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Coin Stories with Natalie Brunell
James Seyffart: What Every Bitcoin & Gold Investor Needs to Know Right Now
00:37:48
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- [00:00]
A
I go back to 2017 and it was like long bitcoin, short the banks, right. And now we have one of the largest banks in the world is going to launch a bitcoin etf. It should be seen as a big deal. I know some bitcoiners are looking at this like, come on, like co opting. The banks are actually going in and doing this and they wanted to disrupt this stuff and they're going to potentially take advantage of it. But it is what it is.
- [00:24]
B
Everyone. Joining me this week is senior ETF analyst at Bloomberg Intelligence, James Seyfer. James, it's been a while. How are you?
- [00:33]
A
I'm good. I'm happy to be here. Thanks for having me back.
- [00:35]
B
Yeah. Let's talk ETFs. I feel like we haven't covered this on my show in a while, so why don't we start with bitcoin? What's happening with the Bitcoin ETFs?
- [00:42]
A
Yeah, I mean, it's not as exciting to just talk about. Money's going in, money's going out. But like every once in a while I think it's probably good for, to check in for you and your listeners. So I guess I would say if we go back, you had the collapse in April of earlier of 2025. Right. Basically almost a year ago at this point, from the bottom there until October 10th, there was like 25, 30 billion dollars that went into the Bitcoin ETFs book like it did really well. But from October 10th, which everyone listening knows that was not a very good day in the crypto markets, or bitcoin markets specifically, there was about 9 billion that left. Everyone in the media was talking about this stuff as like it's the end, like all this money's pouring out. But like you, if you don't take a step back and realize like over 25 billion went in in the preceding few months, it's not that big of a deal. Like money goes in and out. That's how these things are supposed to work. But what you want is that trend over the long term to go up. So from February 23rd to like now, we're towards the end of March actually a decent amount of money has come in. A lot of that has reversed for two and two and a half billion ish, I think has come back in. So not all of the outflows have reversed, but things have kind of stabilized. The price is more stabilized. We're making higher lows pretty much every week. So the Bitcoin ETFs are doing really well. They handled it very well. There was no dislocations in the market or anything like that. So what we're seeing is buying is still happening. We saw some advisors selling in the fourth quarter that we know from 13F's hedge funds sold a decent amount. I think a lot of that has to do with the basis trade. So some of the outflows that I was just talking about likely was almost completely unrelated to what was going on. The price, it was more had to do with the fact that basis, which is when you sell the futures and buy the spot, it's like a risk free yield that you can get which you've had plenty of people on here talk about. But the one thing I would say is like if you have an asset that goes down 50 plus percent and you know the numbers 9 billion equated to like I don't know, 12 and a half, less than 15% of the flows that went in from its launch just a couple of years earlier. That's pretty damn good. Like that is really, really good. So what ended up happening is it was the OGs that sold the Bitcoin. The bit, the Bitcoin ETF holders were diamond hands here. They actually held strong.
- [02:46]
B
Well that's what I really want to zero in on because I've seen both you and Eric Balchuna's tweet about the fact that you might not expect for people to want to weather these storms of drawdowns like 50% but, but in the ETF world they did. They held on instead of selling.
- [03:01]
A
Yeah. So part of it is this is something we were saying from the launch. A lot of people who were not too keen on the ETFs launching are like they're going to be weak hands. They're going to sell at the first sign of stress. And that's like if you are an ETF holder, you are not somebody that was like sold this etf. Most likely like you went out and learned what an ETF is, you went out and learned what this underlying asset is to figure it out. And if you went out and learned, you understand this thing has repeated 70 to 80% drawdowns like throughout its history. Right. And also these people putting their portfolio, think of these Vanguard investors, they're, they're putting their money into their investment accounts every two weeks, even if it's not at Vanguard directly. A lot of these people are just allocating to a set allocation goal. And if your goal, this is what we talked about before the ETFs even launch what could happen? 1% allocation, 3% allocation, 5% allocation. Like it's not like it's 80% of your net worth. Like a lot of your other guests and people who are true Bitcoin maxis, the people that are holding these ETFs, most of them it's like just a portion of their portfolio. So if it's 3% and it goes down 50%, okay, that hurts a little bit, but it's not that big of a deal. I'm not going to dump and run away. What's more likely to happen is, and what I think is going to happen, is happening now is people are going to top up. So if you had a 5% allocation, you get cut in half. You're at two and a half. When you rebalance your portfolio, whether it be within certain bands of ranges or you do it quarterly or semiannually or annually, you're going to buy up again back to that 5% allocation if that's your goal, and vice versa. It happens on the upside too. I think that's part of the reason why we're going to see muted, at least with the Bitcoin ETFs, as they grow in importance, you should see muted. You don't see the blow off tops and theoretically I think you shouldn't see the complete collapses, which is what's happened so far. Right. We haven't seen the 70% pullback that would bring us below 40k, so we never saw a blow off top. Everyone has basically said this, but I think you're seeing ETFs, and I think there's plenty of reasons for that to happen.
