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A | What is going on, David? Do we have an ethereum ETF on. |
B | The menu, possibly in the middle of a meeting that we are having at bankless? We interrupt the meeting because Eric Balachunis, who knows a thing or two about the ETF, is one of the two, quote, unquote ETF boys. ETF guys. |
A | Bloomberg Bros. Is what they call the Bloomberg. |
B | Yeah, the Bloomberg bros. The ETF bros. Tweets out. Update James Safer. The other, the other ETF bro and I are increasing our odds of spot ether ETF approval to 75%, up from 25%. Hearing chatter this afternoon that the SEC could be doing a 180 on this increasingly political issue. So now everyone is scrambling like everyone else assumed they'd be denied. See Nate sweep below for proper order of events. And so this has got to be a reaction to sab 121, the 60 to 38 vote with a meaningful amount of high ranking Democrats defecting from Biden stated policy of the fact that he's going to veto SAP 21 21. Many Democrats nonetheless disregarded that and voted to repeal SAB 21 21, indicating that not all of the Democratic Party are in alignment with being anti crypto as a result of that. It seems that that's speculation, but it's pretty. |
A | That's pretty, I think, look, he said, he said increasingly political pressure. This is what we've said. |
B | And so something is going on behind the scenes. Eric and James would know about the SEC and the ETH ETF being approved. To me, like, they are upping it to 75%, which means, of course, there's a one in four chance that it's getting denied. In my opinion, the fact that this is happening at now, it's happening now. It's pretty binary. It's just very bullish. |
A | So Thursday, May 23, is when the SEC has to either approve or deny it. Okay, so it's Monday right now. So the fact that it's happening now tells you something. And both Eric and James, their sources for all of this, basically all, all along they've been saying the same message. If it was going to get approved toward the end of May, we would have seen it in the paperwork. They monitor the docs, they monitor the filings. They sort through, like, the sifting of everything that's going on in, like, the filings. They keep track of it. And their constant refrain has been, there's no way it's getting approved, like, under 25% odds. In fact, David, let's go to James's Twitter right now, because I recall, like, seeing earlier just today that, like, look at this. This is from May 17. All right, this is not today. But he said it's just not happening, guys. Talking about the Ethereum ETF, and which. |
B | Is an accurate take for the data that he had at the time. |
A | Exactly. Because they haven't seen anything come through. But this is, this was kind of the Hail Mary pass, like the if that we talked about on the roll up last week. We said if, and this is a big if. If Biden and the Democrats wake up at the 11th hour and realize anti crypto Gensler is about to lose them the White House, they may pressure gensler to achieve. Basically, politics trumps all in, particularly in election year. And this is what Eric is saying. Basically, it could be political pressure that is motivating Gensler and the SEC to actually approve. Now, again, we don't have 100% certainty here, but what we're taking from Eric and James is that they are seeing documents move. They are seeing, like, good signs, paper filing at this 11th hour. And what else could that mean? So they have increased the odds of approval by two. Over 200% right now. |
B | Yeah. Up to 25%, which was very low. Probably even, I think people were accounting for even lower than that. Up to 75%. To me, this is binary, right? If it is indeed political pressure, then it is getting approved. And it's getting approved in the final hour, because the Biden administration has realized that it's a close election and there is enough of a crypto vote out there to be meaningful. And they want to be reelected more than they care about denying the spot ether ETF. Can we pull up in the Kraken price chart so we can look at the price of Ethan? |
A | Oh, please. Yes. |
B | When Eth, it pumps in slow motion. |
A | Actually, this is all we got. |
B | Well, that's. That's a one day candle short. Let's shorten it down to the 15 minutes candles on the other side. |
A | Thanks to kraken for the charts. |
B | There you go. |
A | That's what we like. |
B | Whenever I have seen ether pump ever, it always pumps slowly over a long period of time because this market hates. Has not gone down since, like, this. This news got improved. So this is like, the market is currently digesting this. We are currently on the fourth baby pet candle here. |
A | I see it. What's that? |
B | Well, that's on the 15 minutes. On the 15 minutes, to me, like, we are currently pricing in $3,430 on the ETH. On the Eth chart. To me, we are if, again, if it's getting approved, we are so far away from actual meaningful price equilibrium. |
