Retail Got Screwed on the BTC ETF's

Summary

The video is abnormal, and we are working hard to fix it.
Please replace the link and try again.

The video is abnormal, and we are working hard to fix it.
Please replace the link and try again.

The video is abnormal, and we are working hard to fix it.
Please replace the link and try again.

Outlines

The video is abnormal, and we are working hard to fix it.
Please replace the link and try again.

Mindmap

The video is abnormal, and we are working hard to fix it.
Please replace the link and try again.

Keywords

💡Bitcoin ETFs

Bitcoin ETFs (Exchange-Traded Funds) allow investors to buy and sell Bitcoin through traditional financial markets without owning the actual cryptocurrency. In the video, these ETFs are a focal point of the discussion, particularly in relation to their performance since their launch in 2024, their adoption by both institutional and retail investors, and the large inflows and outflows associated with them.

💡Institutional Adoption

Institutional adoption refers to the involvement of large financial institutions, such as hedge funds and investment firms, in the crypto market. The video debates whether institutions are genuinely buying into Bitcoin ETFs, with critics like Jim Bianco suggesting low institutional participation. The video contrasts this with data showing significant inflows, but small average trade sizes, leading to the argument that retail investors, not institutions, might be driving adoption.

💡Inflows and Outflows

Inflows and outflows measure the amount of money entering or leaving investment funds, such as ETFs. In the script, the video highlights $17 billion in inflows into Bitcoin ETFs in 2024, contrasting this with a reported $1.2 billion outflow over a short period. This discussion ties into the broader theme of whether the ETFs are succeeding in drawing sustained investor interest.

💡Retail Investors

Retail investors are individual, non-professional investors who trade securities for their personal accounts. The video emphasizes that a large number of retail investors are likely driving Bitcoin ETF adoption, as evidenced by small average trade sizes. This contrasts with the narrative that institutional investors are the primary players in the ETF market.

💡Tourist Tool

The term 'tourist tool' is used critically in the video to describe Bitcoin ETFs as being mainly adopted by small, casual investors ('tourists') rather than serious institutional players. Jim Bianco uses this term to downplay the significance of the inflows into Bitcoin ETFs, suggesting that it reflects speculative or non-committal buying rather than deep, institutional investment.

💡BlackRock

BlackRock is a major global investment management corporation that launched one of the Bitcoin ETFs, 'IBTC,' discussed in the video. The mention of BlackRock's ETF highlights its rapid success, ranking high in inflows among all ETFs, which is used to argue that institutional Bitcoin adoption, while debated, may still be significant.

💡Grayscale

Grayscale is another key player in the Bitcoin investment space, particularly through its 'GBTC' offering. The video contrasts Grayscale’s outflows with the inflows of newer ETFs like BlackRock’s, noting that Grayscale saw $20 billion in outflows, illustrating shifting investor preferences and the volatility in the crypto ETF market.

💡Benjamin’s Trading Pit

Benjamin’s Trading Pit is referenced as a source of analysis on ETF expectations, particularly regarding the anticipated $24 billion inflow for the year. This platform provides the pre-launch expectations that the video compares against the actual inflows, highlighting how the ETFs have already surpassed optimistic forecasts by achieving $17 billion in inflows by September 2024.

💡Adoption Expectations

Adoption expectations refer to the forecasts made about how quickly and to what extent Bitcoin ETFs would gain traction among investors. The video compares early predictions (like a $24 billion target) with actual performance, showing that Bitcoin ETFs have exceeded expectations in terms of inflows but continue to face skepticism about their long-term adoption, particularly among institutions.

💡Onchain vs TradFi

Onchain refers to transactions recorded directly on the blockchain, while TradFi (Traditional Finance) represents conventional financial systems. The video touches on a potential return to TradFi as a critique of Bitcoin ETFs, with some arguing that the inflows are coming from smaller, less serious investors rather than institutions. The discussion suggests that if better onchain experiences emerge, like ordinals and BRC-20 tokens, it might eventually overshadow ETFs.

Highlights

The video is abnormal, and we are working hard to fix it.
Please replace the link and try again.

