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Topics covered in this episode:
- BTC news
- MicroStrategy announces $42B plan
- Vaneck: Bitcoin a reserve asset, 2% weight, $3M
- BlackRock's $IBIT
- The first U.K. pension fund invests in bitcoin, with up to a 3% direct allocation
- Bitcoin ETF assets 2/3 to gold
- Tokenized Treasuries exploding
- Polymarket Whale Profits
- Gensler and the SEC
- Crypto PACs, 48 out of 48
- UBS Asset Management launches its first tokenized investment fund.
- Bernstein, "add crypto exposure ASAP"
Creators & Guests
Host
What is Weekly Crypto Check-In?
Hosts Robert Swarthout and Andres Sandate cover the last week's worth of crypto news, providing insights and opinions on this quickly evolving space from a fund managers perspective.
Welcome to another episode of the Weekly Crypto Check-in recorded on November 13, 2024. I'm your host Robert Swartout. I'm in Germany with my co host, Andres. How's it going, Andres?
Andres Sandate:Good, Robert. It's good seeing you. Lots to cover today. It's been a, a busy couple weeks since we last recorded.
Robert Swarthout:Yeah. Busy couple weeks. Yeah. We were we didn't record last week because I was I'll I'll be doing something I'll probably never get to do again. I got to go sit in on the Georgia Supreme Court, so that was fun.
Robert Swarthout:I've never been in a courtroom where there's more than 1 judge, so that was a a bit of a different dynamic. Yeah. And, pretty cool to kinda see how that part of the, legal system works.
Andres Sandate:Yeah. Definitely. Well, welcome back. I'm glad that we're, able to jump back into the check-in. Lots of news, you know, to to discuss in terms of Bitcoin, the elections, regulations.
Andres Sandate:We can't do an update, it seems like, without mentioning our friends at the SEC, so let's jump in.
Robert Swarthout:Yep. And so, obviously, you know, we like we said, we didn't record until 2 weeks ago, but the last week is really where all this news, largely comes from, and is gonna be impacting you going in the future. So the I guess we'll start with the Bitcoin news, and just kind of a bunch of smattering of Bitcoin news. Some of it's ETF based, other is just kind of more general, Bitcoin buying itself. But so the first one being the MicroStrategy, and this just blew me away.
Robert Swarthout:Like, I you know, immediately, I have trouble seeing foreseeing how this MicroStrategy thing just doesn't blow up in some bad way that people aren't seeing. Because so the news here is MicroStrategy announces a $42,000,000,000 capital plan, including 21,000,000,000 at the money equity offering and targeting to raise another 21,000,000,000 in fixed income securities. And you know it's all gonna go by Bitcoin. Like, that that's all that that they do at this point, and it's just insane to see these numbers. I it again, I don't see at the end of the day, like, is he gonna hold forever?
Robert Swarthout:Maybe. But, like, how does this not blow up?
Andres Sandate:Well, the he that we're talking about for those, tuning in is Michael Saylor, s a y l o r, I think.
Robert Swarthout:I see. Yes.
Andres Sandate:O r. So if you wanna go out and and and, you know, search on him and search on MicroStrategy, the company that he is the CEO of. Somebody that I met 3 years ago, said, you know, Michael Saylor is the godfather of crypto, and people are gonna look back on him in 20 years and, you know, compare him to sort of like a Steve Jobs type. He's done more for crypto, this, this, and this. This person was obviously very much a a Bitcoin, bowl and a crypto bowl and all this stuff.
Andres Sandate:Then FTX happened. We go through this crypto winner that we're in, and but I continue to see his name. Right?
Robert Swarthout:Mhmm.
Andres Sandate:Any kind of big moves, any sort of long bias, it's always like micro strategy, Michael Saylor, and then, yes, this $42,000,000,000 capital raise, I have a lot of questions.
Robert Swarthout:You know? The least of
Andres Sandate:which is, who's who's helping arrange this? Who are the investors that he's targeting? I don't know the institutional ownership of MicroStrategy at this point, but, obviously, yes, you're making a a a long bet on Bitcoin. So lots to cover here in terms of this. You know, I thought we talked about Microsoft potentially going to their shareholders with the plan to potentially get approval to go acquire Bitcoin.
Robert Swarthout:Yeah. That'll be in December.
Andres Sandate:He's going straight to Wall Street. He's going straight to the market and and saying, you know, if you wanna be in on this, I need help raising money and Mhmm. We'll find out what the market says.
Robert Swarthout:Yeah. It's, it's interesting because people could go directly by Bitcoin, but they're buying MicroStrategy.
