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Topics covered in this episode:
- Bitwise acquires ETC Group, issuer of Europe's largest physical Bitcoin ETP
- Updated 13Fs, Goldman and Morgan Stanley
- ETH ETFs are small potatoes
- Franklin Templeton files for a crypto index ETF
- BlackRock holds more BTC than Greyscale
- Live Mastercard transactions on Algorand
- US selling Bitcoin?
- Crypto adoption is outpacing early internet adoption
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 August 21, 2024. I'm your host, Robert Swortha, and I'm joined by my co host, Andres Sedate. How's it going, Andres?
Andres Sandate:Good, Robert. We are officially back in school here in, the Atlanta area, I think. Most most kids are anyway. So Yeah. Little quieter.
Andres Sandate:We're I work from home, so it's a little quieter. And, the, yeah. I mean, the it it seems like fall is is close. I I'm, my favorite season of the the the year is fall. Followed by spring.
Andres Sandate:And if you've been through a Georgia summer, you know why. So I'm excited about that. How about you? How you been?
Robert Swarthout:It's good. If you didn't know what the school size schedule was, all you had to do is drive in the mornings, and I would agree that traffic, is indicating school's back in schedule or back in session. And, yeah, I was out, my wife's out of town. So I was out, feeding the horses this morning, and, it was I wouldn't say cool, but there was a hint of coolness in the air. I'm like, wow.
Robert Swarthout:The tail end of August. I wouldn't have expected it, but I will certainly take it. Let it humid in cooler temps, which is nice. So
Andres Sandate:Yeah. Football season's around the corner. The hopefully, the weather is gonna start to cool off a few degrees. We'll stay more in the eighties than the nineties here in Georgia. And Yep.
Andres Sandate:Yeah. But a fair amount of news to cover. I mean, I'll be always some, some regulatory stuff. There's some some political stuff. Obviously, we're in the week of the the DNC in Chicago.
Andres Sandate:Right. But but also some interesting stuff happening out there with 13 f filings. So let's, let's get rolling.
Robert Swarthout:Yes. Yes. So this first one, you know, you said this to me, and this admittedly caught me off guard. I would have never really paid attention to this news if it was if I wasn't in crypto, but, you know, Bitwise does acquire a, ETC group. So basically an exchange traded company.
Robert Swarthout:I don't know what ETC stands for, but it's a basically the ETP is the ETF equivalent in Europe. And, you know, it's pretty interesting. I guess this is more of a they're trying to increase AUM and just kinda builds a presence over there, brand wise, would be my guess. But yeah. Do you have any thoughts?
Andres Sandate:Yeah. I was doing a little research. This is one of the the the crypto asset managers that I have followed and had a chance to meet, Matt Hogan, their CIO, and some of their their sales, and distribution folks. Really nice people. Yeah.
Andres Sandate:I think there's a couple things, you know, to note. I mean, obviously, the press release doesn't always disclose a lot of the financial terms, but I think there's kinda three things happening. I think one is, yes, they're growing. They're gonna be now over 4 and a half $1,000,000,000 in AUM after this acquisition. They are getting up, obviously, a toehold in Europe, where these ETPs have been active for, a number of years.
Andres Sandate:I think they now have 9 products, the the folks, at ETC. And, and, yes, there's all these acronyms. So they have 9 ETPs out there in the market. So they're getting, obviously, a toehold into Europe. And then I think also this gives them the ability to really sort of market Bitwise as a global firm.
Andres Sandate:Right? They're now competing directly with BlackRock, with Fidelity, with other large institutional firms. And so, really, in order to do that in asset management, you've gotta have scale. You've gotta have distribution. You've gotta have reach.
Andres Sandate:You've gotta have multiple products. So, yeah. The, you know, the the interesting thing will be to see, is, you know, is this the beginning of a number of these types of transactions? There's been others, in the ETF space. There's always a lot of m and a.