Transcripts

hey there it's Marone white and did you

hear that the Bitcoin ETFs lost over $1

billion in 8 days I mean what a failure

seems the institutions never arrived the

Boomers aren't buy at least that's the

narrative making the rounds but I don't

think that's the entire story ETFs are a

test of adoption any criticism needs to

accurately measure if they've succeeded

on that front and believe it or not the

data may suggest the biggest adoption is

already happening so let's review how

successful the ETFs have been today look

at the data points behind institutional

buying and discuss why institutional

adoption might not be needed in the end

but first we're going to look at the

flows so the Bitcoin ETFs launched

January 11th

2024 and quickly became some of the best

performing ETF of the year and just two

months later in March 11th we have a

tweet here from Aaron balconis talking

specifically about that he says two of

the ETS ibit black Rock's offering and

fbtc Fidel's offering are ranked three

and four in the top 10 for flows for

march across all ETFs and I think part

of this other part of this Twitter

thread he talks about the fact that

maybe some of this could been expected

six to nine months or even a year end

but to come as early as it did it's just

well it's just incredible so already you

know in March we were talking about how

successful these were being now you fast

forward a little bit take it all the way

to August and you experienced over 17

billion in inflow I want to show you

this next slide this this is an image

that comes from Far Side investors they

maintain about a two-e rolling average

or rolling schedule of the the actual

inflows for each of the ETFs you can see

here on the bottom it actually has the

flows inflows coming into ibit fbtc IIT

having about 20 billion and if you go

all the way to the right you can see

gbtc grayscale which had a which had

head rise right start started with a

larger number it's seeing 20 billion in

outflow even with that said you have

about just 17 billion of inflow for the

year and this includes the weeks that we

talked about that billion dollars that

came out in the eight days in September

so I mean under any measure we're

talking about 17 billions of dollars

it's a lot of money so now we're in

crypto a lot of people think to

themselves well 17 billion that's not a

lot well you need to put the context in

to what the expectations were going into

the ETF launch you see a lot of people

have been talking about the

institutional launch or the ETF launch

for a long longtime years in fact and

you had the Skeptics who saying it

wasn't going to do well at all and then

at the beginning before it even launched

you had people starting to talk about

what those numbers would actually look

like and Benjamin on a recent episode of

trading pit he actually explained what

the expectations look like let's take a

look at that clip to hear what people

were actually thinking before these

actually went live so the whole

expectation when Black Rock filed for

the ETFs uh the 2024 expectation even

from Eric and a lot of of prime

brokerages almost the majority of the

ODC debts coinbase all included the

expectation was 24 billion on a hyper

optimistic upper limit actually so um

that was supposed to be end of

20124 that was the expectation that in a

period of 12 months we may hit 24

billion in net

inflows if all goes great so for a full

year what they were looking for was 24

billion now we're at the we're in August

and actually the table I just shared

here it's actually in September you have

17 billion which is roughly about 70% of

the highest expectation just to give you

a little bit more perspective on what

this might mean if you look down here

the average inflow is about 101 million

per trading day if you take that and

look at the the remainder of the year if

that continued that'd be about 11

billion which would net out to about 28

billion exceeding the highest water Mark

that they had by 4 billion I think by

those measures you'd have to say that

these ETFs have been a success from an

adoption perspective but to be fair a

lot of the discussion isn't just about

flows it's a question of who's actually

buying these ETFs and that's where a lot

of the criticism has come from they're

saying are the institutions actually

buying well now According to Jim biano

Bianco micro research the answer is no

see after the the the one .2 billion

redemptions that came out in September

the ones that you're seeing right here

on the screen hey Marone here I need

your help to win a bet with Ben Lily he

said the interest in crypto is so low

that JB's digital could offer Jay the

personal AA Trader for free and people

still wouldn't take the 5 minutes to

give it a try I said you are crazy and

I'll prove you wrong so all you got to

do is click the link here and sign up

for Jay and Ben loses and he has to

drink Earl gry tea for an entire year

with no espresso and if you're wondering

what's J well it's the AI software

that's been used to power funds trade

desk and over nine figures of capital in

some of the most extreme conditions in

crypto and now it's tune to have one job

use lower risk trading strategies to

consistently grow your account over time

and here's the best part Jay does the

trading so you can be in crypto without

living crypto you get to sleep touch

grass and spend time with friends and

family sounds perfect right we click the

here to get started let's get back to

the show Jim put out this this tweet

which was a uh I think about eight

different tweets actually trying to

summarize or detail the points he was