- [04:46]
B
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- [06:48]
A
Yeah. So one thing I would say is you get these 13 Fs, all you see is technically equity holdings. Fortunately you get to see an insight because ETFs fall under that reporting standard. So we can see who holds different ETFs because they're required to file under 13 Fs. And one thing we only see the long positions. So hedge funds are huge users of ETFs, but technically on a net basis they tend to be short. So like we see a lot of hedge funds holding these things. I'm just saying this to caveat that we don't know exactly what the Harvard endowment is, but they're a huge port holder of it. Yale holds some of these things, including Ethereum. I know it's a bitcoin podcast obviously, but so the biggest buyers are still advisors, wealth advisors, broker dealers, things like that, people that normal everyday people, usually at least, you know, middle income or higher net income, people that have advisors, they're managing their money. Those are the people that are buying this for the most part. That said, the 13F only show so at the end of September in 2025 we knew 27% of the holders. We actually saw outflows, like I said, from hedge funds, a little bit from those advisors as well in the fourth quarter. And now it's down to like 25, under 25%. So we only know 25, like a quarter of like who's owning these things. Which means most of it is retail, probably. And there's probably other institutions that are international, not required to file 13 Fs that are holding these things. But really retail is a huge holder. It's direct investment from, you know, your brokerage platform, whether it's like Robinhood or Schwab or what have you, that those are the people that are typically buying these things. And then as far as institutions goes, it's mostly advisors, which some of your guests on your other podcast wouldn't even consider them institutions. But for 13 purposes, they are.
- [08:27]
B
Right. So when these were Approved, there were 11, right. Can you tell us how they stack up? And we're about to have a new entrant, right? Morgan Stanley.
- [08:34]
A
Yeah. So I think there might be 12 now. I don't even know. And then you include this futures products. There's a whole bunch of other bitcoin products that are like, actually, yeah, there's one's buffer products where like they basically give you no downside protection, but you have capped upside down. Those have performed really well. Like if you put, if you went into those things six months ago, you're really happy or even earlier you're happy when. And then some of them are covered call products. You're selling call options, giving up some of your upside. So there's like this whole sub ecosystem of bitcoin exposed products and they're all doing well. A lot of people are like, there's no way you can have this many products. And we're like, yeah, you're probably right. But it depends how much money comes in these things. And even the smallest ones have a couple hundred million in them. Right. So. And they're profitable and they're. So it's good enough for them to keep them going.
- [09:17]
B
So how do they rank? Ibit's number one by how far?