A | Like, this is so cheap. |
B | This is so dumb. Like, we are not done yet. |
A | We got 12% pump. |
B | Twelve hair, 12%. |
A | That's a baby. |
B | ETF approval. This is like 1%. If, if approved. This is at like 1% priced in. |
A | Not financial advice. |
B | Not financial advice. |
A | David is saying by now, but not financial advice. |
B | This. |
A | I mean, okay, so the, the price is pumping. Let's go back to James Safford street tweet because you read Eric Baltun as he says, things are taking a turn for the better spot. Ethereum ETF approvals this week, upping our odds to 75%. He says this. Never going to hear the end of. |
B | It, that they're not hacked. |
A | Yeah, yeah. He had to confirm he's not hacked. Never going to hear the end of this from the dot. Each people in my replies if this turns out to be true, but it's what we're hearing from multiple sources, should see a bunch of filings in the coming days. If we're correct, I will know that both David and I reached out to James and Eric, and I don't think they can actually, we invited them to come on the live stream. And by the way, James, Eric, if you guys are listening, come on live stream. Let's tell us what you know. We got the sense that they actually can't reveal more than what they've already revealed on Twitter at this point. |
B | They were from bloomberg. They have to push it through. Bloomberg. Bloomberg, their media organization. |
A | Yes. And also I think that there's probably this is happening so last minute. They're still trying to figure out, like, what exactly is going on, but you're like, glad they got this, this tweet out. David, is this a little life on the ratio here? |
B | A little bit low. An ETH approval with the ETH bitcoin ratio below 0.05 is insane. You know that the market isn't even pricing this inappropriately when poly market, I think you have that tab ready. Poly market is pricing it in at a 50%, hit refresh and then hit like the one day time. |
A | This is the poly market, the prediction market. Odds of approval of Ethereum ETF approved by May 30. |
B | Okay, so it is getting up to 75%. Yeah. Okay, so like, basically this information is informed by the blue. |
A | David. |
B | People, people. |
A | Look, dude, it was, it was 13% this morning. |
B | 13% up to 75. Approaching 75%. Currently at 69%. Nice. Also, Eleanor Tarrett, who is another commentator on the markets and crypto news, she says this is her as a primary source now saying an issuer one of the ETF issuer sources tell me that things are evolving in real time. Blackrock, bitwise, fidelity, fidelity. They are reacting right now in real time. Anyone who works at one of those companies right now is currently in their slack channel, like, asking, freaking out what the f is going to be. Like, what do we need to change about our ETHF, like, application? Like, what's going on? Are we going to get approved? I'm sure the SEC office is also freaking out right now. Shout out Gary Gensler, who I'm sure is watching this channel. I'm sure you're freaking out. Yeah. |
A | What do you mean freaking out? I mean, I think he's probably pretty calculated in this. He probably got some phone calls over the weekend and late last week. Who knows how this works behind the scenes. But yeah, there's political pressure. Okay. So the reason I'm in a collared shirt, by the way, is just like, I know you guys think I usually dress like this. David. David switched. I didn't get a chance to switch is because earlier today we had an episode recording with Representative Patrick McHenry. So this is a former chair of the House, interim chair of the House, I should say, and a crypto advocate. So. And he was talking to us about the political pressure that's happening in Washington. Basically, DC has just woken up and they're realizing right before the 2024 elections, a major presidential election, probably one of the historic election, that the crypto populace has a chance of swaying election outcomes at this point in time, which is absolutely crazy because, like, 20% of people in swing states are potentially crypto voters and care what politicians think about crypto. And so what's happening is last week and then also this week, basically, politicians are having to go on the record as to whether they're pro crypto or anti crypto. The SAB 121 repeal was them going on the record. And you saw even Senate majority lead Chuck Schumer, the most. The Democrat, the most Democrat of democrats forsook the White House and, like, and, you know, against. Against their policy. And he actually voted pro crypto. And so there's another bill going from the House this week that Patrick McHenry is talking about, which is called fit 21. And this is more pro crypto legislation. It's going to be yet another opportunity, maybe even a bigger opportunity, for politicians to get on the record and say whether they're pro crypto or anti crypto. And he was very clear that, like, this has become an actual election issue in DC, and politicians are waking up. |
