Bitcoin Bear Market vs. Blockchain Bull Market with Beimnet Abebe & James Seyffart

Summary

Galaxy Brains Podcast Summary

Episode: Bitcoin Bear Market vs. Blockchain Bull Market with Beimnet Abebe & James Seyffart

Date: June 4, 2026
Host: Alex Thorn (Head of Research, Galaxy Digital)
Guests: Beimnet Abebe (Galaxy Trading), James Seyffart (Bloomberg Intelligence)

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Episode Overview

This episode explores the continued bitcoin bear market, the dynamics of ETF flows and institutional adoption, and the simultaneous bullish movement in broader blockchain and financial innovation. The first half features Beimnet Abebe's bearish outlook on bitcoin’s near-term price action, while the second half dives deep into ETF developments, institutional crypto adoption, and the tokenization of financial assets with James Seyffart, ETF specialist from Bloomberg Intelligence. The episode highlights the tension between crypto’s anarchist roots and mainstream institutional adoption, discusses the emergence of niche ETFs (like prediction market ETFs), and assesses where true innovation is happening.

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Key Discussion Points & Insights

1. The State of the Bitcoin Market

Speaker: Beimnet Abebe
Timestamps: 01:48–14:48

• Bearish Outlook Maintained:

  • Bitcoin is trading at $65k, continuing a downtrend after a failed rally back to new highs. Beimnet stands by his "prolonged bear market" thesis.
  • Quote:

    “Are we heading lower than 60? … Yes.” — B. Abebe [02:22]

  • Drivers include diminished buy pressure from key actors like Michael Saylor, halted ETF inflows, and no catalysts to reverse the trend.

• Lack of “Panic Bottom” Signals:

  • Despite drawdowns, the market lacks signs of true capitulation typical of previous bottoms: sharp drops, high volatility, and extreme selling.
  • Quote:

    “It doesn’t feel like panic, capitulation, bottom type of selling… it would feel more like an October 10th type of event where you’re like, oh my God, everybody…” — Galaxy Analyst [05:05]

• Cyclical Analysis:

  • Drawdowns from new highs, compared to prior cycles, suggest the market may still have room to fall—possibly to $50k or $40k.
  • Accumulation zones historically emerge about one year after the last all-time high, pointing to Q4 2026 as the likely bottom.
  • Quote:

    “About 365 days from the prior all time high puts you into October. So essentially in Q4 of this year is probably the time to just start accumulating…” — Galaxy Analyst [09:28]

• Broader Market Context:

  • Other crypto assets (ETH, SOL) are also experiencing pressure as flows into crypto ETFs have slowed or reversed.
  • Macro environment for risk is bullish, yet crypto isn’t benefitting—a concerning signal for short-term prospects.

• Bitcoin’s Identity Crisis:

  • The asset isn’t acting as a risk asset nor as a full store of value yet.
  • Store of value narrative could eventually dominate, especially with the expectation of future central bank money printing and inflation.
  • Quote:

    “Eventually you will get a significant amount of money printing... all roads lead to the central banks expanding their balance sheet and printing more money. In that world, this store of value narrative will gain tremendous prominence.” — Galaxy Analyst [12:53]

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2. Institutional Adoption & The ETF Revolution

Speaker: James Seyffart
Timestamps: 18:51–27:39

• Mainstreaming of Crypto:

  • Major banks like JP Morgan and Morgan Stanley maintain highly visible presences at crypto conferences—indicative of deep institutional involvement.
  • Transition from “retail-dominated” events to highly professional industry trade shows reflects institutionalization of the sector.
  • Quote:

    “They’re not coming [institutions]—they’re literally in the room with us right now.” — J. Seyffart [19:32]

• Tension Between Crypto Roots & Institutionality:

  • Seyffart acknowledges the tradeoff: Original crypto ideals (self-custody, decentralization) are often subsumed by institutional demand for convenience, abstracting away complexity via ETFs and custodial services.
  • Quote:

    “My parents are never going to …deal with a multi-sig wallet or a hardware wallet. Like, it’s just not going to happen… People will pay for convenience.” — J. Seyffart [21:53]

  • ETFs don’t threaten Bitcoin’s core architecture; self-custody remains an option for those who desire it [22:57].

• Morgan Stanley’s Entry & Motivations:

  • MS launches one of its very few ETFs—a Bitcoin ETF—with ultra-low fees (14 bps), encourages “bring your own assets” under their umbrella to gather AUM and charge recurring fees.
  • Advisors recommend 2–4% allocations, leading to potentially massive inflows as advisors and platforms seek to pull client-held bitcoin into manageable, fee-generating accounts.
  • Quote:

    “We have this saying, BYOA is better than PTOA—bring your own assets is better than pay the other guy.” — J. Seyffart [24:39]

• ETF Fee War:

  • Fierce price competition is driving bitcoin ETF management fees lower, but custody and security costs place a natural floor at current levels.
  • ETFs are now a main vector for both retail and RIA (“tradfi” investor) flows into crypto, with traditional brokers like Schwab advertising crypto access [27:10–27:25].

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3. ETF Flows, “Facebook Moment,” and the Changing Holder Base

Speaker: James Seyffart
Timestamps: 27:41–30:59

• ETF Flows:

  • After a period of significant outflows, bitcoin ETF inflows have recovered, mostly held by “diamond hands” institutions rather than retail traders.
  • Traditional holders (OGs) have been net sellers during the recent downturn—“the call is coming from inside the house.”
  • Quote:

    “If you want to know who’s selling, look around you. The call is coming from inside the house.” — J. Seyffart [29:36]

• Bitcoin’s “Facebook” Moment:

  • The asset’s adoption curve is likened to Facebook’s: as it becomes institutionalized and “mainstream,” original core supporters become ambivalent or leave, but the total user base (and asset base) grows exponentially.
  • Quote:

    “When Facebook got very popular and everyone’s parents got on … everyone, like the younger crowd kind of left. But, like its audience grew by like 3x…” — J. Seyffart [28:26]

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4. Prediction Market ETFs and Financialization

Speaker: James Seyffart
Timestamps: 31:18–34:50

• New ETF Frontiers:

  • Innovation continues with filings for prediction market ETFs (e.g., ETF shares linked to election outcomes or potential indicators like recessions or tech layoffs).
  • Most of these products will use derivatives (swaps) referencing platforms like Kalshi, not direct on-chain assets (like Polymarket).
  • SEC likely to carve out sports from ETF-eligible prediction markets; focus will be on “informative” real-world outcomes, not gambling.
  • Quote:

    “Things like you were talking about… I assume the SEC isn’t going to allow that. … My view is like, that shouldn’t be in an ETF… sports gambling.” — J. Seyffart [34:16]

• Trend Toward “Financializing Everything”:

  • Discussion of how prediction markets and tokenization trends reflect the increasing financialization and instrumentalization of nearly every aspect of society and bets on outcomes.