Andres Sandate:Yeah. As a proxy to
Robert Swarthout:As a proxy. I'm not sure what the benefit there is. I you know, I you used Steve Jobs' analogy. I've often heard him referred to as Rockefeller as well. Okay.
Robert Swarthout:Because, you know, history as it takes takes place in the new zoom out, you know, 10, 20, 40, a 100 years later, the good and the bad is remembered. Sometimes it's healed, but, like, Rockefeller did a lot of good, but he also wasn't great sometimes. Right?
Andres Sandate:Yeah. There's been controversy.
Robert Swarthout:Yeah. So I he may fit in that same bucket depending on what Melendy used.
Andres Sandate:So Well, it's, it's it's in line with a lot of the news that we've been seeing around Bitcoin, though, for the last couple of weeks, in terms of just a lot of revised projections. Mhmm. The second one caught my attention because we're talking about now it is a reserve asset. Yeah. And a projection a price projection, I'm assuming that's what that $3,000,000 number is.
Robert Swarthout:Yeah. And so, you know, I guess to their credit, this is Van Eck, the founder of Van Eck Securities, was on, CNBC, I believe, on November 3rd. So before the election, before we had an idea how this was all gonna go. And he said we have a model that assumes that by 2050, Bitcoin becomes a reserve asset, is held by central banks at a 2% weighting. In that model, we have arrived at a $3,000,000 price target.
Robert Swarthout:Maybe. 2050 is a long ways away still. It's 26 years or 25 years, and $3,000,000 seems like a long ways away. I mean, Bitcoin right now is at, 90 almost 93,000. And, I mean, it's moved very quickly the last week.
Robert Swarthout:Yeah. It has. Yeah. Like, I guess you can quickly get to $3,000,000 if you have that kind of, in some sense forced buying, But it's, it's a crazy number to think about,
Andres Sandate:especially if you In the yeah. I mean, in light of like, so investors who are already in crypto and already own Bitcoin, and they're long. Right? One thing that I mentioned in the preshow that we were talking about is, we've mentioned them before, but Bitwise, does a lot of research. They put out a lot of content for advisors.
Andres Sandate:And one of the things they said that's come up, is there's a lot fewer sellers right now. There's a lot more folks that are holding and expect to hold for a long period of time. So that what what I am fascinated by is I feel like this conversation we had I don't know if we had it on the show, but we talked about Bitcoin at a1000000. And that was sort of like an outlandish number that you and I were like, where are they getting that number? And then it was 2.
Andres Sandate:Right. And now we're starting to hear 3. So, use this word too much in this business. Interesting. You know?
Andres Sandate:And I think it's a way for us to just try to understand something that we don't all have a lot of context for or we don't have a lot of strong feelings and opinions on yet. We're forming them. Right? So, something to watch for sure.
Robert Swarthout:Yeah. You know, and I guess it's another way to illustrate this and I guess metrics you can put around it is just watching these Bitcoin ETFs, which is our third topic here where we started to talk about BlackRock's IBIT in particular. But these BlackRock these, excuse me, these, Bitcoin ETFs since January, it's it has barely been 10 months. Like, as of actually 2 days from now, it'll be 10 months.
Andres Sandate:Oh, since they launched.
Robert Swarthout:Since they launched. Yeah. And everyone was like, I don't know if people were again, we've talked about this. People were saying how, oh, we may get to 5 or 10,000,000,000 AUM by the end of the year. That quickly happened.
Robert Swarthout:And now you have a single ETF, IBIT in this case, that has 40,000,000,000 of assets under management. Like and BlackRock's, like, a week and a half ago, so roughly a week before the election, said that they thought by the end of the year, they would have 40 to 50,000,000,000 in AUM. So they've already hit the low end of that target. And the way this is going and by Thanksgiving, they're gonna be at 50. It went from 30 to 40 in a little over a week.
Robert Swarthout:Right. It's just Well, one thing that
Andres Sandate:yeah. All the, you know, all the calls that I'm on with, asset managers, issuers, sponsors of of ETFs, and different different offerings, you know, they always ask, do you own today? Do you allocate to your clients today? And do you intend to allocate over the next 6, 12, 18 months? Right?
Andres Sandate:And in the case of, you know, Bitcoin, you know, I'm, like, thinking I mean, I got that question yesterday. Does allocating the last hour count? You don't get into the equation because I think there's a lot of advisers who are thinking about where this fits in an allocation. I think there's a lot of advisers that are thinking, what is the sizing? Should should it be half a percent, 1%, 2%.