B | To it and not just an election issue. People have been saying crypto is now a partisan issue. It's now like the right versus the left. But what we saw with a sab 121 bill is it's actually splitting the Democratic Party, where you have the establishment, like, older generation Democrats, the Biden, the warrens, the genslers, as the anti crypto party, but the younger Democrats, and like, many of those people not in those circles, as, like, pro crypto. So it's basically the entire Republican Party, pro crypto, younger Democrats, pro crypto, and these current Biden administration as anti crypto. And so the Biden administration realizes that they're on an island with not very many voters in an election year, in a contested election. So, like, it's a simple calculus. |
A | Can we just take it in for a minute of just, like, if this is how it happens, this would be the most crypto thing ever. |
B | This timeline is fantastic, which is basically. |
A | Everyone expected the SEC to deny it. It was just denied. Denied. Guys, they have lawsuits against five crypto companies. Joe Lubin just came on the bankless podcast three weeks ago and is like, they're out to get Ethereum, right? They're looking at the Githubs. They're, they're trying to make the case that Ethereum itself is a. Is a security, all of this evidence. And he said there's no chance that they'll approve it. And now, potentially, again, we don't know for sure about this, but potentially, this could be approved. This would be the most crypto thing ever if this happened. David. |
B | Yeah. The timeline, I think, is, like, pretty perfect. Mike Capolito was calling for, like, eth sentiment, bottom calls just last week. E sentiment, just, like, in the absolute, like, dumpster. Like, just vibes, just really bad. |
A | What was that? Okay, so I was barely paying attention to this on, like, crypto Twitter, but it just, like, felt very much that. I mean, people were blaming farcaster that. |
B | Yeah, like, the Ethereum leadership. Ethereum thought leaders just have, like, abandoned Twitter. They're all on Farcaster now. No one is left on Twitter defending eth sentiment. |
A | The narrative. |
B | The narrative is dead. Yeah, like, meme coins were on Solana eth not getting its ETF, like, all this kind of stuff. We actually have a bunch of these tweets talking about this, like, lined up. We got some tweets from Eric Conner. We got some tweets from Jake Stravinsky. We got James Safir talking about how the ETH were wishcasting. Then we also got some technical analysis. Not from me, but from other people who I trust that I want to pull up on the screen. And then we got some gifts about Anthony Susano. So we're going to pull up all these tweets and more. But first, a moment to talk about some of these fantastic sponsors that make this show possible. The new meme is that goddamn EtH are about to become insufferable again. If you don't know what a dot eth is, that's somebody on twitter. That's an ethereum tribe on twitter, people who have eth in their name. As you can see, that's what I have as a cryptopunk eth. I would call myself an archetype of a th on twitter. And this is just like, the sentiment is going to shift with it, with the spot eth etf. I know you know this, Ryan. If the spot eth ETF gets approved, the market is so underway etH. It's been underway eth this entire bull market. The market became overweight EtH in the bear market because it was like the flight to safety ETH and bitcoin performed shoulder to shoulder in the 2022 decline of crypto prices. But since the bull market has resumed, like, just people have, people are already overexposed because of the safe haven that ETH was. And in the bull market, people were dispersed away from ETH. Now, like, the market is completely underexposed to ETH. People have priced in an ETF disapproval. Meme coins are on Solana. Bitcoin has this bought ETF approval. So people, and like, ETH has all the regulatory pressure, like ETH has all the lawsuits, like, the Department of justice is going after applications on Ethereum. And so, like, I think the sentiment pendulum shift is going to swing so strongly just because it's so underexposed. The market is so underexposed. |
A | Oh, it's going to be, it's going to feel like whiplash. Right. It's good. I think, I think there's going to be a lot of ETH bulls that are very excited because this has been a very lackluster bull market for Ethereum up to this point. Right. And it's just so, so let's talk about this for a second. If this happens again, it's an if. So if you missed the first part of the show we were talking about, you know, the approval odds of an Ethereum ETF going up. This is according to Bloomberg. They're, they're seeing stuff happen in the background, right? They're seeing paper being filed. They're seeing issuers giving positive sentiments. And this is kind of breaking as of the afternoon of May 20. But if this happens, David, I want to ask you, do we just like, do something similar to bitcoin pricing in its ETF approval? And I feel like that started happening. Would you say around October 2023? October 2023 is a good time? I was going to say September. October 2023, because that was when the grayscale case was. Was pretty one, definitively in bitcoin's favor. But like, that time zone, I think. |