- [09:20]
A
And like, then I don't have this in front of me. IBIT is the number one by every metric. Right. Like if you look at volume, assets, flows, they tend to lead. And then the other ones up there, you have Arcbee from VanEck, Bitwise. So Arcbee from Ark. Sorry, Bitwise is Bitcoin, ETF, fidelity. Fidelity is way up there, but you go all the way down. I think Wisdom Tree might be one of the smaller ones. Right now you have 21 shares which is just bought by Falcon X. All of them are doing just fine and they're all like trading well. Like the main thing that you look at for an ETF is like one, is it getting money? Does it have enough assets? Is it the, is the, is the company getting, is the product profitable for the company? And all of that is happening. And then like you mentioned, Morgan Stanley is launching, which is huge because like I go back to 2017 and it was like long bitcoin, short the banks, right? And now we have one of the largest banks in the world in the United States is going to launch a Bitcoin ETF in the very near future. We just saw a listing action. So by the time this comes out even maybe there'll be an ETF out there, which is fascinating obviously because one, Morgan Stanley doesn't launch a lot of ETFs at all. They have a bunch that they launch under like Eaton Vance and some of these other parametric which are brands that are, they've acquired. There's like subsets within Morgan Stanley. So for them to launch and then also to launch like under the Morgan Stanley brand I think is pretty impactful. And what it comes down to is the fact that they have a captive audience if you will. So we call it BYOA. Bring your own assets. They have 6 plus trillion assets with brokers, advisors and people on their platform. So if they, I know for a fact, I've heard they have a lot of clients asking like what about crypto, what about bitcoin, all these things. And they're like, if clients want to put this in our portfolio, IBIT's pretty new, FBTC, Fidelity, you know, all, all these issuers like why can't we just do the same thing and we don't have to pay somebody else to do it. And they're leaning into it obviously. So no matter how you slice it, this is, it should be seen as a big deal. It's also, I know some bitcoiners are looking at this like, come on, like co opting the banks are actually going in and doing this and they wanted to disrupt this stuff and they're going to potentially take advantage of it. But it is what it is.
- [11:28]
B
Do you think that this is the first of all the major banks moving into this space and issuing their own ETFs?
- [11:36]
A
So I was honestly when, when Morgan Stanley filed, so to be clear, they filed for Bitcoin, Ethereum and Solana. When they filed for these. I was surprised. So it's very late to come into the game for like and it's not even like a differentiated product. There are other products out that have been filed for doing unique things with bitcoin. The covered call side of things ones combining with carbon credits for institutions that are worried about esg things related to bitcoin mining, which we don't need to go down that rabbit hole. But you can see why institutions want something like that. From the point, from what we've seen so far in the filings, this is like just another spot bitcoin product relatively undifferentiated. From what I can. Well, I'm happy to be called wrong. So it's interesting that they would jump into the space so late. But it's like I said, they have a captive audience. So I don't think the other banks will necessarily do this. Morgan Stanley is particularly large. UBS also has a very large wealth management platform. But Morgan Stanley is very big. So I don't think the other banks will come in. But with that caveat of I wouldn't have expected Morgan Stanley to be launching this either.
- [12:38]
B
Didn't something change with in kind redemptions?
- [12:41]
A
Okay, good question. That is becoming a bigger and bigger thing. So when we talked years ago when these things were coming out, the big thing was like a lot of the issuers wanted in kind redemptions. Basically you give me Bitcoin, if I'm the issuer and you're trying to trade into it, you would give me Bitcoin, I would give you in return equivalent shares of the ETF or vice versa, I would give you shares of the ETF and you would give me Bitcoin. So that was not allowed for the first few years. That is now allowed. But the thing is you had to go through this cash creation process, the process, if I were to show you a diagram of it, there was all these additional steps that were unneeded of like moving cash around because certain banks and market makers making product making markets in these ETFs weren't allowed to touch the crypto markets at the time. So they had to go through cash and then they had to have subsidiaries that touch the cash. The ETFs themselves had to go out and buy bitcoin usually through some prime broker, desk, CoinDesk or some other provider. And now you can just do what we were just talking about. But the thing I will say is the products got super efficient. It didn't matter that it was cash create. Like if you go on Coinbase or Kraken or you name it Gemini. Like great and great, great companies, great products like you're paying, the spreads are kind of wide comparatively to the traditional financial markets. And you're paying a transaction fee in the US if you're buying IBIT or FBTC or one of these other things. Your, the spread is like penny wide. There's like no spread whatsoever. There needs to be a little bit for the market makers and there's, it's usually there's no transaction fee whatsoever. It's zero. So that is huge for ETF efficiency. And so like they did that with cash. More and more I'm hearing people, they're, they're tapping into the in kind markets. I think long term down the line right now it's only for APs. The big banks are the only people that can really do that type of transaction. But there is an example, Vaneck, who's obviously a big player in the crypto space. And with Bitcoin ETFs, with their hold of ETF, they have a gold product where you can actually be a retail customer and over a certain amount you can trade in your shares and you'll deliver gold to your doorstep. So I said this a long time ago. I don't know when it's going to happen, but at some point in the next few years I would not be surprised if you get to a point where say you, you as long as you have 10,000, $20,000 in one of these Bitcoin ETFs, they'll actually send Bitcoin to an address of your choosing once you've been like whitelisted and approved to accept it because they're never going to allow like anyone to just send it anywhere. There's still securities regulations on this stuff. But yeah, I think that's going to happen. And different issuers, potentially newer entrants are going to try to compete there. Like oh, as long as you have 10,000, we'll send Bitcoin to your wallet. As long as you have a. Unlike gold where like you have to have an armored truck deliver that thing or you have to move it, it's kind of heavy. Bitcoin is pretty instantaneous and pretty lightweight to move around. So that's farther out in the future. But I think that's where things are ultimately going to go with these ETFs. And honestly it might be a more efficient, cheaper way of getting exposure to Bitcoin than, than some of these centralized exchanges and even decentralized exchanges.