Andres Sandate:You know you'll likely need to rebalance if prices get anywhere close to these estimates Mhmm. Which is, which is to say there's a lot more merit for an adviser to say, I'm gonna go in. I'm gonna start acquiring personally before maybe I wanna go take it out to clients. Right? Right.
Andres Sandate:Because you're you're likely gonna get that question.
Robert Swarthout:That's front running or
Andres Sandate:not. So Well, right. Yeah. Yeah. The the the but the reality is is I think this Ibit story, and we could talk about any number of them, you know Mhmm.
Andres Sandate:Hit I think before we went live with our notes today, yesterday, when we were talking about the show, it was at 30,000,000,000 Mhmm. Or the estimate coming out of the weekend was 30,000,000,000 last Friday, and now here we are at Wednesday, and we're at 40,000,000,000. They've had days recently with over a $1,000,000,000 of inflows
Robert Swarthout:Right. To the private ETF.
Andres Sandate:Just in the single ETF. Yeah. Yeah.
Robert Swarthout:So a few more numbers around this. So they did it in 10 months. The previous record to get to 40,000,000,000 took 1253 days. So call it 4 years. 4 years?
Andres Sandate:Yeah.
Robert Swarthout:And it's now in the top 1% of all t ETFs by assets, and at 10 months old, it's bigger than 28 100 ETFs launched in the last 10 years.
Andres Sandate:And there's a lot of white papers. But before we move on to this next one, there's there's more and more white papers coming out in research. Right? Doesn't mean they're right because they're white papers. It just means that they've taken some time to sort of step back, higher level view, and look at an asset class or look at a particular issue.
Andres Sandate:In this case, when they look at, Bitcoin, I think BlackRock circulated pretty widely a paper around the idea that this is now what they recommend anyway, and they're biased. Right? They issued the largest Bitcoin ETF. They now recommend or say there is a place for Bitcoin in a model portfolio. Right?
Andres Sandate:Whereas, like, literally 2 years ago
Robert Swarthout:Or 11 months ago? 11 months ago, we we were, like Yeah.
Andres Sandate:Never talking about the 2 in the same breath. Right? If nothing else, it was, a bad thing for the economy. It was a bad thing for investors, etcetera. How things have changed so quickly, I guess, which is a good, you know, good segue into we're starting to see more institutional adoption.
Andres Sandate:We had Emory, endowment here in our backyard of Atlanta that had allocated, in our last update, and now we have our 1st UK pension fund. Mhmm. So talk to us about this one.
Robert Swarthout:Yeah. You know, this you you brought this one to my attention. I had missed this admittedly, and it was just you know, they, have invested 3% of the total asset. That is a quick entry for, you know, to jump in at 3%. I don't know if they started, and they, you know, obviously they didn't go 3% on one day.
Robert Swarthout:I wouldn't drink. But it's and I don't know what the reporting rules are in the UK, so they're it may be different than what we experienced here in the US. But, you know, it's pretty cool to see just how it's going. You know, it's the corporates like we mentioned on Microsoft that I imagine that's a snowball that quickly gains steam if Microsoft or, you know, one of those top five companies by market cap starts doing it. I wouldn't be surprised that Apple joins in, either because Microsoft or right before.
Robert Swarthout:Tim Cook was recently interviewed on CNBC and said he has crypto, and he thinks it's part of a balanced portfolio. You know, granted he is not a financial adviser or anything like it, but, you know, he does have some sort of, I guess, weight to his comments when he says something like that. But then, you know, then you start having pension funds and state endowments and all sorts of stuff or state pension endowments do it. So it's it's pretty cool, to kinda see it unfold.
Andres Sandate:Yeah. Yeah.
Robert Swarthout:And I Basically, the break is going super slow, then you all sudden you wake up the next day and there's 3 of these. You're like, oh my gosh. Here we are.
Andres Sandate:And all of a sudden we started the week with Bitcoin, you know, postelection was running up above 70 some 1,000. Right? Touched maybe 80 in the days after the election, and now we're sitting today over 90. So 93. Yeah.
Andres Sandate:I mean, there's a lot of assets that are bouncing now. Doesn't mean they're gonna not bounce down. Right? But they're bouncing post election. I think there's optimism in in, in the market right now that we're gonna see a little less, regulation, and there should be, you know, potentially a little bit more clarity.
Andres Sandate:Do we get do we get crypto regulation? Probably a bigger topic, but at least a little bit more clarity about a path forward, and what that potentially looks like. There's also a lot of crypto bulls, I would say, who are saying just when you think, you know, you're gonna get clarity, keep keep an eye on the fact that with all this, quote, unquote, optimism euphoria, also the reality is that you're gonna see a lot of bad projects. You're gonna see a lot of, you know, people that come are sort of the Johnny come lately to the party with a new thing. So, you know, investors have to just be very mindful and diligent.