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5. Tokenization: Next Steps for TradFi and Crypto

Speakers: James Seyffart, Alex Thorn
Timestamps: 37:58–41:48

• Slow March to Tokenization:

  • Real-world asset (RWA) tokenization, especially of equities and funds, is accelerating but remains in its infancy—despite explosive growth numbers, the relative scale is still minute.
  • Distinction discussed between offshore “wrappings” (ex: Ondo) and regulated, issuer-sponsored approaches (Securitize, Superstate).
  • Quote:

    “If you look at the chart of like things being tokenized, like real world asset tokenization, it looks like a cliff. It’s literally vertical. It looks fake.” — J. Seyffart [39:46]

• ETF–Blockchain Feedback Loop:

  • Seyffart predicts a future where ETFs themselves are tokenized—leading to a circular flow of assets between blockchains and finance wrappers.
  • “Everything is a circle here… at some point… ETFs will functionally be smart contracts on the blockchain.” — J. Seyffart [40:24]
  • Despite innovation, he emphasizes just how sticky legacy structures are: ETFs only barely surpassing mutual funds 30 years after their launch.

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6. The Innovation Cycle and Where Alpha Remains

Speaker: James Seyffart
Timestamps: 41:57–43:19

• Alpha in Active/Basket Products:
  • As more advanced, actively managed, and basket ETFs come to crypto, there remains opportunity for outperformance, due to inefficiencies and information gaps in the crypto market relative to highly efficient, data-saturated tradfi assets.
  • Quote:

    “There are certain areas…you can actually find alpha and edge because there’s not as much information. And I think crypto is one of those…” — J. Seyffart [43:11]

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Notable Quotes & Memorable Moments

• On Bitcoin’s Bearish Outlook:
  • "Yes." ([02:22], B. Abebe)
• On Cyclicality:
  • “Q4 is a great time [to buy].” ([13:52], B. Abebe)
• On Institutionalization:
  • “There are plenty of...My parents are never going to…deal with a multi-sig wallet or hardware wallet.” ([21:53], J. Seyffart)
• On Who Is Selling:
  • “The call is coming from inside the house.” ([29:36], J. Seyffart)
• On ETF Fee War:
  • “Bring your own assets is better than pay the other guy.” ([24:39], J. Seyffart)
• On the Future of Tokenization:
  • “Ultimately... ETFs will functionally be smart contracts on the blockchain.” ([40:46], J. Seyffart)

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Timestamps for Important Segments

• [01:48] Bitcoin’s Bear Market Analysis – Beimnet Abebe
• [09:28] When to Accumulate Bitcoin Again (Q4 2026)
• [14:48] Transition to Store of Value, Macro Commentary
• [18:51] James Seyffart Interview—Institutionalization in Crypto
• [23:33] Morgan Stanley’s Entry, ETF Distribution Mechanics
• [27:41] ETF Flows, “Facebook” Moment
• [31:18] Prediction Market ETFs Explained
• [37:58] Tokenization of Equities, ETFs, and Future Visions
• [41:57] Where Is Alpha in Crypto? Active/Basket Products

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Takeaways

• The bitcoin market remains structurally bearish in the short term; expect potential new lows in the coming months before a more attractive long-term accumulation opportunity arises, likely in late 2026.
• Institutional adoption is not only inevitable but well underway, changing the face of the industry from its anarchist roots to one dominated by convenience and large capital flows.
• ETF development is a major frontier—not just for bitcoin, but for other cryptos, sector niches, and even prediction markets.
• Tokenization is growing exponentially but remains at an early stage. The future likely holds a full-circle integration of ETFs, blockchains, and smart contracts.
• Crypto still offers more room for alpha, especially in actively managed vehicles—unlike saturated traditional markets.

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For more insights, follow Galaxy Research and Alex Thorn on X.

Transcript

[Alex Thorne]

Welcome to Galaxy Brains.

[Bimnet Abibi]

An infinite amount of cash.

[Alex Thorne]

Cash. I'm your host Alex Thorne. The US banking system is sound and resilient. Bitcoin made a new all time high.

[Bimnet Abibi]

If you're not long. If you're not long, you're short.

[Unnamed Galaxy Trading Analyst]

Satoshi is going to come on there,

[Bimnet Abibi]

laugh hysterically, go quiet.

[Unnamed Galaxy Trading Analyst]

All bitcoin's gonna be erased.

[Bimnet Abibi]

Bitcoin. Bitcoin's the best crypto. Bitcoin is going to zero.

[Alex Thorne]

Welcome back to Galaxy Brains. As always, I'm your host Alex Thorne, head of Firm Wide Research at Galaxy Bitcoin Not Zero. We have a great episode for you this week. Bitcoin's down, it's trading down. Our friend BIM Net we're going to get to in a minute with a very fulsome discussion on where bitcoin is in this bear market drawdown, what gets them excited about bitcoin and when that's coming up. But we have a great interview also after Bimnet with James Safe art from Bloomberg Intelligence, our friend. We've had James on the show quite a number of times. I talked to him on the sidelines of consensus 2026 in Miami A few weeks ago about Morgan Stanley launching one of their only ETFs of any type, a Bitcoin ETF. About institutional adoption, the incredible institutional presence at Consensus and how they're all the big banks and brokerages are all building bitcoin crypto blockchain products. And we'll also talk about some the rise of niche sector ETFs, inverse ETFs, people trying to launch prediction market ETFs. James is an ETF expert. Before we get to that, I need to remind you to please refer to link to disclaimer in the podcast notes and note that none of the information in this podcast constitutes investment advice or an offer recommendation or solicitation by Galaxy or any of its affiliates to buy or sell any securities. Let's hop right into it with Bimnet ab. Let's go now to our friend Bimnet Abibi from Galaxy Trading. As always, Bimnet, welcome back to Galaxy Brains.

[Unnamed Galaxy Trading Analyst]

Thank you for having me.

[Alex Thorne]

It's an exciting time to have you on because everyone's been asking me what BIM Net is thinking right now because chart looks pretty bearish. Bitcoin 65K. Obviously longtime listeners know that you've been saying this was going to be a prolonged bear market, not just a little blip for many months now, and that there would be bull market bear market rallies. We now know that the rip from 60 back to 82, 5 looks like a bear market rally. It. Well, it's almost entirely wiped now.

[Unnamed Galaxy Trading Analyst]

Yeah.

[Alex Thorne]

Are we heading lower than 60?

[Bimnet Abibi]

Yes.

[Unnamed Galaxy Trading Analyst]

And my basis for saying that is one, the marginal buy pressure isn't there from Saylor. In fact, he actually sold.

[Alex Thorne]

He did.

[Unnamed Galaxy Trading Analyst]

Right. And you've got this weird setup where he's not able to basically issue to buy anymore and he's got an increase,

[Alex Thorne]

not the MSTR atm. Right. He needs a certain M nav and by his own admission or his own

[James Safart]

dashboard, it looks like it's below it.

[Unnamed Galaxy Trading Analyst]

And the ETF flows have also stopped. And so it's one of those things that isn't performing in one of the craziest risk on rallies that we've had in markets. And so flows are dying down. And the story has gotten worse

[Bimnet Abibi]

when

[Unnamed Galaxy Trading Analyst]

you think about it in the context of prior bitcoin cycles which we've repeatedly highlighted on the call. In prior cycles you were actually lower in bitcoin price space than you are here even.