- [15:35]
B
Well one Thing I wanted to ask you about is, aren't most of these ETF issuers using the same custodian? And isn't that somewhat of a risk?
- [15:42]
A
Well, I mean, Coinbase is custodian custodying. I mean, I think they custody most of Sailors Bitcoin, they custody a lot of the DAT Bitcoin, they custody more like 2/3 or 3/4 of the ETF Bitcoin. That said, there's been a bunch of filings for distributing their custodians. The most recent thing I'll say is, like, this is kind of unrelated, but like Blackrock just launched a Ethereum staking etf. I know you don't care about it, but like, they. And rather than going with one staking provider, they chose three. And we've seen a bunch of filings. And so Bitco is a, is a custodian for some of them. Gemini is a custodian for Vaneck. A lot of these issuers are having multiple custodians for the reason you're concerned about. But it, at the end of the day, it's still highly, highly concentrated at Coinbase. So, like, the numbers you see about these ETFs, like, how much bitcoin they hold and all that stuff, a lot of it is technically within Coinbase's coffers, but I mean, the Lindy test, like, the longer you've been around, the harder it is to break. And they obviously issuers are still picking them, companies are still picking them. So for whatever reason, whatever process they use, I'm not in those meetings or having those conversations. There's some reason that they're choosing Coinbase, and I have to assume some of it has to do with, like, they like the protocols of how they're handling this, but it's something I'm obviously paying attention to and slightly concerned about.
- [16:58]
B
That's interesting. Okay, you brought up gold. Let's shift over to the gold side. Because a lot of bitcoiners have been disappointed that gold outperformed as the inflation hedge, as the debasement trade. What kinds of flows are you seeing into the gold ETFs?
- [17:11]
A
Yeah, so I talked about all the outflows from Bitcoin ETFs from October through February. It was the exact opposite. It was a bonanza for flows into gold ETFs. It was like multiple standard deviations above the norm. They were taking money hand over fist. You saw it in gold. Price going well over 5,000. And ironically enough, it's like kind of the flip side of Bitcoin. Where like now it's going the opposite direction. Tons of money are coming out. But it's kind of the same as bitcoin. More money went in over this preceding few months than has come out in the last few weeks when, when money started turning away as price got went down. So yeah, I mean money's going out. People, they're like bitcoin flows and gold flows have kind of almost been inversely correlated over the last eight months. But that's what bitcoin does. Like bitcoin has was very correlated to software stocks over the last from October through February. One thing I'll say is Bitcoin ETFs. There was very little dip buying. There were some outflows I talked about and it wasn't like a deluge of money pouring out every day. But when bitcoin went to 60 I kind of would have expected money to start pouring in and people trying to call a bottom and really didn't like the money didn't start coming in until the end of February after we had really gone down to 60 and then like kind of leveled up a little bit. So people waited for, I guess they were concerned that it was going to go down to that 70% pullback. And I guess people are now we're at least calling a near term bottom and gold was the same thing. I guess they're, they're jumping out now. And part of it I think has to do with if you look at, if you talk to people that were around in 2008, 2009 financial crisis, people running hedge funds and funds like the people the, the money, the funds that saw redemptions were the only funds that were doing well like trend funds and managed futures products that like actually were able to weather the storm. And it's because people tend to sell things that went up. So everything that's going on Iran, if you want to go to cash, like are you going to sell the thing that's down 50% already or are you going to sell the thing that's up 50% in your portfolio? You're probably more likely to sell. There's always this reversion to the mean in the market. So I think that's kind of what's happening with the ETFs and also what ends up happening with the Bitcoin ETFs.