Robert Swarthout:Yeah. And, you know, it's, you know, what's caught me off guard admittedly since the election is up until that point, it was very much the narrative in the crypt industry. We we need regulations. We need regulations. We need a regulator that doesn't try to tear an industry apart.
Robert Swarthout:Trump wins the election. He has stated in the past, back in July, that he is for the potentially for the idea of a Bitcoin reserve. I will tell you the only thing that you hear on crypto Twitter right now is about a Bitcoin reserve. It's like we all forgot about regulation, the need for it. And Yeah.
Robert Swarthout:And, admittedly, it's all the Bitcoin Maxis. You almost can see the drool on their face through their tweets. Right. Because but I
Andres Sandate:have a question for you. I know you and I talk, a lot more offline than we do on this show about utility and what is the purpose of you know, just look at that question from the vast majority of people. There are the reality is there's a lot of advisors and a lot of people that just don't understand Bitcoin, crypto, digital assets, DeFi, and there's plenty of folks that are like, I just don't understand what it's there for. I don't understand what it's used for. Right?
Andres Sandate:You compare that to our next, you know, bullet there, Bitcoin ETF like, people can I guess there's a lot more folks that just understand gold? Like, you can wear it. You can Right. Protect. You could, you know, you can preserve it.
Andres Sandate:You can use it. Like and and so I think people have a hard time sort of putting their arms around that. But with that said, I'd love to ask you, has your when you think about utility and digital assets before we go to this next to last Bitcoin bullet. Has did did the election change what you thought was gonna happen, with Bitcoin? Because I know you talk about cycles.
Andres Sandate:Mhmm. And you talk about we were coming you know, we're we were in this crypto winner. Did the election accelerate anything in the, if you will, cycle, or was all this $100,000 march planning to play out anyway?
Robert Swarthout:You know, I think it happened quicker than I if I'm if I it was it happened quicker than I was expecting. I'll say that upfront. I think it was gonna happen. You know, I did think that the top for Bitcoin in this cycle was a 120 to a 150,000. Is that still gonna be the case?
Robert Swarthout:I don't know. I have spent the last week as I've watched crypto and this the markets in general, but I'm specifically paying attention to crypto, just rip higher. And I'm like, now that, you know, there was a bit of a pressure relief valve that got, let out, once it was clear that Trump was gonna win.
Andres Sandate:Mhmm.
Robert Swarthout:So you had 4 years of pent up like, oh my gosh. This industry is being held down by the regulator. That appears to be going away or will be going away with, you know, different, leaders at the SEC in particular and this congress being actually potentially for crypto or pro crypto. I don't what I've spent the week thinking about is is the how does this change the cycle if it does? Does it elongate it?
Robert Swarthout:I can't imagine it makes it shorter. But does it is it more gradual and takes time to get there? Or is this we're gonna rip hire and we're gonna hire for a lot longer because we've never had the support that we have now?
Andres Sandate:Okay. Alright. Well, it's something to keep our eye on, I mean, from the standpoint of just headlines. Right? Because we're, you know, we're we're we're looking at all this news and so much of it to the for the first 15, 20 minutes of the show has been around Bitcoin.
Andres Sandate:There's obviously a lot more going on. We wanna talk about some of these other things like tokenization, for example. But, yes, you know, we'd have our head head in the sand if we didn't probably lead off the show with, you know, just the reality of just the magnitude of the move up over the last, you
Robert Swarthout:know, month, call it, few weeks. Month and especially last week. Yeah. Yeah. Yeah.
Robert Swarthout:And the last bold here on Bitcoin, and we can move on to the tokenization. And so just looking at US spot Bitcoin ETFs comparing it to US gold ETFs, it is now 2 thirds of the way there to having the same AUM as gold has in 11 in 10 months. Right. So super early. You know, if you zoom out and look at it from a whole world perspective, I think it's roughly 1 third of the way there.
Robert Swarthout:So there there's more work to do, but, that I would say that's the closest thing that Bitcoin is compared to a lot of times, and especially if you start thinking about a reserve asset. Gold is typically on on the balance sheet of, fed, government banks, so it's a decent analogy there. So on to treasuries. This will be quick, and, admittedly, the listeners can't actually see this. There's a a chart that, Bitwise tweeted out about tokenized US treasuries.