Andres Sandate:There's always a lot of funds starting and closing down. So, certainly something to pay attention to, and, I think that it's gotta be a a positive if you're, you know, thinking about, who are the players that are gonna be able to compete with the big guys over time. It it seems as though Bitwise is really putting its hat in the ring.
Robert Swarthout:Yeah. And, you might know this. I'm kinda curious. Is there ever acquisitions of ETFs of other ETFs of like kind? Like, would Bitwise buy the, I don't know, the Franklin Templeton FA, you know, ETF of Bitcoin to consolidate or is this more of
Andres Sandate:Yeah. I think they could. Yeah. I mean, there there certainly are ways that you could, I believe, consolidate, different registered offerings into Right. The others.
Andres Sandate:Yeah. But I I think the the other thing you get when you do these acquisitions is you get the like, if you're if you're the acquired company, you obviously have relationships and, you know, they're selling the product to what is was the equivalent of an adviser, a bank, a direct to to a consumer. So you're getting not only the the products, but you're also getting the sort of shelf space, the relationships, and all that that comes with it. It'd be interesting to see the product comparison. Is there overlap, or are there things that, you know, Bitwise is gonna ultimately wanna sort of create that isn't there or vice versa bring things, you know, to the US market that are potentially just further ahead.
Andres Sandate:I just think it speaks to the to the to the fact that, you know, that the European marketplace, as much as it is, different from culture, language, etcetera, One country to the next. Like, they they are obviously ahead of the US when it comes to, you know, product, being out there and available. And I think it just speaks to their they've got their regulatory house in order. So, hopefully, it's a a sign of things to come here in the US that we're gonna see more, of that advance. But Yeah.
Andres Sandate:More to come on that here in a second with this with this next headline because I've got some some comments from their CIO of Bitwise.
Robert Swarthout:Yep. Yep. So kinda leading in here, the next, is the updated 13 f. So they come out quarterly, and it's all about who's buying what. It's certain sizes.
Robert Swarthout:And, I guess the ones we're calling out here are Goldman and Morgan Stanley. Golden Goldman, holds around just shy of 500,000,000 of Bitcoin ETFs, and Morgan Stanley is around 200,000,000. You know, obviously, probably small potatoes for their balance sheets, but, you know, you gotta start nibbling before you can really take a big bite, if if that's what they plan to do. So pretty interesting stuff there. You got Yeah.
Andres Sandate:I mean, again, 22 sort of, white shoe investment banks, as they call it, that are global franchises. And and so for them to be participating in the market, I think stepping back and looking at broader adoption across the just the institutional landscape. And, again, we we tend to focus a lot on Bitcoin ETFs just because that's where we can tend to get a lot more data. But, again, speaking of Bitwise, their CIO, Matt Hogan, did an article, that's out out there on their website, titled, yes, institutions are still buying Bitcoin. There's a couple of good data points, that Matt Hogan, brought forth in, in his in his article.
Andres Sandate:The 3 takeaways, we won't go through all of them, but one of them that I thought was kinda interesting was that institutional investors holding Bitcoin ETFs rose 14% quarter over quarter. Mhmm. And so that number went from 965 institutions to now 1,100. And the total a u m of the Bitcoin ETFs, that they hold, those 1100 went from 18, 19 percent to a little over 21%. And that total number now for those 1100 institutions is about $11,000,000,000 in Bitcoin ETFs.
Andres Sandate:So I think that, yes, unequivocally does answer the question. Do institutions own Bitcoin? Yes. They do. A 1,100 of them.
Andres Sandate:You know, obviously, all different sizes. We've only picked 2 here. Sure. But we'll be able to track this in these 13 f filings going forward for certain size institutions that are required to report. So, you know, net over the course of the Q3 or Q2, pardon, 2024, there were a 112 institutions that sold out of their Bitcoin ETF positions, but 247 according to Matt's research.
Andres Sandate:Mhmm. Again, Matt Hogan from Bitwise that, added. So a net of a 135 new institutional investors, own Bitcoin ETFs according to the 2nd quarter 13 f filings. So it's kinda interesting. I think it's worth sharing on our crypto check-in, you know, because I know that a lot of our, listeners and investors, are paying attention to what their advisers are saying.