- [19:15]
B
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- [20:40]
A
GLD is the spider gold etc State street in partnership with the World Gold Council but they have GLDM which is a mini version and the fee is a lot cheaper on there. And then you have IAU from BlackRock and then you have IAUM which is also a mini version of BlackRock's IOU that's cheaper but they all do the same thing. They just, they hold gold in a vault typically somewhere in London and that's all there is to it.
- [21:02]
B
And how do they compare to the Bitcoin ETFs in terms of size and liquidity?
- [21:06]
A
Liquidity the, the same thing gold is, the gold ETFs are much larger. So in December of 24. So right after Trump won the Bitcoin ETF. So the, the first gold ETF came out in 2004 and it was, it was a huge thing because gold back then there was no way you could trade futures, gold futures and it, but that it's derivatives, it's not that efficient. There was gold futures ETFs at the time. Same way when the bitcoin futures ETFs I've talked to you about, they're not the most efficient way. They're good trading vehicles. There's reasons to hold them at certain Times, but they're not like things that you want to hold for years on end in my opinion. But gold ETFs were like the first way you could do actual allocation to gold long term. And it, it led to a bull market through like 2011, 2012. And that's when gold hit all time highs. I was saying this because they have a long history. Bitcoin ETFs and AUM were within a couple billion dollars of catching gold ETFs. Total AUM in December of 2024. And then bit bitcoin had kind of a sell off through April. Gold did well and now gold is almost double the size of Bitcoin ETFs at this time. So one, it's the. Obviously when you, when you look at assets and size, I've talked about this before, there's two things that move it. The underlying value of the holdings and the flows coming in. So you had a double whammy all of 2025 for gold where you had performance doing exceptionally well and you had tons of money pouring into these ETFs. Yeah. So that's the way I tend to think is. So I have this chart where I like to look at like what's going on with gold AUM and bitcoin EF aum. And yeah it came it like Bitcoin ETM shot up real close to gold and then it was like kind of following it and then gold just like went through the roof and bitcoin went the opposite direction. Now it's kind of, they're kind of converging again but they're still, they're really far apart, further apart than they've been since basically the launch.
- [22:51]
B
Do you think bitcoin will catch up again?
- [22:53]
A
Our view is that Bitcoin ETFs will be larger than gold ETFs. But that doesn't look too good right now. Part of the reason is because there's multiple reasons you would have bitcoin etf. So we were at DAS this week, the Digital Asset Summit hosted by Blockworks. In my panel we talked about the narratives around bitcoin. And there's the peer to peer cash. That's the Jack Dorsey side of things. There's digital gold, Digital store value portfolio diversifier. That's what institutions view this 1 3, 5% allocation. Then you have digital capital, digital property, Michael Saylor's kind of point of view. Right. Like creating digital credit on the back of that. So like you have all these different ways of viewing bitcoin and gold is like only one of those things. Right. It is a portfolio diversifier and a currency debasement hedge. So like, and then the other part of it is, oh, the fourth thing for, for bitcoin, which the market must view it as, at least despite what we think about it being a digital store of value or the use cases of Bitcoin, the market views it as a growth risk asset right now. That's the way it trades. I personally think that should change, but it doesn't really matter because the market doesn't think so. So yeah, that's the way things are trading right now. So in a portfolio when you have an etf, there's so many people that could use it. They could be using it to put in their portfolio because they want to bet on like a growth and liquidity trade. They could be buying it because they want to have a hedge against currency debasement the way we view it. Or they could view Michael Saylor's point of view and they want to get exposure to that type of thing. So it can be hot sauce in a portfolio in a way because it can. I mean granted I didn't think you would see that big of a move in gold for an asset with that many trillions in market cap. So I think that bodes well long term for bitcoin because obviously if you can hit its stride, it can, it can do something like that. But there's just more use cases of why somebody would put a Bitcoin ETF in a portfolio. So that's why I thought they might catch up. But that the exact opposite has happened since we made that prediction. So.