[Alex Thorne]

Yes. This far from the prior all time high.

[Unnamed Galaxy Trading Analyst]

Correct.

[Alex Thorne]

We measured it through Sunday, which was May 31, but I think you'd still be above it, even prices.

[Unnamed Galaxy Trading Analyst]

Correct. And so you're just having a catch up trade to where it has historically moved. And right now it just, it seems like there's no real good reason to buy it on a short term basis. And so if you think about the market as an attention marketplace, it's getting no attention or the wrong type of attention. And so my thesis is bear market is still in effect. We will most likely test levels between 50 and 40k at some point this year in terms of a one to two week outlook. It's tough to gauge because you just moved, you know, really far, incredibly quickly.

[Alex Thorne]

Last, last week you said 60k in 60 days. So that was seven days ago. And we're really not very far from it. Yeah, it was reminiscent when I was saying 60k like within months or within weeks back in February. And then we went, got there in six days, five days, I don't know. But yes, I mean this could happen at any moment. At this point we're, we're very close to 60. Yeah, yeah.

[Unnamed Galaxy Trading Analyst]

But in terms of the things I look for in terms of like max panic in a market that typically signifies a low. You haven't really had it yet. Right. You haven't had like, you know, down 5% in a straight line, like, you know, instant liquidation type of move.

[Alex Thorne]

Right.

[Unnamed Galaxy Trading Analyst]

You haven't had like an insane Move higher in implied vols, like they have moved higher but it's not been like too like holy shit, this is insane. You're saying if you compare to like

[Alex Thorne]

prior bottomings, it doesn't have those characteristics yet?

[Unnamed Galaxy Trading Analyst]

Correct.

[Bimnet Abibi]

Yeah.

[Unnamed Galaxy Trading Analyst]

And you know, there's still signs that, you know, there's still a ton of selling going on in the market, but it doesn't feel like panic capitulation bottom type of, you know, selling. You're not, you're not, you know, it would feel more like an October 10th type of event where you're like, oh my God, everybody.

[Alex Thorne]

I mean Honestly, even February 5th was pretty bloody. Like I think that, remember what I was, I've said this before that like if that was the bottom February 5th and 6th, like you know, in a year or two or 10 years we look back and that had been the bottom. It had enough of the characteristics to match, you know, like we dropped $10,000 in two days, you know.

[James Safart]

Yeah. But yes, right now though it feels orderly.

[Alex Thorne]

Yes. And it doesn't usually when it's bottomed.

[Unnamed Galaxy Trading Analyst]

Correct. And so what this, you know, move from 60 to 82k and rejection tells you is that the trend is still in place. And my simple motto in trading is just the trend is your friend. And if you're in this structural downtrend, the way to trade it is sell rallies and you buy on the dips to cover your position. But in terms of genuinely thinking about when you have a true bottom, you'll kind of feel it because it'll be like a panic capitulation, like what is going on and you'll get to levels that prior cycles have kind of bottomed out at.

[Alex Thorne]

Yeah. And on an index basis you were saying like if we look at all the drawdowns from prior all time highs. You said our line on an index basis meaning like normalized for the different prices is still above all of the other ones.

[Unnamed Galaxy Trading Analyst]

Correct.

[Alex Thorne]

But they all bottom between like 20 and 40 indexed. And that corresponds to what you said, 37.5 to 50.

[Bimnet Abibi]

Yeah.

[Unnamed Galaxy Trading Analyst]

Somewhere around there.

[James Safart]

So like 40 to 50 to 50.

[Alex Thorne]

Yeah, but and one of the things underlying this by the way, and I've got some research coming out soon that will show more about this, the cycles, it did repeat almost to the day, I mean really close. Like basically every bull market is having to like what, 400 to 500 days or sorry, it's like the October of the having year. I don't know why it's always in October to 400 days or so until the all time High and then, you know, like five, four, four to 500 days of bottoming until the sort of new cycle starts. And if you actually line them up like they look pretty similar. Yeah, I think the only difference that I found is some compression and which makes sense with more institutional adoption. So didn't go as high, haven't gone as low. You think we still will go as low on an index basis? That remains to be seen. If we don't go as low, then the psych. The cyclicality will have remained, but the. Maybe it's dampened a little bit.

[Unnamed Galaxy Trading Analyst]

Yes, it's totally possible. I think in terms of.

[Alex Thorne]

Well, you said 50, it could be 40, 50, it could be 50 would be on the upper end of the index drawdown. So, you know.

[Unnamed Galaxy Trading Analyst]

No, absolutely. And I think it's also worth noting, like just highlighting that the impact that the bitcoin price action is having on a bunch of other crypto assets, mainly eth is breaking down. You're back to the 60k low levels effectively in theory. Every time it goes down, the DAT buying pressure on the ETH side is also declining and Solana is basically at

[Alex Thorne]

those same low levels.

[Unnamed Galaxy Trading Analyst]

It's even lower on a relative basis. So there is pressure bleeding into the rest of crypto. But long story short, DATs aren't buying, folks in ETFs are selling. And if you put that in the context of a macro tape that's been incredibly positive for risk assets, it's a very worrying picture. And you line it up with the bitcoin cycles and it tells you there's probably more room to go lower.

[Alex Thorne]

Yeah, I think that makes sense. If we look at the cycle and we assume that it's again continues to play out on a similar timescale, which is of course not guaranteed. When do we start getting excited about stepping back into bitcoin, you think? When should investors be making sure that they're paying attention to see if they like the level?

[Unnamed Galaxy Trading Analyst]

I mean, if you're thinking about it cyclically, about 365 days from the prior all time high puts you into October. So essentially in Q4 of this year is probably the time to just start

[Alex Thorne]

accumulating like about one year after the prior all time high has historically been a great buy zone time. Of course that's purely time time.

[Unnamed Galaxy Trading Analyst]

Yeah, and I think you can be that way because realistically why that bottom happens partially and why I think it repeats is you have the same people that sold at elevated levels that believe in the cyclicality that are like, oh my God, like Well, I liked the

[Alex Thorne]

thing but I was taking profits. Now it looks cheap again.

[Unnamed Galaxy Trading Analyst]

It looks cheap.

[Alex Thorne]

They know about it. Yeah, I think that's true. I know this anecdotally a lot of the OG whale sellers like will be OG buyers.

[James Safart]

Correct.

[Alex Thorne]

some level. We're just hunting that level. How much of the talk about cyclicality you talked about the macro taping Very risk on bullish. How much of that competition from other bull market narratives outside of bitcoin and crypto is weighing on crypto also for example, think a big IPO is coming like IPO ETFs.

[Unnamed Galaxy Trading Analyst]

You've got you know, per trad fi stuff taken off on you know, hyper liquid etc.

[Alex Thorne]

And maybe coming to the US it looks like.

[Unnamed Galaxy Trading Analyst]

And I think, I think really like what folks care about is like leverage and volatility.

[Alex Thorne]

Yeah, right.