Andres Sandate:But, also, if they're institutions and they're tuning in, they're also probably curious what other institutions are doing.
Robert Swarthout:Absolutely. You know, and it's if you think back, q 2 was a rough quarter for crypto, to see that there was definitely some people selling off, which makes sense because it was a down quarter. But, you know, there's, I guess, people potentially could have been up, that we're selling out of ETFs. I'm trying to think on the math on that. Probably not too much up.
Robert Swarthout:People were losing some money there likely. So
Andres Sandate:Well, I think you said it earlier, like, the the whole, you know, analogy that's thrown out or or sort of we talk about dipping your toe in the water, I think you say, like, you're gonna nibble if you're Goldman. You're gonna you're not gonna go initiate, like, a 1 or 3% position.
Robert Swarthout:Right.
Andres Sandate:You know, it's gonna be a small, small position in the grand scheme of things, though. These are big institutions that if they take a view on, you know, whatever asset class, and their investment strategist says, hey. We we are bullish on, you know, whatever. It could be emerging market debt or it could be small cap. You know, that that whole concept of crypto and digital assets, once that becomes part of that asset allocation, which you gotta think over time at some of these big institutions that are managing wealth, managing money for big pension funds, etcetera, You gotta think that over time, some of them will start to introduce, you know, crypto and digital assets into that when they make a call on the market.
Andres Sandate:And so, yeah, while many of them are starting at well below 1%, you know, just thinking about where the industry is in a year or 2 years or 3 years or 5 years if those percentages go up, I don't know that we can predict price, but we can certainly see that there's gonna be a lot more, you know, movement in terms of volume and dollars. Yep. Absolutely. More to come.
Robert Swarthout:Yeah. More to come. So we'll stick on the ETF bandwagon here and talk about Ethereum at this point. And, I can't say we have great news.
Andres Sandate:You know? You predicted this. So A bit of it.
Robert Swarthout:Yeah. You know, I was
Andres Sandate:saying us down the road that Robert you know, you you had sort of thoughts around how this ETF Ethereum launch was gonna go, and you had, I don't wanna say reservations, but you had some views. Yeah. What's played out so far to to, you know, to you? Yeah.
Robert Swarthout:I I think the headline here is this this data that I'm looking at is as of end of business on 15th August, so it's roughly 5 days old at the point. Yeah. Not not very old. But, negative net outflows. Like, that that's not a headline that you wanna hear as a, I guess, a basket of, ETFs.
Robert Swarthout:This is largely driven by the gray grayscale stuff, but it's Sure. It's not demand to want to buy into the, you know, the cheaper, you know, a the cheaper products versions of grayscale for that matter. So at the end of the day, like, I'm not terribly surprised. I expected a little bit better. I it wasn't gonna be anything like Bitcoin.
Robert Swarthout:There wasn't nearly as much fanfare. Admittedly, most people don't understand Ethereum, if they can even say it. They certainly can't spell it. So I don't know. It's a, it's not a great look, but again, it it happened in a quarter or a period of time where I would say most people weren't paying attention to crypto.
Robert Swarthout:So, you know, you can look at it and try to justify it in different ways, but it's, you know
Andres Sandate:Well, here's the thing I I would I would throw out there. I'm I'm looking over at my other screen, so I'm not I'm not, ignoring you, and I think you're making a great point. There is a director of digital assets at, an asset manager called Van Eck who came out and said, quote, a pleasant surprise to me has been the significant interest from the adviser community, adviser being the financial adviser, wealth adviser. Mhmm. They dot Cruz, the director of digital assets of VanEck, goes on to say, that, quote, it's easier to value and explain to their clients than Bitcoin because the Blockchain network, quote, is cash flow producing and resembles a technology stock.
Andres Sandate:So I thought that was an interesting headline. I I don't know how many advisers, you know, he's referencing and, you know, again, this is, just one individual. But, I've heard Ethereum compared to because I I was at a dinner where they talked about digital assets, and I I think I heard somebody explain it as, the Apple App Store of Mhmm. Crypto.