- [24:41]
B
Well, everyone knows that bitcoin is such a tiny portion of anyone's portfolio, if it's even in some portfolios. But on the gold side I'm actually, I was surprised to learn that almost no one holds gold.
- [24:52]
A
No one holds gold.
- [24:53]
B
Like if you look at wealth advisors and how these portfolios are allocated, they're very much under allocated to gold. If you want sort of that traditional debasement trade, do you think that's going to change? Do you think that it'll start to tick up in the same way that bitcoin is and be maybe like a 3 to 5% allocation?
- [25:10]
A
Yeah, I mean the part of the problem with gold is like the digital gold narrative. There's like you're saying there's plenty of advisors and institutions that don't believe in the gold narrative. Right. It's just a pet rock. There's no reason to hold it. And my response to Them would be the market disagrees with you. Right. Like that We've seen it over the last few years. And the one thing I would say so one, yes, it could happen, particularly because we're going to a multipolar world. It seems like we're heading that way at the very least as Americans, we probably prefer it didn't. Maybe, but I don't know. We'll see. It depends on your views. So there's I know plenty of advisors, plenty of people I respect who just see no reason to hold gold in a portfolio. But there's plenty of research out there. Like if you have, you know, 60, 40 portfolio, if you have just substituted bonds for gold, you would have almost the same outcome in those portfolios over a long enough timeframe. So gold, one thing that a lot of people look to gold for is like they're like it's not inflation head, look at inflation gold and do well or look at what's going on right now and gold's going down. And like one thing I would say, and we wrote about this this week, is like gold, much like bitcoin, it's not really a hedge. Like maybe long term, the most thing, it's the biggest hedge against. It's like currency debasement. But like it's not going to go inverse over a shorter time period. Like over very long time periods, you're going to get that inflation hedge. But it's not like inflation spikes and gold's all of a sudden going to follow it. Like it has zero correlation. That's why it's a portfolio diversifier. Bitcoin on the other hand has like a 0.2 to 0.3 correlation which is also very good. That's pretty uncorrelated for compared to most traditional assets. That's great for a portfolio. So I, I'm surprised more people don't have gold in their portfolios, but the data shows that it really isn't. And maybe gold bitcoin can, you know, I think I've heard of some people like viewing it as like their currency debasement hedge as a 5% allocation and they do like a market cap weighted version of gold and bitcoin. There are ETFs out there that have gold and bitcoin. So I don't know, we'll see.
- [27:05]
B
The market has just been so volatile. I mean even the pullbacks in the precious metals have been surprising to see because they've been performing kind of like a digital asset.
- [27:14]
A
I mean, silver particularly.
- [27:16]
B
Yeah, for sure. I mean, so can you zoom out and talk to us about just how you're viewing the market at large because equities had performed so well. Now there are tremors on the private credit side that are impacting things and valuations. So zooming out, what do you see maybe over the next six to 12 months. And please share your thoughts on private credit too.
- [27:36]
A
Yeah, so I have two things. I'm like there's people out there that are perma bears. I probably lean more towards a permeable without being completely there because like it's very easy to sound smart and like look at all these risks. I mean what's going on in the Middle east right now is terrifying obviously for a whole multitude of geopolitical risks, whole multitude of reasons. But like it's very easy to point to that as a potential problem where I being like this whole thing that causes a whole bunch of jobs to go away or AI is going to have this massive productivity boom. But like it's a lot. There's like this undercurrent of like everybody is going to work every day like trying to make the world a better place, trying to make themselves better off and like 10 over time that tends to win out. So I'd say like that's just the way I tend to view markets overall. So I'm a long term bull. I'm always allocating mostly to risk assets and equities and I think that's the way our team tends to view the markets and that's what we see is happening with long term investors. On the private credit side, there are ETFs that hold private credit in some portions of their portfolios. The thing with private credit is like there's supposed to be an illiquidity premium like you're not allowed to, you can't actually trade it in the same way you can trade other forms of debt. But like I look to BDCs or business development companies, those are the ones that have a lot of this debt and they're publicly traded and they're trading at 20 plus, 20% plus discounts which is like, like, like everyone's worried about private credit. And there's where there's smoke, there probably is fire. We've seen plenty of issues where there's actual fraud happening. And I think part of the problem with private credit is one in aggregate they're heavily weighted towards software and software is the thing that's getting hit hard by what's going on in AI because like they love software because it's steady, consistent returns and income and they Love that. Because when they allocate