Robert Swarthout:There's different funds that are doing this from finance, BlackRock, Franklin, Edmonton, and a few other smaller ones, or less than ones. But it is crazy to see, like, the chart was slowly ticking up. Then you get to roughly the tail towards the tail end of q 1 2024. And this thing went to a 45 degree angle and it's up to the right. I'd imagine this this curve even, accelerates even more, when there's actually real regulations in place and these things can be used for more than just truly buying a treasury and a blockchain because that's all it is right now.
Robert Swarthout:You can kinda use it as collateral, but that's not the easiest situation right now to to pull off. But, you know, it's just I I I look forward to being down the road again a year or 2, 5 years down the road, looking back and just kinda like, oh, how silly was that? We thought that was cool because look what it's doing now.
Andres Sandate:Right. And I think we can cover that second to last bullet around tokenization. This is there there are other funds out there from asset managers. In this case, UBS Asset Management launches its 1st tokenized investment fund, I think we're gonna see more and more of this. I mean Yeah.
Andres Sandate:I think you and I, you know, you've been in the industry now long enough in terms of the investment management industry. I mean, there's such inefficiency when it comes to the documentation and the subscription and the liquidity and the ownership and all the things related to limited partnerships and private funds. Credit to investors for will you know, being willing to go through the paperwork and the slog of, adding capital when you need to because it's just harder than buying an ETF or buying a mutual fund or buying a stock on your Robinhood app or your Charles Schwab app. So I think we will look back in, you know, a shorter period of time than we probably are thinking today and say, yeah. Why aren't all the funds tokenized?
Andres Sandate:Like, that makes sense. Right. And then it's gonna march to other areas of the financial markets. Right? Because it's just so big.
Andres Sandate:Like, whether it's real estate or it's titles or it's, you know, records, the I just think that the idea that we are not using that technology, yet, it's it's just a matter of if and if if there's one thing that gives me some optimism is that how quickly, the ETF took off and the ETFs took off with respect to owning Bitcoin.
Robert Swarthout:Right.
Andres Sandate:It was like, was it because the vehicle made it easier and you didn't have to deal with self custody and you didn't have to deal with trying to open a digital wallet and go coin Coinbase, or was it that the market was just more ready? You know?
Robert Swarthout:Yeah. Probably all of the above.
Andres Sandate:Or great marketing.
Robert Swarthout:Yeah. Well, you know, all of a sudden, Larry decided everyone needed it too. So Yeah. Yeah. We got the idea.
Robert Swarthout:And you mentioned one thing I'll mention real quick before we, move on to move
Andres Sandate:to our poly market whale story.
Robert Swarthout:Yeah. So you mentioned, Robinhood. So I actually saw an article today, a little off topic, but I guess it helps illustrate why you might use a blockchain. Vlad, the CEO and founder of, Robinhood was saying how that that they own a they bought, a crypto exchange with Stamped about 6 months ago. Right.
Robert Swarthout:And they're 2 different pieces. He was saying how it is. It cost them 10, 10% of the same, or actually, it's, 10% of the the full cost of running a brokerage to run a, a crypto exchange. So it's dramatically less. He's like, over time, you would love to kinda see all that merge together, but it's, the I think part of it is there's regulation on one side and not the other, so there's paperwork to do.
Robert Swarthout:Sure. But we, we'll see how that unfolds over time.
Andres Sandate:Yeah. I think one one last step here, is we talk so much about regulation around crypto and in with respect to the consumer. I think a whole other area, and this was brought up on a call recently by Matt Hogan, the CIO of Bitwise, just regulation around integrating digital assets and the infrastructure around blockchain technology in the banking system.
Robert Swarthout:Mhmm.
Andres Sandate:There's other regulators beyond just the SEC. I mean, we talk a lot about the SEC because we you know, it's it's they're constantly in the news. Right? Yeah. But there's other regulators that are gonna get probably new leadership, and they're gonna, I would think, be asked to to really look carefully at, how they can integrate this technology.
Andres Sandate:And we're talking about, like, the OCC and, you know, the the the treasury department, you know, the Fed, all these different agencies or quasi government agencies, I think, are gonna get I think 2025 is gonna be an eventful year if you work at a regulator with respect to Bitcoin and digital technology. I mean, you're gonna have to dust off the playbook because I I think a lot's coming.
Robert Swarthout:Absolutely. So jumping back in our bullet points here, the poly market thing, I was fascinated by this all through the election. You kinda see these markets. I know we talked many times about it. Right.
Robert Swarthout:And, and you were explaining some of this to me, the other day, but, like so there was a ended up being a trader, from France. Right, on on Polymarket that ended up profiting profiting $48,000,000 with the Trump victory. He used 4 different pseudonyms that's kinda split amongst the 4, honestly, evenly, but at least broken up. And it was just fascinating to kinda hear his strategy on how he, went about, making his bets.