Robert Swarthout:Yeah. I mean, I think we mean a lot of things to a lot of different people. I I think that's fair. I the comment he said
Andres Sandate:know what the app app store is worth. I don't know you know, there's obviously winners on in the app store and there's losers. I was part of a start up that tried to launch an app on the App Store and it failed, and I lost my job. So so, I mean, there there are definitely casualties just because you're involved in the App Store ecosystem. Right.
Andres Sandate:But that that was just one one person's take on how to explain it.
Robert Swarthout:Yeah. I you know, the the one guy that you're kinda referencing there, I think he technically was correct, but these ETF Ethereum products do not have a cash flow, like, component. Right. Because the FTC does not allow staking, and they does not they didn't allow it to happen. Will that change over time?
Robert Swarthout:Hopefully. Fingers crossed. It won't happen underneath this SEC, Gensler administration, but, you know, it's maybe it's a point in the future that will change. So Yeah. You know, it it needs to have that to give it some something different than Bitcoin is.
Robert Swarthout:No different than Bitcoin is spelled differently at this point, when it comes to just another product. So
Andres Sandate:Yeah. Well, I I think I I'm gonna plug you and LinkedIn and social media because that's what we get to do when we run the show. Yeah. But I I saw a post I think you made about, because you were you were on, you were a guest on a show for another crypto Yeah. Asset manager recently.
Andres Sandate:Mhmm. I think it was the DigiOps team, and I I think they pulled some of the sound bites. And one of the ones I I think popped up on my feed today was Mhmm. Can Ethereum quit trying to be everything to everybody? And it Right.
Andres Sandate:I I I thought that was interesting, in light of like, I spend a lot of time in asset management and alternative world, and we're seeing there, like and this is more traditional alternatives, but, like, we're seeing this proliferation of do everything asset managers. Right? Yep. Where they they started out as a real estate or credit or private equity manager, but now because they have the they have the keys to the kingdom, I e, they have distribution. They have the capital.
Andres Sandate:They're public. They're buying up these insurance companies, so they've got nearly permanent capital or permanent capital. Mhmm. And so they're launching everything, and they're they're literally trying to be the one stop shop for guys like me who are advisors to individuals and Right. Saying, well, maybe you have 2 or 3 of us instead of having an open I don't wanna say they're against open architecture, but they're pro.
Andres Sandate:Let us be, you know, the solution for all your needs. Yeah. So it's an interesting I mean, it's it's there's some similarities there. Yeah. In terms of
Robert Swarthout:And I guess I'll take this opportunity to quickly, give a shout out to Philip and, Dalton. That was a great conversation we had. They're they're launching their podcast. The name of it is Convince Me. They're they're coming at it Okay.
Robert Swarthout:From the perspective of they are, crypto fund managers, but Yep. They want to know where utilities at. Where's this stuff gonna be used if it's not just for gambling effectively. And, And you were
Andres Sandate:a great guest to have on because you've been driving Philadelphia.
Robert Swarthout:I have a lot of opinions nonetheless. Yeah.
Andres Sandate:Yeah. Yeah.
Robert Swarthout:I guess over time we'll be the judge of that. But the at the end of the day, I think that I I appreciate their perspective because they they are wanting to, you know, see the facts and that, you know, part of our conversation was it's so early. It's a lot of times it's hard to point to good data points that kinda prove something. You almost have to point at something and say, well, you need to believe a little bit in that over there and a little bit more in this thing over here. And, you know, maybe 6 months, years down the road, you can kinda start judging, but it's, you know, I I think in that hour and a half that we talked, I said you have to be patient or, it's early days a lot, unfortunately.
Robert Swarthout:So
Andres Sandate:Yeah.
Robert Swarthout:Here we are.