[Unnamed Galaxy Trading Analyst]

They want to see number go up really quickly and you know, post 10 grand but have like know 5, 50 grand of exposure and all of a

[Alex Thorne]

sudden a lot of people want that. Yeah, you can't get that with bitcoin right now.

[Unnamed Galaxy Trading Analyst]

Yeah. And so it, it's a thing that's just been grinding lower and it hasn't really had these like explosive moves higher.

[Alex Thorne]

That's why the volume has been generally lower than prior times in bitcoin history. Yeah, I, I think also like you know, if you look even if we bottom at the bottom of your, you know, your range that you've said 40k area that's meaningfully more than double where the last cycle bottomed. And I think of that as these are the people that long term believe in holding the asset and that's growing. And so much of the I sort of think about as a mental model that like the price above the prior all time wherever the, the low ends up being is the froth. And it's the froth because bitcoiners have been preaching loudly for years that the asset is meant to be a non inflating hard money store of value that you hold with a low time preference that you're meant to work hard in life and you're supposed to be able to save in money that doesn't get devalued by the central bank. Right. It's not that the narrative has never been promoted by bitcoiners that it is a good risk asset.

[Bimnet Abibi]

Yeah.

[Alex Thorne]

It's not perform. It has performed in the past but that was due to risk investors is my point. So it's right now it is not a sexy risk asset. That is a fact. Because risk is Rallying and is not. I wonder if this is part of the road to becoming a store of value asset. Did people think it was gonna transition, go like up, up, up on a risk basis and then everyone immediately change to using it as a store of value? Like I think that road is rocky to that place and maybe this is part of that story.

[Unnamed Galaxy Trading Analyst]

I will tell you that eventually you will get a significant amount of money printing. And right now the setup in macro is very interesting where you've got all these central banks expected to hike even in the US but realistically I don't think they can hike. And there's a ton of debt outstanding in the world and it's not like deficit spending is going down. And so you have this world where there's just more and more debt and eventually you're probably going to have a breakdown in the back end somewhere globally. It might be domestic or it might be somewhere in G10, but eventually all roads lead to the central banks expanding their balance sheet and printing more money in that world. This store of value narrative will gain tremendous prominence. I think things like gold and other hard assets will perform, but it's just a matter of time. And so if you're thinking about it as a long term investment, Q4 is a great time.

[Alex Thorne]

Yeah, I hear you. And I'm thinking that in that scenario, let's say the risk investors, they go to gold, maybe they've become disillusioned by bitcoin as a risk asset, but they never quite learned about it as a store of value asset. But in the meantime, the global bitcoiner population that is using it as a long term asset will have continued to be growing. And when that great devaluation occurs in fiat money, there'll be more such bitcoiners and maybe a lot more of them will decide to buy more. And like that's if it happens. Like the genuine transition to a hard money store of value for Bitcoin, that's kind of how I envision it, that the global population of people who believe it should trade like that outweighs the risk people.

[Unnamed Galaxy Trading Analyst]

And I also think, and we're clearly

[Alex Thorne]

not there yet though, we're not.

[Unnamed Galaxy Trading Analyst]

But the other thing that folks probably miss is the amount of financial institutions domestically and abroad that are working to integrate blockchains and general crypto into their organization. That's true. And so by the time like the thesis makes a lot of sense, it'll be part of the web of connections and like in, in financial services, they'll

[James Safart]

be ready, they'll Be right there waiting.

[Unnamed Galaxy Trading Analyst]

Like, yeah, you will be able to, you know, go to XYZ bank and you know, have physical Bitcoin custody there.

[Alex Thorne]

Yeah, I think that's right.

[Unnamed Galaxy Trading Analyst]

Right. And, and it's also. They'll probably end up giving you leverage versus it. They'll probably let you do other stuff. It'll be useful collateral.

[Alex Thorne]

Yeah, that's right. I, I wonder, as an aside, we were talking about this before but you know, you get these giant IPOs coming. SpaceX anthropic is somewhere in the future and whatever else, you know, I mean the.

[Unnamed Galaxy Trading Analyst]

Yeah.

[Alex Thorne]

I kind of wonder like, especially when I look at the ETF flows, which of course financial advisors can do and traditional investors can easily access on their brokerage platforms, how many RIAs are getting calls saying, hey, you know, I was huddling this thing because it's, I liked it but you know, let's cut our losses to raise some capital for the SpaceX IPO. I think a fair amount or other

[James Safart]

AI trades and you know, I'm going

[Unnamed Galaxy Trading Analyst]

to buy, you know, Micron or whatever buy, you know, Korea.

[Alex Thorne]

Well, I think just the ETF flows in particular, like a lot of that is advisory. A lot of it is, it's, I think of as traditional flows. They're not necessarily institutional. Plenty of retail investors buy those as well. Yeah, but they're, they're tradfi investors that buy it. And there's right next to, there's probably banners on some brokerages right now about how to get a slice of the initial when, when XYZ new issue is going to start trading. Like, yeah, there's a lot of advertising about other. Right there next to their Bitcoin etf.

[Unnamed Galaxy Trading Analyst]

Well, you also can't blame these guys because if you miss the AI trade this year, like you're, you're sitting there being like, what did I just do? Like, did I just miss like a generational like opportunity?

[James Safart]

Right.

[Unnamed Galaxy Trading Analyst]

And if you're a good fiduciary, like what are you going to say? Like don't buy like the Nvidia at this. Like, you know, let's say three months ago, like they're going to sell every chip in the world.

[Alex Thorne]

There was a giant, like, there's a huge dip in this stuff. Briefly. What everyone thought briefly. Remember there was the, the AI anxiety about the Capex. Are they still spending now? Like companies, you know, giant mega cap corps are doing at the money offerings to raise money to buy more AI Capex.

[Unnamed Galaxy Trading Analyst]

I think that's a really notable switch though. But you just went from A market that tech companies used to buy back shares aggressively and now we're talking about

[Alex Thorne]

at the money offerings issuing to raise cash to spend on capex. That's the funny thing too with the buybacks were all funded by these giant balance sheets that they were all holding. You're like, aren't you supposed to be allocating that capital to growing the business? The criticism of buybacks has always been by the way, same in crypto. Buybacks has been a criticism. Aren't you meant to be that of buying your stock? Yeah.

[James Safart]

Being like why should basically should pay

[Alex Thorne]

it back as a dividend. The criticism goes to your shareholders rather than just which. I guess this is the debate. The crypto is speedrunning itself. Well, should it be paid as a dividend or is a buyback accretive to the token, in this case the stock. But they finally found a huge use

[James Safart]

for this money which is buying, you

[Alex Thorne]

know, multi year or even decade plus data center deals and stuff for their AI stuff. It's so it's. What a crazy story.

[James Safart]

Yeah.

[Unnamed Galaxy Trading Analyst]

Interesting times for sure. But eventually bitcoin will find its way back. And I think we've never been closer to the bottom because every day that passes is another day closer to when it's time to buy.

[Alex Thorne]

Well, there you go, my friend. Our friend Bim Nadibi from Galaxy Trading. Thank you so much.

[Unnamed Galaxy Trading Analyst]

Thanks for having me.

[James Safart]

James Safart from Bloomberg Intelligence, my friend. Welcome back to Galaxy Brands.