making that these ETFs have been you

know for lack of a better term a

non-success they've been a failure on

the front of actually getting uh

institutional adoption he says it's not

an adoption vehicle instead of small

tourist tool and onchain is returning to

trafi so he's calling $ 17 billion in uh

infl flows a uh tourist tool but we're

going to dismiss that for a moment I

want to go through the the Four Points

he notes Here which summarize all eight

of his tweets says inflows are now

outflows yep you're going to see the

outflows agree with that hollers have

recorded losses well yeah that's true

but anybody who buys an ETF and then

sees the price decline is going to have

unrealized losses on that asset that

applies to any asset not just Bitcoin

you can dismiss that advisors are less

than 10% the Holdings and the average

trate size is now 12,000 these are

interesting points that we can actually

get into let's actually understand does

this support his point that no

institutions have arrived and it's just

a small tourist tool let's get into it

so the first I want to actually start

with his discussion on oh let me bring

this up all right the discussion that he

has here about small purchases so what

he's done here is he's got a chart he

has uh several different ETFs on here

including the Spy the triple q and what

I think is the most relevant which is a

gold ETF GLD the very the y- axis that

we see here these are actually trade

amounts uh and the average trade amount

and then this is over a period of time

so you see the larger ETFs you've got uh

spy you got the triple Q then the middle

part you actually have the gold one uh

which actually is in gold and on the

bottom you see Bitcoin so he's

absolutely right very much smaller

amounts being applied to bitcoin on a

fairly consistent basis we're seeing

consistent purchase ing uh and and not a

lot of variation on the actual amounts

that are coming into the the ETFs and

definitely much smaller when you compare

to some of these other ETFs I mean if

you look at gold gold comes at about 60k

per trade whereas the Bitcoin ETFs are

about 12,000 that's about a 5x

difference but then you should ask the

question is that the whole story not

entirely when you actually look at some

of the other metrics around these ETFs

Bitcoin or at least ibit versus gold

actually Stacks up pretty well I mean if

you look at volume here you've got 26

million daily share volume for ibit

versus only 6 million for GLD and the

Daily Dollar volume for ibet is sitting

at just under a billion whereas GLD is

over 1.4 roughly 1.4 so it's definitely

smaller but it's not as if it's a 5x

difference or 10x difference bear in

mind GLD is about 20 years old and iit's

got about eight months so here Jim is is

definitely pointing out a correct

statistic but he's not giv a full part

of the story to try and really talk to

you about are these people really you

know buying these are they really retail

people uh and does this actually say

that there's no adoption I think there

is adoption but fair enough it's

actually smaller smaller purchases

whether these are serious buyers or not

time will tell but let's actually get

into the next part that he's actually

going into which is are the institutions

actually coming and here I think he

actually has a better argument uh that

actually again has a few holes in it so

what he does he's got a chart here which

I believe is going to be coming from um

uh well it's it's some reporting uh

maybe it's coming from a Bloomberg

terminal uh but what it actually shows

is for ibit uh which I've included here

he also does it I believe for Fidelity

and for Grace scale it does a breakdown

of the institution types that actually

own the ETF and here he has the hedge

fund managers which are about 8%

investment buyers are 7% Brokers of 2%

all the others are very very small

number the M middle column is actual

shares and then the percentage ownership

is going to be the outstanding shares

the total shares outstanding so Jim

looks at this and says listen you don't

have any investment advisor it's only 7%

8% going to hedge funds and they're more

doing speculation and brokerages own

being nothing and we got you know maybe

10% if you calculate all the other uh

institution types owning

this well there's an interesting point

of rebuttal here which is is yes this is

only 7% going to institutions but how

valuable is it to the marketplace and

here Matt howan the CIO bitwise put some

context around this you see he points

out that the amount that's actually gone

in from investment advisor perspect

specifically equals about $11.45 billion

and that $1.45 billion if you look at

all the ETFs launched in

2024 it's actually the second largest

amount going to investment advisers beat

out beaten out by just one ETF that he

notes Here which is

klmt so you actually have quite a bit

going into investment advisors when you

compare ibit to the other ETFs that are

out there but there's actually more to

the diversity story and this comes in

from a tweet again from Eric balconis

the um excuse me a senior ETF Analyst at

Bloomberg he points out that in his own

words the ETFs are freak of nature when

it comes to ownership and this is a

tweet he put out just uh in September

9th Bitcoin ETFs collectively have over

1,000 institutional holders ibit

specifically has 661 holders well how

unique is that well if you compare it to

the other ETFs that that launch within a

given year it's not uncommon for them to

have just two holders which he notes

Here got 661 holders of ibit versus two

for the common ETF and again the whole