Andres Sandate:Yeah. And I mean, I'd say that maybe one final point on that. For for folks that aren't paying attention to crypto digital assets, like, in the weeds day in, day out, like, if you zoom way out and look for look for a comparison, and you said, let's just take AI. Right. Now most people, when they hear that in the context of, like, public markets, public equities, the stock market, they're thinking the big giant platforms like Meta and Amazon and and and others.
Andres Sandate:And they're also probably now thinking NVIDIA. Because if they own the stock market, more than likely, NVIDIA is driving a lot of the returns in their 4 zero one k's, in their Right. In in in their, you know, brokerage accounts if they own it. Point being, then if you went one day or one layer deeper and ask them, well, can you tell me all about what NVIDIA's doing? Probably, you're gonna get a a a blank stare.
Andres Sandate:Like, we all know they do chips. They make chips, and it's like, that's that's enough. I don't think crypto's quite there yet. Like, the whole space is just it's it's there's a lot of utility, but it's just not a simple story as, you know, pick your company Yep. That we just you know, the average person can kind of explain generally, like, what they do.
Andres Sandate:So, that's cool. Well, we'll have to we'll have to share, some updates with them and get some updates from them, in terms of news that they're reading and seeing because they're doing, quite a different strategy in terms of what they're what what they're waking up and doing in crypto. But, Right. It's a it's a tight knit and and and small community, so it's cool. And they're doing it here in Atlanta, where we're based, which is great for the ecosystem.
Robert Swarthout:Yep. Absolutely. I believe our last ETF topic for the day, and goodness, it's roughly half of our topics total, Franklin Templeton has filed for a crypto index ETF. This would just be a makeup or mix of, Bitcoin and Ethereum right now because that's all they could do. Yeah.
Robert Swarthout:But obviously, over time, they would kind of, want to enhance that. Immediately, I was surprised that it took this long for somebody to submit an application, they submitted the rest one. You think this would have happened, like, the day after the Ethereum one's launched because they wanted to start that process. And if the I would imagine much like all these others, a bit of first mover advantage is gonna be, pretty important for peep for, you know, think about it as, you know, asset, advisors that don't wanna have to manage the allocation to these. They can just go buy this one product and, you know, does this become the SPY of crypto over time?
Robert Swarthout:We'll see. I guess there's a potential for it, but it's a, it it is in the application stage nonetheless.
Andres Sandate:Yeah. I mean, this is a a big name in in the in the wealth and investment management world, particularly when you think about, institutions, but even retail advisers that do, you know, just, private wealth. So I I gotta think that these headlines, we're gonna see a lot of them over the next 3 3 to 5 years. I mean, we we may have to have a sub podcast or sub conversation about, like, registered or or or index, you know, crypto products. Because I think you're gonna see a lot more single, don't you think?
Andres Sandate:Like, sing single token or single crypto crypto exchange exchange products over time?
Robert Swarthout:Yeah. They'll be that. Then I start you know, this is a crypto index. I imagine this is gonna be much more of the blue chip approach to it over time, I believe.
Andres Sandate:Yeah.
Robert Swarthout:Yeah. I I can see a a meme coin ETF, index at some point or a, you know, one that is more commercial focused, you know, to kinda pick your favorite bucket there. So it's I I don't think there's anything different about crypto 5 or 10 years from now from an ETF perspective than there is the current ETF market now when it comes to traditional markets. So
Andres Sandate:Yeah. Yeah.
Robert Swarthout:Can take some time to get there.
Andres Sandate:But the big the big names are dominating our crypto update this week. I mean, if you look through it, Bitwise, Goldman, Morgan Stanley, Franklin Templeton, BlackRock, and Mastercard. I mean, you know, like, just Mhmm. Just stepping back here before we jump back in, like Yeah. We're not talking about, you know, the FTXs of the world.
Andres Sandate:We're not talking about some of these, like, these these these stories.
Robert Swarthout:Right. They're not startup based.
Andres Sandate:No. These are these are big players moving in the space. I think we we gotta sort of step back sometimes and look at that. So next is BlackRock. BlackRock's always making their presence felt.