[Bimnet Abibi]

Thanks for having me. Alex. I do want to say real though because the. We'll have heard the intro. Your intro is like my favorite intro. Any of the crypto podcasts shout out

[James Safart]

to Phineas and the team.

[Bimnet Abibi]

I am. I. I love the satoshi quote from Jamie Diamond. It just every.

[James Safart]

You're like, she's gonna come back. What? What?

[Bimnet Abibi]

Delete all your coins.

[James Safart]

Delete all your Bitcoin's gonna go to zero.

[Bimnet Abibi]

Yeah, it's up there for.

[James Safart]

It's Is Jamie diamond coming around to crypto though? It seems like JPM is fully working on it finally.

[Bimnet Abibi]

Dude, we are at consensus and JP Morgan has a huge booth like a massive. That didn't. That's cost a pretty penny.

[James Safart]

It's crazy, right? Like because the institutions, they, they're not coming. Like they're literally in the room with us right now.

[Bimnet Abibi]

Yeah, I mean this is the mo. So I've granted I only started coming to consensus starting in 2022 down in Austin. That was very retail.

[James Safart]

I mean Johnson was there in 22 that.

[Bimnet Abibi]

Yeah, she was. Yeah. Franklin was there There was, yeah, but

[James Safart]

they were early movers and the booths

[Bimnet Abibi]

were very much not institutional at all.

[James Safart]

There was like a million coins.

[Bimnet Abibi]

Exactly. I was like, what is this conference?

[James Safart]

A quark coin and. Yeah, fork coin. And you're like, how can they have the same name?

[Bimnet Abibi]

Yes, but now it's very different. Right? Like, it's very institutionalized. I guess there's some people that probably don't like that. But as somebody who comes from TradFi, it seems like things are growing up. There's obviously going to be growing pains, pros and cons with that. But this feels way more institutional based and like the industry's growing up a little bit.

[James Safart]

This con, I was just in Vegas last week for the bitcoin conference, which is an interesting other juxtaposition and comparison to make much heavier retail, much bigger.

[Alex Thorne]

By the way.

[James Safart]

People here at Consensus were like, oh, I heard bitcoin wasn't well attended. I was like, my brother, like, bitcoin Vegas was five times as big as this. Yes, but this conference, especially now, but this year, this is a industry trade show. There's probably not a retail person here. It's all pros and there's a lot of them is what I'm saying. Yeah, Giant professional industry now.

[Unnamed Galaxy Trading Analyst]

Yeah.

[Bimnet Abibi]

Like, I was weird. Like when I went used to go to these things, it was weird for me to wear a blazer. Like, I wasn't wearing a full suit yesterday. I was on stage with Pomp and we were both in full suit and tie. So like, like. And there's a lot of people walking around in suits. It's very, it's becoming very institutionalized.

[James Safart]

Pomp probably came out of the womb in a suit, but that's a different story. Let's stick with this topic though. Institutional institutions and the crypto natives. I just interviewed somebody who has a national bank charter and I said, would Satoshi, like, think that was cool? Like, aren't you, like, isn't the crypto anarchist libertarian roots, like, clashing with the TradFi? The Bitcoin ETFs might be the best example of this. Like, it's the most libertarian, self sovereign, crypto anarchist asset in the history of the world and you should have 1 or 2% in your portfolio. How do you think about the tension, the clash between insto and tradfi?

[Bimnet Abibi]

So part of it is like, that's the way I've always viewed it. Like, I thought this thing had true power. Like, I didn't come on board really until 2017, so I wasn't definitely not an OG, but like I've always viewed it and there's value in being that, you know, decentralized asset. But you got it. You got to face the facts here. There are plenty of. My parents are never going to take care of their own coins and deal with a multi sig wallet or a hardware wallet. Like it's just not going to happen. Let alone my grandparents. Yeah. Some of my friends aren't going to do it. And like all this is doing the ETFs. These institutions that are BlackRock, you know, the behemoth of Wall street, they're launching this thing. They're coming on board. They have been on board and it just, it's just, it's abstracting it away and be. People will pay for convenience. Like people are happy to abstract this away and give somebody else the responsibility. So if something goes wrong, it's their fault. But it's not changing. We've talked about this before. It's not change of Bitcoin itself. Like you're. You could still do self custody. You can still do multi sig on your own. You can, you can do all these things without abstracting it away by giving your money to BlackRock or I mentioned, I mean Morgan Stanley now, which I know we're going to talk about. I mean that is a. What better symbolism of the opposite.

[James Safart]

I mean this is what the biggest army of investment advisors in the world, I guess like top two or something.

[Bimnet Abibi]

Yep.

[James Safart]

They never issue ETFs. They've got like 20 total.

[Bimnet Abibi]

Yep.

[James Safart]

Like Ms. Is a distribution platform much less than an issuer. They're issuing a Bitcoin ETF and they've also added it to model portfolios. Had this army of invest. Isn't this what we've been talking about? The whole purpose for the etf? You and I can buy Bitcoin on Coinbase or like, you know, river or whatever. We, we have not had a problem. But like the RAAs have had a problem. Is this like peak RA adoption?

[Bimnet Abibi]

Yeah, I mean I remember when we were talking about the ETF launches right before it was happening, you and I were on a podcast. Yeah, we were, we were, yeah. Pubkey with Peter McCormick and I was. This was the argument he was making. And because some people are like what is the demand going to be? Like why are you even going to do this? But there's a multitude of reasons why Ms. Did this. Right. One, as you mentioned, they have an army of. I think, I don't know what the number. It's over 15,000 advisors like brokers, 15,000 or so on 7ish trillion dollars in assets in their wealth platform. Like. Yes, yes. You put one, they're recommending 2 to 4% in a portfolio, depending on your risk, ability to take risk, all these things, whatever.

[James Safart]

That's a lot of portfolios and a lot of money.

[Bimnet Abibi]

Well, exactly. And if so, one, if you think there's, there's multiple reasons they do this one, I bet you a lot of those advisors have a lot of clients that already own bitcoin on places like you mentioned, Coinbase, Gemini, Kraken, and they want to bring that under their umbrella where they can charge a fee. Yeah, it looks good for them. Why would they want to launch go and put this, they want to eventually put this in client portfolios. They are now. So why pay somebody else to do it? So we, we have this saying, BYOA is better than ptoa.

[James Safart]

Bring your own assets.

[Bimnet Abibi]

Ptog, bring your own assets. It's better than pay the other guy.

[James Safart]

Yeah.

[Bimnet Abibi]

So they undercut everybody in fees. So Grayscale's product was 15 bips. This is 14 bips.

[James Safart]

Are we gonna get down to like two bips, you think?

[Bimnet Abibi]

I don't think so. We're probably near the low end of what he. I mean, right now vanex HODL is 0 fee because they have a fee waiver.

[Alex Thorne]

Yeah.

