led.
Outlines
📈 ETFs and the Future of Bitcoin Investment
This paragraph discusses the impact of ETFs on Bitcoin and the broader cryptocurrency ecosystem. The speaker predicts $220 billion in net inflows into ETFs over the next three years, highlighting the opening of previously inaccessible capital for investment in crypto. The introduction of ETFs is seen as transformative for the market, with retail investor advisors controlling about $25 trillion in assets now able to invest without the need for platforms like Coinbase. The speaker emphasizes that the market is still in its early stages, with accelerating flows expected, despite potential volatility. The conversation also touches on the speculative nature of the market, the potential worthlessness of many cryptocurrencies, and the bullish outlook on blockchain technology. The ETF for Bitcoin is considered a separate entity, but the overall trend is towards increased capital allocation in the crypto space.
🚀 Diversification in the Cryptocurrency Market
The second paragraph focuses on the diversification within the cryptocurrency market beyond Bitcoin. It discusses the potential of an ETF ETF and the performance of other cryptocurrencies like Solana. The impact of the Bitcoin ETF on platforms like Coinbase and Robinhood is explored, with the expectation that increased interest in the crypto space will lead to higher trading volumes. The speaker argues that the ETF has not cannibalized trading but has instead attracted more capital into the market. Coinbase is positioned as a comprehensive player in the crypto ecosystem, with involvement in various aspects of the industry's growth, including tokenization, payments, and web3 applications. The conversation also briefly touches on other brokerages like Galaxy that could benefit from the growing market.
Mindmap
Keywords
💡ETFs
💡Bitcoin
💡Retail Investor Advisors
💡Fintech
💡Volatility
💡Blockchain
💡Coinbase
💡Altcoins
💡ETF ETF
💡Robinhood
💡Galaxy
Highlights
$220 billion of net inflows into ETFs over the next three years is predicted.
There has been $10 billion of net inflows in the first two months of ETF launch.
ETFs have opened up additional capital that was previously inaccessible for crypto and Bitcoin investments.
Retail investor advisors, managing $25 trillion in assets, are now able to consider crypto investments with ETF approval.
The early stages of ETFs suggest that flows are accelerating, with potential for increased volatility.
The transformational impact of substantial money entering a new market is highlighted, with a focus on financials and fintech.
The shift in tone regarding the crypto market is attributed to the introduction of ETFs.
Speculation on the future value of cryptocurrencies, with many potentially becoming worthless over the next few decades.
Blockchain technology and its application in the broader crypto ecosystem are seen as highly bullish.
The ETF for Bitcoin is considered a separate entity but still contributes to the overall growth of the crypto market.
The discussion around the Bitcoin ETF cannibalizing trading volumes is debunked, showing increased interest and trading in the broader crypto space.
Coinbase's role in the growth of the crypto industry, beyond trading volumes, is emphasized.
Coinbase's involvement in various aspects of the industry, including tokenization, payments, and web3 applications, is highlighted.
The potential for ETFs to impact the price and discussion around Bitcoin, with a focus on the broader implications for altcoins.
The spillover effect of ETFs on other cryptocurrencies like Solana is discussed.
Galaxy and Robinhood are mentioned as potential beneficiaries in the brokerage space, alongside Coinbase.
The importance of retail investors and self-directed market in the predicted $220 billion of net inflows.
Wealth management advisors are expected to allocate some funds to the new asset class, driven by customer interest.
Transcripts
Some of your notes have been pretty extraordinary in terms of the sheer
scale of money that is entering this space and where you see some of the
price points going. Can you just talk us through your main
thesis of what the ETFs could do for Bitcoin and the ecosystem more
generally? Yeah, happy to, Caroline.
And thanks so much for having me on. So we put out a note earlier this week
and we are talking about $220 billion of net inflows into these ETFs over the
next three years. So for context, there's been about 10
billion of net inflows over the first two months of launch, but we see that
accelerating quite a bit. And the reason being is that we've
essentially opened up a lot of additional capital that historically, up
until January this year was shut out of investing in crypto and in Bitcoin,
specifically the biggest pool that is retail investor advisor by money,
there's about $25 trillion of assets where advisors really want to custody
the money within their own custody and not move it out to somewhere like
Coinbase. And so ultimately now these advisors
with the ETF approval can start to look at that.
But I think we're in the first inning. I don't think advisors have really been
allocated yet. So we see flows actually accelerating
from here. So there will be volatility.