Robert Swarthout:Yeah. Well, once they decided to move into crypto, I mean, they they're big enough. Even if they make make make take a baby step, it's gonna mean something. So
Andres Sandate:Yeah. For sure.
Robert Swarthout:I I think the point of this, topic here is just more of just kind of observation. Right? So if you look at the top 11, in this case, I got an image here of the top 11 Bitcoin holders in the world. This is Toshi Nakamoto. So that's the guy, person, group, whatever you want to think there, that created Bitcoin.
Robert Swarthout:Has 1,100,000 Bitcoins in their wallet, and they've never moved. And for all intents and purposes, you probably can view those as never gonna be in existence or be used is my guess. The second biggest is, Binance. So that's a bunch of individuals having their Bitcoin on Binance. They have 550,000 Bitcoin and their wallet, and BlackRock is number 3 at 347,000.
Robert Swarthout:They have, surpassed Grayscale. Grayscale was at one point number 2 or 3 on that list. Grayscale's number 4 now at 263. If you kind of scroll down the list, you get through some governments, US government at 213, the Chinese government at 190, and then Fidelity comes in at 9th at a 176,000 Bitcoin. So, you know, moving up the list, I I can't foresee a reason why over time these ETFs don't become the biggest holders.
Robert Swarthout:I I just not all of the ETFs, just, you know, maybe 2 or 3 of them kinda get up the list. And at that point, you'll also wonder how decentralized this whole thing is.
Andres Sandate:I'm just getting ready to say that. Because you brought that up earlier this week when we were talking about this episode, and you were like, I don't know. It raises this interesting question about centralization and decentralization. So
Robert Swarthout:Yeah. I mean, it's on this list of the top 11, that's 900 excuse me if you're excluding I don't know why they're doing that. Oh oh, the US combined u US ETFs combined for, 909,000 Bitcoin. You know, there's only 21,000,000. So that's approaching, 5% just in those.
Robert Swarthout:And over time, you quickly get to the point where, like, maybe the top 10 or 20 holders of Bitcoin holders, like, are the network. Like like, what's you know, how this thing started and how it's going now are maybe 2 totally different stories. So
Andres Sandate:Oh, yeah. I I that's one to check back in on, for sure. That that's fascinating. I was actually a sub headline that I wanted to throw out there real quick because because we can't talk about grayscale, without talking about what what the business is looking like. I mean, I'm reading an article that they have around 25,000,000,000 in assets under management.
Andres Sandate:Obviously, a lot of capital went in early days to the trust that they'd created. Mhmm.
Robert Swarthout:We're
Andres Sandate:seeing a lot of that capital now move into these different exchange traded products.
Robert Swarthout:Right.
Andres Sandate:For reasons you've alluded to, number 1, not the only reason, but one of them being, like, you can just access the product much cheaper. But I I in in the process of reading that, I saw that BlackRock's Ethereum ETF, which is e t h a Mhmm. And this is this is about a couple hours old, so it's probably yesterday's data. They had about 992,000,000 in net inflows, according to Morningstar in the iShares Ethereum Trust, ether, which would put them clearly, you know, number 1 in terms of flows. Yeah.
Andres Sandate:And, and so yeah. I mean, you're gonna see headlines probably tomorrow or, you know, who knows, maybe Friday about the Ethereum. I mean, that's the thing. Crypto will jump on this headline, and it'll, you know, build it up as like, oh my you know you know how many $1,000,000,000, funds there are out there in the world? I mean, it's Right.
Andres Sandate:It's it's good for the story, but, you know, that's, I think, one of the reasons why we would say tune in, get the real headline, get the real news behind the news because Mhmm. You know, there's a lot of Ethereum funds that are sucking wind at this point too.
Robert Swarthout:Right. Absolutely. And to think that they are just out of the gate and they have 11 more months to go to get over the year hurdle, seems pretty Yeah. Pretty extreme. Yeah.
Robert Swarthout:Okay.
Andres Sandate:So we gotta keep rolling, though. We, we're we we only got a few minutes, and we gotta talk Mastercard and Algorand.