[Bimnet Abibi]

But that ends, I think at the end of this year. But like, it costs more money to store bitcoin. There's a lot more risk with all the hacks we know we're talking about. So you're never gonna get to like, I don't think we're gonna get anywhere near 2 bips anytime soon, but I, I think we're at the lower end maybe. Yeah. I mean, you gotta get to a point where like some of these other issuers have to start competing. And like, do you want to compete on being the lowest cost provider or do you want to compete on your own brand? Right. Like there's, there's, there's different ways to go about this.

[James Safart]

But miss, they are adding it to their portfolio recommendations for certain types of investors and they have a lot of those investors. And did they say, you said bring your own assets or were they just like, well, I mean, if we're going to be telling people to buy bitcoin, they should buy it from us. Well, is that what they did?

[Bimnet Abibi]

You get into this quandary of like fiduciary duty. Right. So if you launch a bitcoin ETF and it's not the lowest cost in the market. Then you have to justify, okay, I'm going to buy Bitcoin in an etf. And then you have to justify why you want the Morgan Stanley one that charges, you know, I don't know, we'll call it the same as Ibit, 25 bips, or even if they went higher, 30 bips.

[James Safart]

Right.

[Bimnet Abibi]

You have to justify why you did that. Now there is no reason to justify it. One, you're putting in your own, your own fund. It is the lowest cost option in the market. There's no qualms about doing that. Right. And I think the other problem is like, they probably see one, this is a way to like build their brand with younger investors. They also just started trading on E Trade, which Morgan Stanley also owns.

[James Safart]

Love that.

[Bimnet Abibi]

And so, like, this is a way for them to be like, look, you. Maybe they're trying to bring people in house to be, be under their wealth advisory service. So there's all these things and benefits I think that they saw for potentially doing this. And again, you charge 14 bips. Let's assume they're not making any money on that just because it's costing them somewhere around that to operate this. And it's also, if you bring that in house, you charge on the fees you charge on the assets as well. So it's 1% AUM fee, 0.8 in

[James Safart]

the portfolio or the vehicle fees you also charge your clients.

[Bimnet Abibi]

Yes, exactly. For managing their assets, giving you a financial plan, all these things. So. And then remember, they also filed for Solana and Ethereum, so those are also probably going to come in the near future. So I mean, we, we went from, you know, long, long Bitcoin, short the banks to one of the largest Wall street banks in the world is now launching a Bitcoin ETF and coming with more crypto ETFs.

[James Safart]

Yeah, it's, it's really surreal. And even I was saying, I met the fellas from Schwab last night, okay? Schwab's at this conference. They are advertising on the escalator outside. It's best place to buy crypto. Charles Schwab, like, is that.

[Alex Thorne]

It's crazy.

[Bimnet Abibi]

It is crazy. If you, it's weird because if you had told people this, I don't know, go back three years, even four years, they'd be like, bitcoin's got to be a million dollars a coin now. Like, you're just like, yeah, no, we're still at around the same levels we were in 2022.

[James Safart]

That, that is an interesting topic.

[Alex Thorne]

I Agree.

[James Safart]

I think bitcoin hasn't performed like it should have. I think it still will. But what have flows been like, into

[Alex Thorne]

these ETFs this year?

[James Safart]

Like, is this. It's not just a Michael saylor story in 26. Right. Like, he's been buying a lot, but, like, the ETFs have been active, right?

[Bimnet Abibi]

Yes. So if you look at the way I tend to look, I look in these waves, and we have these waves. A growing etf, healthy market. It usually goes a few steps forward and then takes one or two steps back at some point. Like, nothing is just money in and no money out ever. Like, that just doesn't happen. So there's got to be steps back. And so that step back happened around 10:10. Everybody knows what happened there. Prices collapsed. We actually saw outflows for a few months from the Bitcoin ETFs, but honestly, it wasn't huge outflows. 8, 9, 89 billion ETF holders.

[James Safart]

Diamond hands.

[Bimnet Abibi]

Yeah. Way more than the. The retail army investors. Right. Like, the people that have been buying are like the ETFs and sailor. Right. So I. This. It goes back to this, like, you know, the IPO moment. I kind of do really agree with this. One thing that we're workshopping that Eric likes to talk about is this, like, this Facebook moment. Like, bitcoin is becoming mainstream. And like, yes, when Facebook got very popular and everyone's parents got on it and started being used for everything, everyone, like the younger crowd kind of left. But, like its audience grew by like 3x and now, like, everybody has a. Has a Facebook account.

[James Safart]

So not Facebook, then. Instagram.

[Bimnet Abibi]

Yeah, exactly.

[James Safart]

Yeah.

[Bimnet Abibi]

Yeah. So overall, the way that the flows went, so we saw, we'll call it 12% went out from October 10th to February.

[James Safart]

To say. You think that bitcoin is like Facebook now? The olds like it, the young people don't like it.

[Bimnet Abibi]

That's kind of what's happening.

[James Safart]

It is a little bit, yes.

[Bimnet Abibi]

I mean, the OGs are like, what is this? This is antithesis of what we wanted. And they're. They're selling. And if you look at who was selling, part of it was probably.

[James Safart]

It was. It was bitcoin owners, like the classic ones. You guys are very prominent in pointing this out at Bloomberg. You and Eric, if you want to know who's selling, like, look around you.

[Bimnet Abibi]

The call is coming from inside the house.

[James Safart]

Yes. It was not the, you know, boomer with a 2% allocation through IBIT. Nope. Those guys held the ETFs, held pretty strong.

[Bimnet Abibi]

Right.

[James Safart]

I think we had a 52% max decline to February 5th of this year. And the total cumulative net inflows only declined like 20% or less. Less, less.

[Bimnet Abibi]

I've 8 like 9ish billion at the peak at the end of February. February 23rd I think was the peak of outflows, which was like 13%, right? 62.

[James Safart]

Yeah.

[Bimnet Abibi]

And now we've almost completely reversed that from February 23rd to one recording now. Yeah, we're like 60ish, 61 billion. So we're, we're about to get towards the high water mark if the trend continues. But we all know this market that could flip on its head like

[James Safart]

straight of Hormuz. I wasn't sure if that was a real place. I thought that might be a yoga pose.

[Bimnet Abibi]

As somebody who's in finance, I've been hearing people talk about the straight of her moves for since I became like, about markets.

[James Safart]

And like being active in like the markets is like the joke on Twitter where they're like, oh, everyone's like a straight of Hormuz expert. Well that, that's what markets are like. We're like, oh, now I don't Deep Seek released a new model, remember last year.

[Bimnet Abibi]

Yeah.

[James Safart]

It's like now we're all experts in LLMs.

[Bimnet Abibi]

You kind of have to. Yeah. I mean if I'm talking to clients and they're interested in one subsection of ETFs or what's going on in the markets, I have to be at least conversant in what's going on. I mean, it goes back to the same thing I talk about with advisors. Like advisors for a while were able to ignore what was happening in crypto. They could just say it was all a joke, magic Internet money, it's worthless. And then you get to a point where like not being able to explain why you're against this is not an like, that's not an option anymore. You're going to lose clients from anyone who's remotely interested in understanding what's going on. Bitcoin or crypto more broadly.

[James Safart]

Let's talk about weird niche ETFs. One of the market narratives and things is prediction markets.