Andres Sandate:And why why he made the bets he did. Like so yeah. From what I read, and and the the the interesting and fascinating thing is, you know, around polling and and the idea of polling. Is the poll right? Is the poll wrong?
Andres Sandate:And what I what I thought was so interesting is his approach was ask the neighbors of, you know, let's say, Robert or Andres. Ask the neighbors to the left and to the right and to the front and to the back of them, how do you think they're gonna vote? Mhmm. And and he's like, effectively, that's my methodology is that neighborhood neighbor approach of I don't know if people are gonna be honest or they're gonna tip their hand or they're gonna say who they're gonna vote for if they get, you know, contacted by a pollster. But his idea is if I live next door to Robert, I know how Robert's likely to vote.
Andres Sandate:And so he's asking me to weigh in on on your vote, and I thought this is interesting. And he's like, I'd like he said, I'd like to see more, of this polling method used in America. So we'll see. Yeah. But, highly profitable, nevertheless.
Andres Sandate:And, it was a series of trades.
Robert Swarthout:Right? Correct.
Andres Sandate:Under different Zeta names.
Robert Swarthout:It's a series of trades and, and then, probably market in general, they ended up tweeting this out, the day after the election, which is, I guess, is a bit of, like, a back slapping for themselves. But, what they projected the the finished, on a state by state basis who's gonna win, they projected it on October 25th, and it was exactly correct. Okay. So the markets were speaking. Whether people wanted to listen to them or not, I guess, is different, but it's, pretty fascinating to kinda see.
Andres Sandate:So what happens to the polly market from here? I'm curious. That's the post script. I I'm you know, do is there another area of the, I guess,
Robert Swarthout:the I mean, there's poly market. There's things for who Trump's gonna add to the secretary of state. I mean, there's all Yeah.
Andres Sandate:You can bet on all kinds of things. Yeah. Yeah. Okay.
Robert Swarthout:But, I don't know. It will it grow to be something else? I don't know. It was somebody's idea, the previous election when Trump was running against Biden. He threw it together.
Robert Swarthout:It was I think it was around, but didn't really make to the same level of, popularity
Andres Sandate:it did now. But Interesting.
Robert Swarthout:Anyway, nonetheless, pretty interesting to kinda see how it ended up playing out.
Andres Sandate:Yeah. Okay. We gotta talk regulation and politics. Yeah. We covered UBS and their tokenized investment fund.
Andres Sandate:Mhmm. So Gensler and the SEC.
Robert Swarthout:Yeah. I you know, again, it's not a podcast without talking about Gensler. And soon enough, we can almost be certain we won't be talking about Gensler. Maybe someone else we're talking about. But Sure.
Robert Swarthout:He,
Andres Sandate:Or his next role. You know? Yeah.
Robert Swarthout:His next role. He's probably not gonna get the treasury like he wanted either, would be my guess. But so I've listened to a few podcasts with attorneys talking about all this different enforcement action the SEC has been doing, the Ripple case, the, Coinbase case, the Kraken case, and there's pro there's tons of cases. Somebody actually shared a number in one of those podcasts. There's over 200 active cases of crypto with the SEC right now.
Robert Swarthout:Vast majority of them aren't making the news that we would even probably see. But that's it's a crazy amount. And, again, it's a regulator kinda getting to make the rules as they go along, and that's how we get there. But it sounds like, you know, the general consensus around how the FCC is gonna get handled is there may be a a state to all of this when somebody first gets in, office, as the chair, or they literally make a list and they start going down. It's like it seems to be the bright line is if there was fraud in this case, then maybe it needs to be, adjudicated.
Robert Swarthout:And there are
Andres Sandate:some of those in the short term. Yeah.
Robert Swarthout:No. Yeah. They're bad
Andres Sandate:actors for sure. Yeah.
Robert Swarthout:But the ones that are not fraud I mean, the Ripple case is a great example. The Coinbase case, there's no fraud. The Kraken case, there's no fraud. The big ones, there's no fraud. Right.
Robert Swarthout:Outside of FTX. That one we'll set that one aside. We all we all know how that one works out. But at the end of the day, it's just kind of it sounds like what will happen is they'll either be settled or they'll just be, straight dismissed. And somebody brought up the interesting point that maybe Ripple isn't ready to dismiss this thing because they want some of these other few things they're about to argue to be cleaned up.
Robert Swarthout:So maybe it ends up as part of the negotiation. You know, if the SEC took less than the 125,000,000 because now Ripple's kind of got some leverage here, what could happen. I it'll be, cool to kinda see how this shakes out, but likely none of this really happens until probably closer to the middle of the summer because you have to get the new chair in place. They gotta get up to speed. They obviously gotta get confirmed by the senate and all that stuff, and then kind of start moving forward.