Robert Swarthout:Yes. This one, it probably a little shorter for us. So Mastercard, has been working with a couple different, groups that are working on different networks. There was one group that was focused on running a, Mastercard transaction that would kind of pull from an Ethereum, wallet and one that would do Algorand. I believe the 3rd network, I don't remember offhand, but Algorand was the first one.
Robert Swarthout:So why why are we even doing this? I think it's a way for people to be able to spend their crypto without actually having to sell it, prior, I think is probably the real use case here. In this case, the transaction was rather small, which does highlight, that it is a bit of a paradox, because currently with credit cards, it's not really doesn't make sense to, run a crypto excuse me, a credit card transaction for less than a dollar. With all the fees, you end up it's on a percentage basis. It's it's just not worth it.
Robert Swarthout:If you start looking at crypto, you can do things in super small fractions of a penny. You do allow for that. So you're kinda marrying these two worlds together. In this case, the Algorand transaction was spending was set up to sell USDC that is held in that Algorand wallet into I think it was dollars, if I remember here correctly. It doesn't show that what I'm looking at, but I'm pretty sure it went into dollars.
Robert Swarthout:And, this happened happened live. It was a 30ยข transaction, oddly enough. So I'm not quite sure what Mastercard is doing about their fees there because you would you would think they would have to be drastically lower or there is functionally no money received by the merchant at that point. But pretty cool nonetheless. You know, starting to see some the ability for real real world real world adoption.
Robert Swarthout:Tongue tied there. Sorry. But, you know, some days it seems slower than days. Poof, you see get news like this, and all it takes is somebody to launch a debit card or credit card somewhere and you can do it. So
Andres Sandate:Yeah. Well, I my real world, adoption of your takeaway or your explanation of, of that is I'm running a charity golf event, and I look at the fees that are charged for processing credit cards, which is how most people pay. I wanna do a foursome. I'm you know, I got 3 buddies. We're gonna play golf.
Andres Sandate:It's $500, $600. I'm like, my gosh. I mean, what? I mean so anyway, that's an aside, but it's it's, I'm like, this is for charity. But, you know, it's just the the processing of the credit card.
Andres Sandate:There's so much margin there, and there's so many players that are involved in that transaction that I think over time, 10 years, maybe it's 5, a lot of us can can kinda get compressed. People are still gonna sign up and wanna play golf, but, you know, over time, it's like, I could go this way to get all this transacted and processed, or I could go the traditional way with, you know, all these fees, you know. Well, it
Robert Swarthout:it's fees, but also the merchant doesn't usually get their money for roughly 2 days, 2 business days. So there's there's a time compression and a fee compression that's likely to happen in that world Yeah. Over time. I agree. So, is the US selling Bitcoin, Andres?
Andres Sandate:Well, it's I don't know if it's selling or it's transferring. But the when the US Marshals Services involved, I mean, you think handcuffs, you think the guns are out, you think right? But the headline, again, are they selling They might say that they're transferring to custody so they can trade. I don't know if anybody at the Marshall Services is a crypto trader. We might have to call Robert or our guys at Digiop Right.
Andres Sandate:To be the sub adviser. But, nevertheless, a lot of money was moved. I think this was capital or this was this was seized off of Silk
Robert Swarthout:Road, was it not?
Andres Sandate:I believe so. Yeah. Yeah. The illegal I mean, they're talking about bizarre. It's been around a while.
Andres Sandate:So they moved, what, 600?
Robert Swarthout:I don't know the dollar amount, but I I think it was, like, 20,000 Bitcoin or something. 20,000
Andres Sandate:into a Coinbase institutional account?
Robert Swarthout:Yeah. So, you know, this is the world where a the custodian can also be the exchange. Granted, they are probably separate entities underneath the hood, but they it Coinbase is the name that you hear there. That would not happen in the world, the traditional market. So maybe that does change in regulation, which may make people feel better.
Robert Swarthout:You would know what is happening there versus it just went to Coinbase, and then it makes headlines, you know.