B | October 2023, excuse me, October 2022 was when it was announced that Grayscale had filed. And then it took the market, like six months to really absorb what that meant. And then it was November of 2023, about a year later, when that actually got approved. |
A | That's right. |
B | It was like six months leading up to that approval with a slow crescendo of price action. |
A | It started getting priced in around this, this area right here. And like, then we saw just like this steady march, upwards of bitcoin price. I think that Ethereum will do this and more because, like, more because it will be an amplifier effect, because smaller market cap, of course, but also Ethereum had, like, higher regulatory risk. You know that Gensler was always cagey, the SEC was always cagey about whether ETH is a security or not. And so it had this perceived regulatory risk. And so institutional investors who wanted access to crypto, right. They had no ability to buy crypto aside from bitcoin. And if all of this is wiped away, I think Ethereum has, like, a bigger Runway. It's going to be an amplifier of what happened to bitcoin. |
B | Yeah, I think you have Jake Stravinsky's tweet somewhere towards the end there, and he just echoes this same sentiment. He says if the spot ETH, ETF is approved, it will be a true shock to everyone I know in DC who's close to this process. It means approval could shift, a major shift in us crypto policy after the SAB 121 vote. More important, perhaps more important than the ETF itself. And so, like, so that's interesting in the Capitol hill about Ethereum ethy asset about, like, securities versus commodities, about like, is there's less political, like, foundation for everything as a security, because, like, now we have, like, the top two assets, not a security. |
A | Yeah. I wonder if this puts an end to sort of the extreme regulatory headwinds that we've been facing for the last, basically 18 months to two years. Right. |
B | We had operation choke, pointless sales. Yeah. |
A | The anti crypto army like, this feels to me like it's, it's more than just Ethereum, ETF being approved. As Jake is saying. This is like a shift in DC, and it's basically democratic establishment saying, hey, you know, being anti crypto fight, we. |
B | Don'T want to fight that fight. |
A | It's not going to win, like, Biden the presidential election. And so, like we, maybe they lean into, start leaning into being pro crypto. I think there's a marker of that, too. And which, which means we might get the headwinds in our favor for some brief period of time. Right. We've never had that. |
B | What we learned from the consensus interview with Joe Lubin and Matt the lawyer, is that there is like a back, back room, like smoke, smoke filled room of people who do not want the ETH, ETF approved because they're trying to suppress Ethereum. They're not concerned with bitcoin because bitcoin doesn't have smart contracts. It doesn't have a banking layer. It doesn't offend the banks, it doesn't offend the Clinton types that want their control. These were like Joe Lubin's words. And so, like the political establishment, the Democrats have shifted the weight away from like, okay, we understand that our, like, these people don't want the power of Ethereum to be unleashed, but we also want to get reelected. And so this is the re electing emphasis, taking precedent over whatever powers that may be, that are pushing behind the scenes for the Gary, for the Gary Gensler Sec to disapprove. This bought ETF. This is why Gary Genslere was always resistant to saying, is ETH a security or is it not? He would, he would very clearly said that bitcoin is not a security. He very clearly was extremely ambiguous around ETH as a security or commodity because he could not claim that ETH was a security because he wasn't ready for it, but he couldn't claim it was a commodity because they didn't want that. Now, all of that precedent is like being wiped away from them, which is what he, which was the foundation that he was standing on to claim that all tokens are securities. So, like so much of the entire argument, foundation of the SEC is now gone again if the ETF gets approved. |