[Bimnet Abibi]

Yes.

[James Safart]

The crazy geniuses at Roundhill have proposed a prediction, a series of prediction market ETFs somehow ETF ising the prediction markets. I think the ones they've put forth first are election outcome ETFs or prediction markets. Do we think we're going to get like, yes, like clarity before end of year ETF. Like, are we going to get the ETF vision of prediction markets 100 I

[Bimnet Abibi]

do think it's going to happen. The SEC is still going back and forth. They're hemming and hawing.

[James Safart]

Well, it's tricky though. I get it. Yeah.

[Bimnet Abibi]

I mean there's, there's going to be a line drawn somewhere and I think the SEC needs to figure out where they want to draw that line. But Round Hill filed, but bitwise also filed under a brand name called Prediction Shares. And then Granite Shares, another issuer has also filed. So there's 18 products in filing that would come first. And like you said, they're who's going to win the House and the Senate and the 2028 election, Democrats or Republicans? The gist of the there's also ones about tech layoffs and a few other things. Recession, yes or no? I think what the sec, this is my prediction. There's no true insight into exactly what's going to happen. But things like you were talking about like that other people can individually influence or know what's going to happen. I, I assume the SEC isn't going to allow that. There might be allowing it for prediction markets, but I don't think they're going to allow like is this person going to say XYZ and ETF markets? Yeah, yeah. And, but also the ETFs right now, the way they're structured, they were initially filed, they were going to like liquidate and end. So they either go to 0 or 1 and they'll liquidate. Right now all the recent filings they're going to stick around. So like you can the, the Senate or the house ETFs roll it. They'll roll it.

[James Safart]

Selection.

[Bimnet Abibi]

Yeah, exactly. So you'll go to functionally zero or functionally $1 and you can get out of it. And then they're going to roll into the next contracts that are doing the same things. I will say these ETFs right now, they're not actually mostly going to hold the underlying prediction markets. They are going to hold swaps that are based on those prediction markets as the assets. So the banks will be doing that.

[James Safart]

Yeah.

[Bimnet Abibi]

And the other thing I will say, which is interesting for the crypto audience, the initial filings didn't say what platforms they were going to use, what DCMs they were going to use. But the new filings all mention Kalshi, no mention of Polymarket. So Kalshi is the dominant thing that's going to be used. That's the asset that's going to be used to make these ETFs at least for now.

[James Safart]

The, the polymarket Kalshi battle is super interesting.

[Bimnet Abibi]

It is fascinating.

[James Safart]

I do think the crypto crowd mostly aligns with polymarket because they're more crypto native. But both are just massive, like advertised everywhere, tons of users. Like, I mean you're, well, you're a runner.

[Bimnet Abibi]

Yes.

[James Safart]

How far, how fast are we running towards a financialization of everything with these prediction markets?

[Bimnet Abibi]

What a transition. I mean, it's happening. So I will say, I mean, obviously if you look at Polymarket and Kalshi, the biggest markets for them are sports.

[Unnamed Galaxy Trading Analyst]

Right.

[Bimnet Abibi]

My view is like, that shouldn't be in an ETF.

[James Safart]

I agree with that. I think 80% of the money that both platforms have ever made have been sports.

[Bimnet Abibi]

Yeah, I don't think that's going to be allowed in an etf. I have my, my view on this. Like I have, again, I have no insight. This is out of my relevancy, I guess I would say I'm going to assume Congress at some point figures out like, I know Mike Selig is fighting hard for these guys to be able to do it. Congress is just going to get to a point where they're like, all right, for prediction markets, you can't do sports. That falls under sports gambling. That's my guess for the next year.

[James Safart]

Reasonable compromise. And to be clear, like the thing that's cool about prediction markets is not, not that I can gamble on sports. Like there's exactly other cool things.

[Bimnet Abibi]

There's genuine insights you can find.

[James Safart]

Yes, there is. Here's a, a curveball. What do you guys do with AI at Bloomberg? Like day to day. James's job. What are you doing with AI?

[Bimnet Abibi]

So I'm using for research really. Like it's not, it's not like the be all end all. Like I was using AI before I came on here to like, I was just like looking at what's going on with clarity to make sure I have

[James Safart]

questions with AI that I've been asking Jam.

[Bimnet Abibi]

We actually are building an AI in house. It's called yes. So, so we used it. Okay.

[James Safart]

It's not that good yet.

[Bimnet Abibi]

No, it's not. It's.

[James Safart]

It's okay. But just to be clear, I love the terminal. I'm a massive fan of the terminal. So a little bit better AI in there.

[Bimnet Abibi]

So the way, the way it's structured right now. Right. Like the, the best use case. So if you're, if you. A lot of your audience probably isn't Bloomberg terminal users, but we have our own Bloomberg query language.

[James Safart]

The only one.

[Bimnet Abibi]

Yeah, yeah. And we have a lot of things you can do in Python.

[James Safart]

Query is great and I've been use an Excel plug in to do Bloomberg analysis for years. It's amazing.

[Bimnet Abibi]

So what this, what currently what our AI is very good at is like I need to create this query, I need to write this code, I need to do this. It's very good at helping you figure that out. That like. Yes, exactly. That even a lot of current AI systems aren't good at. What? It's not good as the generic questions and they're working on it. So one of the things like one of my requirements is like we have to use our own internal AI like a certain number of times. Like help improve it and get it better.

[James Safart]

Use their email app as well.

[Bimnet Abibi]

Correct. Yeah. That, that's been my life for 12 years.

[James Safart]

Reading orange texts in your phone for 12 years.

[Bimnet Abibi]

Yeah. Amber. It's amber.

[James Safart]

Is that what they call it?

[Bimnet Abibi]

Yes.

[James Safart]

It does look like the amber that the, the dinosaur was encased in in Jurassic Park.

[Bimnet Abibi]

Exactly. Yes, yes.

[James Safart]

No, I, I, I think Bloomberg has probably the best finance, almost certainly the best financial data product in the world. I cannot live without the terminal now. Once you work with it, you just need it all the time. They have such a big moat for data and like the, at this point the frontier models are so advanced that they're just starved for data. Like you guys have the best data. Like I think you're about to be like the best AI financial company in the world.

[Bimnet Abibi]

We'll see. I mean, I can't really comment on, I didn't know this was going to be an advertisement for the Bloomberg terminal, but I love the term Bloomberg will take it. I, I do too, obviously.

[James Safart]

What are you building at home? What are you using Claude for? I mean you said you prep for this interview with Claude. Claude. But like what are you doing yourself?

[Bimnet Abibi]

Honestly, I should be doing more. I'm not coding at all. But I use it for research. I use it when I'm like going on podcasts and radio like just to double check. Like has something changed that I wasn't aware of what or when I'm doing interviews. What questions should I ask?

[James Safart]

Alex been talking about these last three weeks.

[Bimnet Abibi]

You know, I, I, I listen to your podcast so I don't even need to do that.

[James Safart]

That's very nice.

[Bimnet Abibi]

Yeah. One of these days I want to be in here when you and Bimnet are talking if, when I, when I come back on so I can chime in.