Andres Sandate:It was $200,000,000 though worth of Bitcoin, I believe. I think the number was, like at least at the time that the transfer happened Yeah. It's 2275,000,000 approximately or something. So
Robert Swarthout:Yeah. Yeah. It's, I don't know. This is more of, I guess, is a pay attention to this news item. I I I don't know if we initially know what's gonna happen there.
Robert Swarthout:Hopefully, it is going into custody, not being sold because I'm not sure that you know, I'm I'm not one that thinks that we need a a national Bitcoin reserve personally, but I also don't think Right. If we're trying to get the most out of it, now is not the time to sell it. So
Andres Sandate:Yeah. Exactly. I mean, there there's the whole argument of, you know, who knows where it could be in a year. Right? If all these estimates and the things that we talked about earlier in the in the update with like, for example, like, Matt Hogan from from Bitwise are correct, and we go from 1 to 1a half or 1 to 2% adoption, like Right.
Andres Sandate:All of a sudden you have a ton of demand like, could be an interesting, position. That brings us to our last one, crypto adoption. Why did you put this one? I know you were an early Internet premier.
Robert Swarthout:Yeah. So I found this fascinating. I ran across this research report. I don't know even know who put it out, but it's it's pretty interesting. They overlaid the, the growth curve on a yearly basis for the Internet starting in 1990 through 2005, and then you have crypto on there from 2014 until now, 2024.
Robert Swarthout:So you have roughly 10 years of comparative data, then you have 5 or 6 years there of, you know, future growth of the Internet and seeing how crypto might go. And the curve that crypto is starting to invert and go to the top right on is appears to be much steeper than the early part of the Internet. And, again, statistics and data can be cherry picked to mean whatever you want it to mean, so take it with a grain of salt. But it does feel like it is accelerating. I would say I was probably not quite old enough to really experience the same time period from a perspective of analytical thinking.
Robert Swarthout:I mean, I was a kid. But being able to compare the 2 and having lived through both, I think, would be really fascinating for those that kinda have that opportunity. So
Andres Sandate:Right. Yeah. That we're maybe thinking about building things on the Internet and thinking about utility and thinking about, like, marginal value and all this stuff and risk. So yeah. Yeah.
Andres Sandate:And I
Robert Swarthout:was to guess, I'm kinda looking at the last year that they're overlapping. So that would be the year 2000 for the Internet and year 2024 for crypto. Granted, we're not through 2024 yet, but crypto appears to be, I don't know, 20 ish, 20% higher or bigger than, the Internet adoption in that year. So you you hadn't even really got to the big years of Internet growth, and you're starting to see crypto do that. And I, you know, I think that just generally with technology, each technology wave in some ways is bigger, in mass, but also quicker in times.
Robert Swarthout:So you kind of get that compression. So
Andres Sandate:Yeah. I I yeah. I think about when I mean, I'm not a huge Instagram user. Right? But I've I've read and seen when people said, you know, taking pictures with your phone was, like, something you could do.
Andres Sandate:But until you could sort of take pictures with your phone, Instagram, integrate with now Facebook, like, that opened up and created an entire ecosystem. Right? So
Robert Swarthout:Absolutely.
Andres Sandate:That's that's the question. What do we see in that sort of same vein or what what's the parallel Mhmm. In crypto or in in this entire blockchain digital asset space? I don't know that we've seen that quite yet. Correct.
Andres Sandate:So
Robert Swarthout:and I think anyone that says they know what it is right now is just purely guessing. There's no I don't think there's great great data points in any of that right at this point. So
Andres Sandate:Yeah. But we won't be long winded. We'll stick to close to 30 minutes with these updates, and we'll leave the prediction game to the quote, unquote experts out there Yeah. Trying to invest your money.
Robert Swarthout:Yeah. Awesome. Thanks for joining us on this episode of the weekly crypto check-in. If you wanna stay updated on future episodes, you can find us in any podcast player by searching Tea Time Crypto Capital or the weekly crypto check-in. Take care.