Robert Swarthout:So there might be a light a bright light at the end of this tunnel, but we'll have to, I guess, hope to be optimistic and and take our time with it. So
Andres Sandate:Yeah. I mean yeah. Everything everything points to the busy folks in DC right now are headhunters because everybody that's going out is gonna be needing a new job, and everybody that's coming in is trying to figure out if they don't get the job they want, which job they want. So there's a lot of there's a lot of behind the scenes shuffling and jockeying happening as we all expect. Right?
Andres Sandate:It's going on all the time. It, particular as as it relates to crypto, I'm gonna be keeping my eye on not only who is floated as, you know, the chair of the SEC, but also some of these other agencies. Mhmm. Because I think there needs to be coordinated regulation. There needs to be less about perf battles and who gets to be the lead, quote, unquote, the lead dog and more about how do we get back to being a leader when it comes to the innovation and the job creation and, obviously, you know, the projects that that can benefit other areas of our economy.
Andres Sandate:We're just behind, I mean, competitively. So I think there's a real opportunity if it's coordinated to to do some things over the next 4 years
Robert Swarthout:Yeah.
Andres Sandate:And beyond. Right? Yeah.
Robert Swarthout:A few of the names that I've heard floated, by people that, you know, at some level are in the know, is Goncalo, Brian Brooks, and the third one is escaping me right now. But, like, you know, it could be it could not be those people or it could be those people. Brian Brooks would be amazing. He would used to be, the chief legal officer. It worries me.
Robert Swarthout:I'm chief legal officer. I worked at Coinbase, and then he went to an office within the Fed and different things. So assuming the comptroller, not the Fed. So alright. There there's some interesting folks out there that are, you know, crypto I wanna say bulls, but just like crypto cheerleaders and kinda see how it can be used in in for a lot of good.
Robert Swarthout:So Yeah. We will see here probably in the next, 2 or so months. I imagine that one is announced before Trump's even, eligible, and, you know, they can start working on it.
Andres Sandate:Before he's come that's confirmed. Yeah. I mean, this has been a busy week for him. He's filling a lot of cabinet positions, and I would expect over the next week or 2 before Thanksgiving, break that a lot of people know kinda what seats they're gonna be in or at least they're being vetted Correct. For those seats.
Andres Sandate:So CryptoPaks, what does what a remarkable sort of, you know, the the packs we know that there's a lot of money in politics, and the packs, in the case of crypto, really had a amazing run during the election, 48 for 48 in terms of backing candidates.
Robert Swarthout:Yeah. And, admittedly, it's a, you know, not only were they accurate, but they potentially influenced the outcome. Makes sense. There's enough crypto voters that, like, you can make the case that, you know, maybe not didn't swing all these states, but some of the states that could have been the swing votes on, that kind of flipped the states. So they spent a $135,000,000 and 48, like you said, out of the 48 candidates, that they backed 1.
Robert Swarthout:I mean, to think that they batted a 1,000 there is insane. Mhmm. You know, even if it was 90%, we would be happy with that potentially. But it's early days. They even said that they're not holding back.
Robert Swarthout:They're already gonna start working on trying to do some stuff for the, midterms that are coming up. So, like, they're it's not like they're just shutting down camp at this point.
Andres Sandate:Sure. Yeah. I mean, there's momentum. Right? There's momentum.
Andres Sandate:So, yeah, they're they're gonna continue to chase to try to get, yeah, their agenda now
Robert Swarthout:in front of folks. Yep. And we already did the UBS. We'll go on to the last one here. So Bernstein is a $800,000,000,000 asset manager.
Robert Swarthout:Yeah. Moved their headquarters
Andres Sandate:a few years ago to Nashville, Tennessee. Just just know that. From New York. Yeah. It was a big deal, for, obviously, for Nashville to land a big New York, relocation, but, brought a lot of jobs to you know, a lot of high collar white collar, high end financial, services jobs to, to Nashville.
Andres Sandate:But, yeah, a sizable firm closing on a $1,000,000,000,000. Yeah.
Robert Swarthout:Well, as as maybe the last week has gone, and depending on the script that they have, they may already be there. That's true. Yeah. But jokes aside, they sent out a letter on 11th, so, on Monday. They basically said, welcome to the crypto bull market.
Robert Swarthout:Buy everything you can. Don't fight this. Add crypto exposure ASAP, as as literally the subject slash headline. Yeah. It can't be more clear.