[James Safart]

What's one thing that you've changed your mind about in the last year. Real curveball.

[Bimnet Abibi]

I was not ready for this.

[James Safart]

You know, like something you thought, but now you don't think, or some new insight you've had that was unexpected.

[Bimnet Abibi]

Yeah, I don't really have one.

[James Safart]

Did you think AI was going to be this good, this fast?

[Bimnet Abibi]

No, I also, I. I will say I thought tokenization stuff would be happening faster.

[James Safart]

Let's talk about tokenization. I forgot.

[Bimnet Abibi]

Okay.

[James Safart]

Oops. I should have been listening to Claude. Look, I've been very involved in this. I'm deeply enmeshed in the tokenization of equities. Saga Galaxy. We've tokenized our stock. We have a particular view of how it should be done. There's internecine disputes in crypto about how it should be done. But I think at our core we all agree like got to take stocks from Tradfi. We can't let them take crypto from us. One way I say this is we kind of gave Bitcoin to Wall street in the form of ETFs in exchange for higher prices. Wouldn't it be nice if they reciprocated and gave us stocks? They won't. They don't want to. In fact, they're obstructing pretty actively.

[Bimnet Abibi]

Yeah, I mean there's, there's multiple models. I was actually on CoinDesk TV as a co host for a little while and we had Ian from Ando and Billy from Securitize. And I asked them about being frenemies and they actually ended up going at each other talking about it because they're very different models. Ando is just wrapping it in the way a stable coin is done.

[Unnamed Galaxy Trading Analyst]

Offshore.

[Bimnet Abibi]

Exactly.

[James Safart]

Securitize. Very similar to Superstate.

[Alex Thorne]

Exactly.

[James Safart]

Securitize Sponsored.

[Bimnet Abibi]

Well, there was announcement today we're talking about bitwise again, but they're, they're tokenizing a fund as well using Superstate. So I mean this is all happening. People are playing with it at the edges. I don't know when it's going to happen, but I mean it's, it's coming and I don't know which. Maybe both of them will have their value, right? Like one securitized in superstate.

[James Safart]

Honestly, I think, I think probably they will. The SEC has called it third party sponsored and issuer sponsored as the two sort of. I think Ondo has like 800 million in TVL. Like it's not small. I mean it's not like a major percentage of the stock market yet, but it's. It's it's not just a plaything. Like it's pretty big.

[Bimnet Abibi]

No, I mean if you look at the chart of like things being tokenized, like real world asset tokenization, it looks like a cliff. It's like it's literally vertical. It looks fake. Yeah, I mean it's still got a long way to go. I mean we're talking like, I mean,

[James Safart]

how big is the equity markets? Like 35 trillion or something like that.

[Bimnet Abibi]

Bigger. I mean the US market alone is like 60 trillion. I think like you go globally and you're hundreds of trillions. Yeah, we're not even really close.

[James Safart]

Do you think you're going to get, you're the ETF guy. I'm going to take a. I'm going to take a crypto. I'm put it in etf spot crypto etf. Then we're going to tokenize the. We're going to take it off the blockchain, put in the etf. Then we're going to tokenize the etf, put it back on the blockchain. You think that's going to happen?

[Bimnet Abibi]

Yes.

[James Safart]

Yeah.

[Bimnet Abibi]

I mean it's probably. I mean everything is a, is a circle here. I don't know. Like the first things that are going to happen is you're going to just tokenize the etf. Ultimately you're going to tokenize the equities that theoretically go into an etf. And I think like at some point, I don't know, 10, 15 years from the, in the future now like we. You're going to end up with like the ETFs will functionally be smart contracts on the blockchain.

[James Safart]

Right, Right.

[Bimnet Abibi]

And that's theoretically you could argue that's the way the future of ETFs maybe. I think it's a long way out. ETF started in 1993. They didn't even, they still haven't even overtaken mutual funds from as a structure. So like, things move very slowly. Assets and money tends to be sticky. Particularly because a lot of people, when I talk in crypto they're like, yeah, smart contracts, vaults. Like this is going to kill ETFs. And I'm like, dude, like ETFs are really good technology. We PR. They trade Pennywide, they're there. There's no transaction fees. Like, even if you look at like, you know, we talk about E trade doing crypto trading, Schwab doing crypto trading, Fidelity obviously third 50 bips, 75 bips to do a trade.

[Unnamed Galaxy Trading Analyst]

Right.

[Bimnet Abibi]

You're talking zero bips. For a trade and the spread is penny wide or less for these ETFs. So like even still those markets still have a long way to go. There's a lot of benefits and we talked about like convenience, like just stripping away the, the need to do any of that. There's a lot of benefits of the ETF wrapper. And so even if I do think that ultimately in the, in the like far distant future these things will be competing with ETFs, it's going to be a long slow ground.

[James Safart]

The ETF innovation is massive. It is massive. You guys cover it as a whole segment. It's, it's a full on beat that you guys cover. Right?

[Bimnet Abibi]

I mean I get to write, I wrote about like we were just talking, I wrote about last week prediction markets. Like I'm an ETF analyst but I have to know about prediction markets because I have a clients that are like very interested in understanding what's have everything in them. And I think the prediction market ETFs assuming the SEC gives them the green light, which I think and hope they will for specific reasons will be a massive category in the same way that I thought crypto ETFs would be a massive category. Leverage single stock ETFs massive category.

[James Safart]

But this blue Machiavelli, the head of digital assets at Hero, they've filed their back and forth. It's not effective yet but they filed for I think the first actively managed spot.

[Bimnet Abibi]

There is an actively managed one already. GSR has one that launched already but it's in the US So but they only have, they're only, it's a, they're actively managed, are going to go bitcoin ETH and Salana and they're trying to outperform an equal weighted benchmark. So they're going to actively manage Blues is going to be a little more going out there. I'm very bullish on basket and active products because I think there's a lot of alpha to be made if you understand this market.

[Alex Thorne]

Yeah.

[Bimnet Abibi]

Like you know as well as anyone about all these different chains and what's going on. It's not just bitcoin.

[Alex Thorne]

Right.

[Bimnet Abibi]

And if you like I, I'm somebody that believes in passive management for investing but there are certain areas like emerging market equities, emerging market small caps, they're like areas where you can actually find alpha and edge because there's not as much information.

[James Safart]

Right.

[Bimnet Abibi]

And I think crypto is one of those edges where like if you have somebody who really knows what they're doing they can meaningfully outperform the broader market.

[James Safart]

This has been phenomenal. Thank you so much. James Safart from Bloomberg Intelligence, my friend, thank you for coming back on Galaxy Brands.

[Bimnet Abibi]

Thanks for having me. Alex.

[Alex Thorne]

Thank you for listening to Galaxy Brains, the weekly podcast from Galaxy Research. I'm Alex Thorne, head of Firmwide Research at Galaxy. Follow me on X at intangiblecoins. Follow Galaxy Research on X, L, X Y Research. Read our written [e-mail] research and don't forget, if you like Galaxy Brains to like and subscribe on your favorite podcast platforms like YouTube, Spotify, Apple Podcasts and more.

[James Safart]

We'll see you next time.