A | David, are you looking at this tweet here? This is Bill Hughes, Elizabeth Warren making phone calls right now. I don't care that he's in a meeting. I want him on the phone now. Anti crypto army in shambles. I want to go back to a Mike Capolito take. He says this feels like the bottom sentiment in ETH sentiment. He posted this on May 18, just the backdrop to this, because we didn't talk about it enough. I don't think ETH sentiment to me was at sort of like a cycle low. In the last couple of weeks, months, it's had paltry performance in the bull market. Bitcoin is overperformed. Other alternative layer ones have overperformed. So Solana has been crushing it. ETH really just hasn't kept up. And so the market sentiment is basically like, why buy eth, right? Like, Solana and these alternative layer ones are lower market cap and are appreciating faster. They have the meme coins and then you have bitcoin, which has institutional demand. So Ethereum is like, stuck in this middle. And so this caused not only, like, the anti eth like sentiment on Twitter, but like, even, even the bulls are starting to get shaky, right? This is a talk in the Ethereum community about changing the narrative and, like, what do we do and who's defending the narrative? And so this is Mike Ippolito on the 18th saying, this feels like the cycle bottom in ETH sentiment. First time in a long time. ETH isn't consensus. Yeah, it lost consensus, didn't it? None of the arguments on my timeline feel that meaningful. It's mostly bickering or airing old grievances. ETH will send in a few months when everyone remembers the ETF. I think the market is about to start remembering the ETF. |
B | Yeah. That's currently priced in or getting priced in, but also really, like I said, really slowly, the. Okay, ETH is up 11.7% in on the one day. Solana is up 9%. So, like, ETH is actually only up two and a half percent versus Solana. But also, like, all the long tail of crypto assets should definitely get a boon from this because of the regulatory green light that this is giving the collective industry. So, like, even bitcoin is up 5% on, on the one day just because, like, this is just bull. This is not just bullish for ETH. This is bullish for the crypto industry. Like, any, anyone with any sort of crypto asset exposure should be very happy about this. |
A | Yeah. And so do you recall some of the numbers we went through with the. I feel like some of these numbers slowed with, like, how big the pipe, the capital pipe is from bitcoin institutional, like, purchasing of bitcoin from all of the rias. And, I mean, we're talking about, like, trillions of dollars how big is the bitcoin ETF market right now? |
B | It's like, I'm actually looking it up right now. |
A | Yeah, look that. Look that up because I think we're in the. What are we in the, like the $30 to $50 billion market cap, something like that. And like, to catch gold, if I recall. |
B | Figure it out. |
A | Okay, well, these are just numbers off the top of my head, but it feels like we're in the 30 to 50 billion range in terms of bitcoin ETF. And it's been the, like, the most bullish performing ETF in history, I feel like, to catch gold, it was something like 90 billion to catch gold's numbers. And so you sort of wonder what Ethereum will do after this. It's got some narrative headwinds, I think, for institutions. |
B | Did you say how many billions? |
A | I said 30 to 50. How wrong was I? |
B | 12 billion. |
A | Oh, really? Okay. I'm ahead of myself. |
B | Interestingly, in the last two weeks, you know, we've been at some sort of like, market milieu market, like quiet period, some doldrums, some crabbing in the last 12345 months or so. We are entering second week in a row, this week, of inbound ETF, bitcoin flows. And so bitcoin, the actual flows are going into bitcoin once again after being at equilibrium on pause for the past two or three months. |
A | Okay, so we've got some positive strength there. Can we talk about the institutional narrative for ethereum, David? I think it's a little bit different than bitcoin. |
B | Very. |
A | We've got productive asset. These ETF's, to the extent they get approved, they will not be staked ETF's. They will just be plain vanilla eth. Right. But you still have the narrative of this is a positive yield bearing asset. Once Eth is staked, I think that's important. I think institutions have talked about tokenization. Ethereum is really the ecosystem that pioneered tokens, tokenization. So you got the Blackrock, all those. |
B | Tokens that you know about, all those nfts that you know about, those are on Ethereum, right? |
A | Even the Blackrock biddle fund, which is pretty major, which is like, I don't know, up to like 400 million, something like this. Close to half a billion in t bills. That is on Ethereum as well. So that is kind of like complimentary. So I think you've got the Internet bond narrative. You've got the productive yield bearing asset narrative. Actually, you know, I'm going to pull this up. Coinbase put, I think those are all great narratives. |