their, like, they know that their loans are going to get paid. And now all of a sudden in software, everyone's concerned that those things aren't going to get paid because AI is driving the cost of making new software to zero. So it's all those things. Fraud, manipulation, for the most part, it's like slightly out of my wheelhouse, but obviously we're paying attention to it. But yeah, I would say right now the market is pricing for serious problems in private credit. The problem is, like, if you're in those things, particularly these things that are called interval funds, the way they're structured is that you can. Only 5% of the fund can be withdrawn on a quarterly basis or whatever the restrictions are. But there's a whole bunch of companies out there and like, if you have 12% of people that wanted to. 12% of the assets that want to list leave every quarter, like, they just can't make that happen every quarter. So I. Part of it is just like, you're not going to get your money out. If you think there's a fire there and you're concerned about it, you're kind of stuck unless you're in a bdc. But if you're going to sell now, you're selling at a 20% discount to what the loans are valued at. I don't know, it's. I would hope that most of the advisors that put their clients into those things explain to them the risks. Like you're going into a liquid investment. Yes. Right now returns, you know that you're getting a 10% yield and what have you. But, but hopefully they understood what they, what they were buying when they went in. And hopefully these companies that were selling these products didn't oversell the liquidity that they could match. So when you go into something like that, private credit, private equity, hedge funds with lockups like you go in, you should know that that venture capital like those, that money's going to be locked up for a long time. And obviously some people that invested in them weren't ready for that. And it's hurting what's going on. But ETFs, for the most part aren't having any problems.
- [30:54]
B
Are you following any of the electrical infrastructure ETFs, like PAVE, which is one I heard about from Luke Gromen, because obviously we need to build out so much capacity. It seems like those are going to do great over the next few years.
- [31:06]
A
Yeah. So this will surprise absolutely no one. If you look at the flows and ETFs and you look at it by what we would call sectors or themes. The number one sector over the last five years before Q4 of 2025 was Tech ETFs, anything that had a tech focus. Semiconductors, Google, Apple, those types of names. Mag7 blowing away every other sector. And then in Q3 of 2425 we actually saw some other sectors coming up and then they were very. Tech was still the largest in Q3, but in Q and ending Q4. But now the largest in Q1 of 2026 is energy industrial. So energy is oil and gas companies, industrials, a lot of the aerospace and defense type products and materials sectors. So gold mining, real like real world stuff, like building stuff. So that's where all the money's going. So we're seeing an ETFs and actually the fourth category that took in the most money is themes. And themes is this really broad category. It could be like stuff. It's basically anything that goes across multiple different sectors, but within themes. The reason that themes is doing so well is because of the infrastructure products which go across industrials, materials and all these different things. And natural resources funds which are investing in the real world stuff. So like the trend is very clear where ETF investors, particularly in the US are putting their money right now. They're. They're not buying tech anymore, they're buying real world. Because people need to build stuff and do real things.
- [32:34]
B
The stuff you can't print.
- [32:36]
A
Yes. So PAVE would fit under that infrastructure segment I was talking about. Exactly. Stuff you can't print.
- [32:40]
B
Fascinating. One thing I also wanted to ask you about is some of the new sort of bitcoin adjacent products that we're seeing, like digital credit from strategy. Do you think we'll see more ETFs that have these perpetual preferred instruments in them? Like we have Stretch from strategy, we have SATA from Strive. Is that something we can expect expect in the future?
- [33:00]
A
Yeah. There are preferred ETFs, like preferred stock ETFs there. I mean it's a really small category right now. There are also a few ETF products that were launched that are like basically investing in the equity and debt of digital asset treasury companies. Some of them are bitcoin specific, some of them are broader digital asset treasury companies. Some are actively managed. So they're out there. There's not a ton of money going into them yet. So I don't know if we'll see one that's specific, just perpetual preferred. The market's probably still a little too small, right? Now for an etf. But like, if this thing keeps going the way that Stretch has grown over the last month, maybe you could see other companies doing this stuff, but it will probably end up in ETFs and particularly the ones that are trying to focus on companies involved in crypto and bitcoin balance sheet companies, if you will. So yeah, right now there's not a ton going on in that space, but I could see it happening. I don't think there's going to be like one ETF that just invests in Stretch, but maybe, I mean, I didn't think there'd be a reason to have, you know, single stock levered ETFs. And that is one of the biggest growing categories in ETFs.