conversation here is about adoption and

whether or not the institutions are

buying it well it's important to note

that you have 661 holders of these ETFs

maybe in very small amounts but they are

holding something so when Jim's saying

that there's no there's no adoption from

an institution perspective he's he's not

really adding that context and I think

that's important two more points here

you know when we talk about the

allocation many people will say this is

a highrisk asset very volatile Le based

on historic parameters therefore you

should allocate a very small amount to

it 1 to 2% of a portfolio this can lead

to average much smaller average purchase

amounts right and we're still getting up

to speed again we're still in the 8

months here so while Jim does have a

point that it's not as if we have 50%

adoption by institutions of these assets

I think he's not giving a full picture

of the actual institution adoption but

what about from a retail perspective

because I think this is the actual story

that's not getting any air time at all

and it needs to because what we're

really seeing here is that normies are

buying Bitcoin in the billions so if you

do you know back in the napkin

calculations you got 17 billion in flows

that have come in divided by 12,000 the

average trade that's 1.4 million is that

1.4 million individuals that have come

into Bitcoin I don't think so it

probably needs to be discounted people

buying multiple trades but how much of

that is an individual buyer did it did

it on board 300,000 500,000 even 100,000

that's a significant number of retail

people that are coming into the

ecosystem and the point is that why are

they coming into the ecosystem now

rather than not doing it before well we

actually have an explanation for this

and this again comes from Benjamin on a

recent episode of trading pit where he

explains well how his uncle actually

bought the ETF and so let's have a look

at that clip now a lot of these guys are

starting to buy the ETF I know this

because my uncle bought a Bitcoin ETF

the unle has not for years yeah like I

we were neigh he never bought a piece of

Bitcoin but he's bought a Bitcoin ETF at

58k right maybe he's wrong but that

doesn't matter he says it's a long-term

hold now for him why the impression that

the ETF vehicles have given him look you

can get it and you can put it in your

brokerage account you can keep it don't

worry about the custody and if you die

it it can you know go to your kids don't

so that opens up a very different tour

what Benjamin's really pointing out is

that these ETFs are giving people that

were Bitcoin curious a way to get into

the market they weren't willing to cross

the technical Chasm to understand seed

phrases to understand you know how how

to manage this from a custody

perspective what happens if you die and

you need to pass it on to people they

didn't want to do that but once it's in

their brokerage account and they can

simply hit buy from an ETF perspective

they're in so we're now opening up

Bitcoin to an entire class of people and

I think you could call the institutional

Bitcoin is being adopted right adoption

is actually happening and by focusing

just on the institutions we're missing

the broader point which is that more

people are getting into the ecosystem

now what does this look like going

forward great question listen the story

isn't over and Jim may be proven right

in the coming months or years if the

flows slower the trends reverse and the

momentum of early 2024 comes to a close

in mate I don't know it's possible that

some of the the bullishness in 2024 is

all because they're expecting a you know

Bull Run in 2024 and 2025 and if that

doesn't materialize They Run to the

Hills that's that's possible Right but

from right now looking at the data as we

have I think it's pretty hard to argue

that we're not seeing actual material

adoption of Bitcoin being you know the

tourist people as Jim calling it that

are just going to come and wait and see

how well it does be it the people who

call it just fake Bitcoin or what I'm

calling institutional Bitcoin you have

buyers they're coming in their uncles

their aunts maybe even grandmas I don't

know but adoption is actually happening

and I want to leave you with one final

perspective on this that I think may be

valuable and hardening to any of those

who are really interested in

decentralization the real threat to

these ETFs and their performance May at

some point come from better onchain

experiences and self custody see I in a

recent interview with Isabelle Fox and

Duke we discussed the potential of

ordinals ruins brc2 and a host of l2s

for Bitcoin such as the art Network that

can radically enhance what Bitcoin can

deliver from what it does today really

giving us some level of programmability

which today you know to date has only

been available on other L1 such as

ethereum and salana and while it's still

early days and it's all very speculative

these projects might actually deliver

better ux experiences the kind of

experiences that finally eliminate the

technical hurdles and offer Defi and

other capabilities that exceed what

trafi can do today and at that point it

may be too expensive to actually hold

your Bitcoin with the ETFs and then we

won't really care about the institutions

will we all right well time will tell I

suggest you subscribe to the channel as

we bring on guests and we bring on these

ideas we talk about them every week

discuss them and other projects that are

going to be relevant to the continual

adoption in the space but for now this

is Marone white see you next time