B | I think the biggest narrative is the one that Sandy Kool from Franklin Templeton was talking to us about, about how Ethereum is a tech platform. So if you want to own real estate in the same way that like you're kind of familiar with by owning Facebook shares or owning Twitter shares, ethereum is that it is a platform for people to build on. And the value of ether grows as this open platform gets built. And so like bitcoin is like the digital gold play in digital store value, but Ethereum is a tech platform platform, and mapping ether, the asset into a financial institutions tech category makes a lot of sense and definitely resonates. That's what she was saying. |
A | Yeah, I think that's right. And I think that's a different valuation. Although we would also argue Ethereum, Ether has similar monetary properties as bitcoin, of course, and should be and could be viewed as a store of value as well. I think that's going to be exciting to watch institutions kind of price that in. I guess there is maybe the bear case here that the institutions don't care about Ethereum at all. It's kind of like the opening act. This is what Eric Balcunis has said in the past. To be fair, this is the Ethereum futures markets. There is an Ethereum futures based ETF out there and its performance has been pretty paltry compared to bitcoin. |
B | Yeah, but compared to bitcoins futures, yes. Yeah. Like I dont expect the ETF's to be bigger than bitcoin certainly, but the thing is, $1 of capital into an ETH ETF means something like three x more than $1 into a bitcoin ETF because ETH is one third the size of the market cap of bitcoin. And so it just simply moves the market cap more. And thats also just not even controlling for the amount of bitcoin on the bitcoin liquidity on centralized exchanges, of which ether has much less liquidity on centralized exchanges because there's a lot of demand to pull ether into defi and pull it away from centralized exchanges. So ether price discovery happens on Coinbase, the EtH ETF price. Whenever there's a buyer of the ETH ETF, that buying pressure will go through Coinbase because they're the custodian and that will actually move way more than it moved the bitcoin ETF, because there's just simply much less liquid liquidity of ether on Coinbase. And so like $1 of capital into eth ETF means a lot more. |
A | You know what's crazy is the ETH still has a 20% discount. |
B | Every single, every single crypto fund right now is like looking out how to buy ETH. And I know that because we are thinking about that at bank ventures. |
A | We should have already done. |
B | We should have already done. |
A | We should get off this live stream and like go buy it. So ethy, of course, is the grayscale Ethereum trust, which will become an ETH ETF. |
B | That gap will just smoosh. |
A | Yeah, it would automatically become a bitcoin ETF. And I think that, yeah, it's a 20% discount. You could still buy ETH, like 20% discount. So it's crazy that that exists as well. |
B | It's also cool to watch the Coinbase stock price also pump on this news as well. Again, this is probably the. Well, a coinbase will be the custodian for the ETH ETF, but mainly it's just like the regulatory risk of the industry is like pumping everything. Coinbase is up like 12%, 8% on the day. Today. There's a new tweet from James. Okay, cool, you've got it pulled up. So James tweeted this out a few minutes ago. 20 minutes ago. Quick note, Eric Baltunis and I increased the odds to 75% for the ETH approvals, but that's for the 19th May 23 deadline. Van Eck. We also need s one approvals. It could be weeks to months before we see s one approvals and therefore a live Eth ETF. There's a delay here, but the actual launch will be later. Do I care about, do I care about that time discrepancy? No, because this is like the cointelegraph in turn. Like accidentally false flagging, false start ETF. It doesn't matter. Once the market has assurances that it will get approved, people will bid. Like we saw trad hedge funds front running the actual bitcoin ETF launch who don't care about bitcoin. They just like, well, this is bullish. So they're going to buy bitcoin. A lot. A lot of the bitcoin price appreciation came from outside capital who were just front running the actual approvals. |
A | So this is different than how it happened with the bitcoin ETF, though, right? Because bitcoin ETF was approved and then basically days later we had open, like bitcoin ETF's that you could purchase. So this would be a little bit of a delay. And I guess that's just because of the scheduling. So the May 23 was just van X deadline. |
B | Oh, okay. I'm sending you another tweet. You need to open up this tweet. I'm sending it to you in the dock. I'm hiring it. Tier ten k. This is bullish. This is bullish. |
A | I love all the bullish stuff. |
B | All right, tier ten k. Sec, sec, sec asks exchanges to update. |
A | What? |
B | Either ETf's. Yes. |
A | Eric. |
B | You got to pump those numbers up, baby. |
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