- [34:00]
B
Crazy.
- [34:00]
A
So maybe, maybe in the future.
- [34:02]
B
Well, what's the most surprising to you or what are you watching most closely? Because again, we're in such like a weird time. I think when it comes to investing, a lot of people are nervous. We've got this geopolitical crisis around us. People fear that they're going to be displaced by AI. I mean it's just, it just feels like total chaos forth turning right, like how do you, what do you want people to know?
- [34:25]
A
I am not the person that question. I mean, I'm looking, like I said, I'm trying to see where people are putting their money. And like I said, people are investing right now. They're, they're allocating to real assets. Ironically, we're seeing a huge diversification. So it was all about the Mag 7 the last year. You hear a lot of people complaining about passive and driving up the Mag 7. If you look since the third quarter of 2025, I mean they haven't done that well. It's been small caps that have done well. It's been real asset type things. It's been international stocks, aside from since Iran. Actually Iran really hurt international stocks. But like all of that stuff. So one thing I would say is diversification matters. I'm a huge believer in diversification. Typically something's going wrong in the us it might be benefiting what's going on international emerging markets. So my personal view is like I have exposure to all of those things, equities. I don't have a lot of fixed income. I'm still pretty young. So one thing we're also watching, you asked what we're worried about. Like people want hedges and they want uncorrelated exposure to assets. But like there has been nothing that's been uncorrelated, right? Like bitcoin went down since 10:10. Gold is going down now. Bonds really haven't been that diversifier at this point. The only real diversifier for a portfolio over the last six months. If you're worried about like your assets going down or whatever your exposure is, has been cash. So there's. I know, I know some advisors and some people, the way they do it is they have like a core satellite approach where like they just have a chunk of their money sitting in cash where they can live off of that and use that or they're waiting for dips and using that cash to allocate and building up a cash position after that. So. So yeah, the death of hedges, I guess, is the only, the only thing, the only hedges that are really working are like derivatives, products like puts and selling calls and things like that. That's the only thing that has worked which, like a lot of people don't want to have to deal with that and it gets real complicated. But yeah, diversified portfolio is I guess, how I would say to handle it.
- [36:10]
B
Yeah, there's a lot of risk for the average investor who doesn't want to spend 100 hours researching. But the idea of what's the hedge is such an interesting question. I think we're going to have an interesting couple of months. I personally think it's not bad to have some cash and dry powder because I do think we're actually going to go maybe lower and have a generational buying opportunity in assets like Bitcoin. But we'll see, I guess so. James, thanks for joining me. Where can people find you?
- [36:35]
A
Easiest place is on Twitter. J, S, E, Y, F, F. But if you are a Bloomberg terminal subscriber, hit me up. Happy to talk there. And on what you were saying, the one thing I would say about Bitcoin, if you see a massive drop in equities due to something going on geopolitically or whatever else, like, it'll be fascinating to see what bitcoin does. But Bitcoin, like I said right now, no matter what you, how you and I view it and how you think it should be put in a portfolio, or whether it's a currency debasement or inflation hedge, like if, if risk assets go down a ton, it's unlikely that Bitcoin is going to be able to completely stem that tide.
- [37:08]
B
Agree, agree. But that's an opportunity.
- [37:10]
A
Yes.
- [37:10]
B
Thanks, James.
- [37:11]
A
Thank you.
- [37:11]
B
Natalie, thank you so much for checking out this episode of Coin Stories. Make sure you're subscribed to the show so you don't miss any new episodes. If you can turn on those notifications and leave us a positive review, they really help the show grow organically with new listeners. We have a free weekly newsletter. You can sign up@thenewsblock.substack.com this show is for educational and enter payment purposes only. Nothing should constitute as financial investment advice and you should always do your own research. I'm always open to feedback and guest suggestions, so please feel free to reach my team@infoalkingbitcoin.com I'll see you next time.