Andres Sandate:Yeah. So
Robert Swarthout:it was kinda cool to kinda you just kinda see these more traditional folks. I wouldn't say buying in, but it's actually encouraging.
Andres Sandate:Yeah. You know, as an adviser, this is my this is my thought on this a little bit. We talked about this early on in some of our shows about adviser psychology because there was a lot of headlines early on when we were talking about these ETFs. Right? Who was gonna approve them?
Andres Sandate:Who could actually sell them? You know? Mhmm. For a longest time, individuals had to go out, open a wallet, open a Coinbase account, buy the Bitcoin themselves. Right?
Andres Sandate:And then these ETFs made it tremendously easier. However, not all platforms, all banks, all insurance companies, all wealth advisors approved them right away, and still there's a number of them that have a hard time buying Bitcoin for their clients. Mhmm. To me, this is and I said this, I remember saying this, this is about also playing offense. If you're an adviser, And I don't want advisers to steal my playbook, but, but it's out there.
Andres Sandate:Right? Like, if you're not talking to your clients about things that your clients are hearing about at work, at the gym, from their kids, you know, And it's like they call you and say, what are we doing? And you're the adviser that's like, I don't know what you're talking about. Like Mhmm. You either are uninformed or you're just you're not really keeping your eyes on the ball on the court for your client.
Andres Sandate:So for me, this is I I'm not saying they don't have conviction at Bernstein. They clearly do to say it in this way. But I think it's also about saying, why are you with that other adviser? Mhmm. Like, they can't they can't allocate the things that you should have exposure to because they're either inept or they're compliance or whatever.
Andres Sandate:You know? So so I think this is all also an opportunity for these Bernstein guys and these advisers, you know, to go out and say to those clients maybe on the fence, like, maybe we should think who's managing our capital.
Robert Swarthout:Yeah. You know, it's advisers have a lot well, they have to think through with this. It's like, hey. When do they wanna start adding it? And then I think the next question that they don't realize that they're gonna get to is how do I deal with rebalancing?
Robert Swarthout:When do I do it? Yeah. For an asset for a brand new asset class, no one is managed through a new asset class that's alive right now. Right. And like, you know, there there's people that added Bitcoin ETFs as they launched that are already over a 100% or approaching a 100%.
Andres Sandate:Right. Of their target allocation.
Robert Swarthout:Yeah. Yeah. And it's like, okay.
Andres Sandate:So they set a 1 and a half to 2% range, and now they're at 2 and a half or they're pushing up against 2. And it's like, do you wanna jump off the rocket ship? Or
Robert Swarthout:Right. Like, I mean, like
Andres Sandate:Do you wanna trim, or do you wanna stay and maybe, like, get free? That's an interesting conversation.
Robert Swarthout:Yeah. Yep. And, obviously, I don't know if it's on a per client basis, but it can be tricky. And, you know, I I wonder if there's ever a world where, an asset manager is too conservative, trims too soon, and then they turn around and get sued over it. I probably not because there's probably enough disclosures that kinda clean up something in that scenario, but, like, there could be disgruntled clients that feel like they missed out on something because you were, as an asset manager, or just me, an asset adviser, trying to be prudent and take some risk off the table.
Andres Sandate:So Yeah. I think, you know, you gotta get ahead of that. To me, if you're an adviser, you talk about the reality is is this is a volatile asset class. That should be part of the pitch. Right?
Andres Sandate:It'd be down 20% just as much as we could be up 20% in a quarter. As we get more adoption, as we have more owners, as we you know, I think that that volatility, you know, starts to come in a little bit. I think that standard deviations go from, you know, whatever, 6 to 4 to eventually, you know, that that you don't see the wild spikes. However, if you don't talk about the downside, you're not doing your job. So I think you have to talk about the volatility.
Andres Sandate:And you also have to talk about the reality that, well, we started at 1 or 2, if that's where you start. Right. But what happens if it gets to 4? Right? And do and the correlations, right, the correlations with their asset classes.
Andres Sandate:So can't do it in a vacuum. The good thing about it for investors, hopefully, that are talking to the right advisers that are open minded to it is it's a lot easier not to buy it. That's the reality.
Robert Swarthout:A 100%.
Andres Sandate:You know? So you can get in, but you can also get out.
Robert Swarthout:Yep. Well, we have run long, but it's a great conversation.
Andres Sandate:Yeah. It was fun.
Robert Swarthout:Yep. Thanks for joining us on this week episode of Weekly Crypto Check-in. If you wanna stay updated on a future episode, you can find us in any podcast player by searching Teton Crypto Capital or the Weekly Crypto Check-in. Take care.