But you know, in my career covering financials and fintech for 20 years, you
know, follow the flows and when there's money coming into a new market and it's
substantial, which we think it will be with these apps, it's really
transformational. It is amazing that we have been talking
some of these cycles for years, but only now do we hear the likes of you, Devin,
talking about $220 billion coming in. And we had Bernstein yesterday out with
a note saying we are entering this monster cycle for crypto.
What changed your tune? Was it the ETF?
Yeah, we've been consistently constructive on the space and you know,
I cover Coinbase, which is in our view kind of the biggest on ramp in the
public markets into the industry. I think you guys touched on it.
There's a lot of speculation going on. You have Bitcoin and then you have, you
know, 20,000 other cryptocurrencies and I think that many of those
cryptocurrencies are going to be worthless when you look out over the
next couple of decades. That being said, we are in the early
innings and so people are putting their chips on various blockchains that they
think will have development on top of them.
And just like you would in a technology stock or even a biotech stock that is,
you know, in its formation days, you know, it's going to take ten years to
get to commercial application. And a lot of these blockchains are in
their first inning and people are speculating on which ones it will be
utilized. And so I'm very bullish on the
application of the blockchain technology that's kind of the broader crypto
ecosystem that Coinbase is benefiting from.
And then the ETF for Bitcoin is, in my opinion, kind of its own animal.
But we do see again, you know, we think people are going to increasingly move
some money, you know, small amounts, but small amounts.
Now you open the door to, in our opinion, over $100 trillion of capital
in us that potentially could look at allocating something here and we're shut
out. You know, much of that until January 11.
You mentioned Coinbase and just a disclosure that my husband is a director
over at Coinbase, but I am interested in that outside of the space of just
Bitcoin, Bitcoin is sort of hoovered up all the oxygen in terms of being able to
shine a light on the price, being able to talk about the ETFs.
But there is talk of an ETF ETF, there is still Solana doing very well, for
example, other altcoins. How does that spillover effect continue?
Yeah, it's a great question, Caroline. I think there was a lot of discussion in
the market leading into the Bitcoin ETF that would be cannibalistic in that
everybody would just trade the ETF and then that would hurt Coinbase.
We were taking the other side of that argument.
I think the evidence is now clear that in reality what's happened is there's
been a significant amount of more money that's moved into the broader spit, both
of Bitcoin where Coinbase is participating, a lot of trading of the
underlying assets in the ETF and then elsewhere, but their volumes are up over
100% trading volumes over the first quarter last year.
And a lot of that's happening in all of these other assets because again, people
are more interested in learning about the space and taking views on other
blockchain technologies and which ones could be successful.
And so that's really what's happening. I think we're still kind of in the early
days of that as well. That's Coinbase.
But then Coinbase is also, you know, in our opinion, going to have their hand in
virtually every aspect of how this industry grows, whether it's
tokenization of real world assets, whether it's, you know, payments and
remittance and development of web3 applications, do they have their own
blockchain called base? You know, they're very active in staking
and there's going to be a lot of innovation in this industry that I don't
think is even happened yet. So Coinbase to us is really a play on
that growth, even more so than just trading volumes.
And you know, the exchange activity. It's interesting that Bernstein called
out Robinhood as the key play. You've got a $25 price target, I believe
in that particular company. Where else could be benefiting in terms
of brokerages? Is it all about the institutional play
and the retail play still? Yeah, I think Galaxy is a name.
They're Canadian listed right now, but that's Michael Bloomberg, right?
As you guys mentioned, they're clearly a public market play here.
We know a lot of the private players in the space and there's a lot of really
interesting companies in the private markets.
Robinhood clearly has an investor base that is, I think, in the demographic
that is active in crypto. It's not as big of a driver for their
business model. Coinbase is really a pure play on the
crypto ecosystem, both trading but then also development.
And how is blockchain used over the next 5 to 10 years and they're going to
participate in all that. I think Robinhood has, you know, their
tentacles into some of that. But you know, Robinhood, a broader
brokerage, which is good, a lot of the other brokerages really, you know,
they're they're barely there yet. And that's also, in our opinion, part of
the opportunity is self-directed market. I would put in that bucket of your
retail investors and we estimate of that $220 billion of net inflows, 160, 170
billion of that is still going to come from retail, whether self-directed or
advisor led. And I've covered the wealth management
market for 20 years. These are folks that, again, they're
relatively conservative, but they want to invest where their customers want to
invest. And I think the people are going to want
some small access to this new asset class.
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