Loading summary
Transcript26 lines
- [00:01]
A
Hey all, before we begin, I've got some exciting news to share. We've been working on something a little wild behind the scenes. It's called Unchained on Air, a revamped live stream series and podcast feed that takes you way beyond the headlines. It features sharp, maybe even controversial takes on major events and the kind of on chain intel that never makes it to your feed. Way more shows way more often, each one laser focused on a different slice of crypto and finance. First up is Dex in the city where the wallets are cold and the takes are hot. With Jesse Brooks, Katherine Kirkpatrick, Boz and V. Lee, three powerhouse lawyers gathering to dish about the latest. From defi enforcement to token regulation and everything in between, it livestreams every Tuesday at 12pm ET. Second is uneasy money because what happens on Chain never stays on chain. With Luca Netz, Kane Warrick and Taylor Monahan, three OG DeFi builders unpacking everything happening on Chain from tokenomics to daos, from hacks to yields. It airs Wednesdays at 3pm ET. And finally, bits and the Interview, an addition to our group chat show in which our executive editor Stephen Ehrlich takes you deeper with one on one conversations. This streams on Thursdays at 12pm ET. To catch the live streams, follow Unchained on x, subscribe on YouTube or find us on your favorite streaming platform now. And don't forget to hit the bell icon so you never miss a show. And if you can't make the livestream, these episodes will show up in your podcast feed the very next day. Thanks as always for your support.
- [01:46]
B
I think the key difference is also that, you know, a year ago when Trump was elected, bitcoin was trading around 67,000 and we very quickly rallied up 20,000 points or a little bit more within the within basically a two week frame. So there was not a lot of trading between 67,000 to 93,000. So there's like a window here where there's not a lot of support. It's almost like a, you know, like, like a void really.
- [02:15]
C
Hi everyone. Welcome back once again. I'm Steve Ehrlich, executive editor here at Unchained and host of Bits and bips. The interview. Let's take a quick break to hear from the ads who make this show possible.
- [02:27]
A
Are you a builder who needs to add on chain trading to your product? The Uniswap Trading API from Uniswap Labs offers plug and play access to some of the deepest liquidity in crypto. It's on chain execution at an enterprise Level. More liquidity, less complexity. Visit hub.uniswap.org to learn more.
- [02:47]
C
So I'm here now with Marcus Thielen, the head of research at research firm 10X Research, a firm that produces daily intelligence and market briefings on everything happening in crypto. And we're here to talk about what's happened in the market, especially in light of Nvidia earnings, how to trade tactically during bearish times and also when it's appropriate to, to call a bear market a bear market and in light of crypto's heightened volatility. So welcome Marcus.
- [03:21]
B
Yeah, thanks for having me. Excited to be here.
- [03:24]
C
Yeah. So let's just kind of dive right into it. Everybody was waiting with bated breath on Nvidia's earnings yesterday, wondering if they could outperform again and perhaps lift the entire economy, the entire market, out of this sluggish pattern. They did very well. What did you see and how did crypto respond?
- [03:44]
B
Yeah, I think this is probably a temporary rebound that we're having right here for crypto, especially for Bitcoin. You know, of course we still have the macro overhangs of a hawkish Fed. We still have the, you know, the on chain data that indicates that there's a lot of outflows. Of course the ETFs are very overexposed right now. You know, we can of course go in detail, you know, about those kind of flows because those were the ones that were really pushing the market lower over the last couple of days or the last two, three weeks really. And I don't think that's going to stop because, you know, people need to clean up their books into year end. But nevertheless, we know we coming into actually a period where the RSI is very oversold, where the sentiment indicator is really negative right now. So we hardly took a negative here because we already so low. And I think from a technical perspective we can have some rebound. But the question really is how long is this going to last? And we suspect this is going to be a couple of days, maybe a week or two. But I think then the market is going to worry again about the Fed. And the Fed has indicated there might not be hiking. And I think we have seen the repricing already, of course from 70% probability to just 30%. So it's unlikely it's going to go much lower, but it's not going to give a lot of tailwind for crypto here. And I think that's why we're coming into the year end flow is clean up their Books for institutional investors. And, and I think that's going to remain an overhang until really year end.
- [05:09]
C
Okay, so let's kind of break some of that down step by step. First, I'd love for you to kind of define a bear market, especially in terms of crypto. I know in tradfi usually a 20% drop from a local high is sort of the marker. But given again bitcoin and crypto's volatility, that seems to be way too shallow. So how do you define it?
- [05:32]
B
So of course I think with crypto we have to be realistic. The market does not go up all the time. You know, the market swings up and down and I think the market reacts a lot to macroeconomic indicators. But you know, to really define what is a bear market, when Bitcoin is in a bear market, I think there's clearly defined on chain indicators, you know, the MBRV for example, that we look at. But also there are certain moving average that indicate when bitcoin is in a bear market. Can it be for example the 12 months moving average, so something like a 50 week moving average or we prefer actually the shorter period which is a 21 week moving average. And we back tested this every time. And bitcoin is below this level. It is sort of like the stop level where we want to stop out of long positions. And you know, we came into this period, for example, earlier in the year where Bitcoin broke the 21 week moving average. So if you would have followed this rule, you would have been out of the market, you know, while Trump was really ramping up, you know, the tariff talk. And very similar to last year. Last year also during the summer you would have been out of the market. Yes, we bouncing sometimes up and down to this level. But nevertheless it is kind of like a rule of thumb is a little bit, I think a little bit more, you know, technical in the sense. It's not just like a 20% drawdown. And then we're in a bear market because historically that's usually when we get some fat reaction function. But of course that's when the Fed was more forward looking versus now the Fed is backward looking. But again we have, you know, come up with a, with a whole rule book of on chain indicators when really the market is in a bear market. And based on those indicators, Bitcoin is clearly in a bear market since actually late last month really when a lot of those indicators turned, you know, down. And I think an easier indicator that we really like is really the short term realized price so which is basically the average price of everybody who bought bitcoin the last 155 days. And when bitcoin is below this level, we actually, we start to see people being liquidated because, hey, I'm suddenly underwater. I want to, you know, protect my capital and I'm going to get stopped out. And then those people that are underwater had not, did not get stopped out. They are praying, of course, that the market goes back to this average price. And once the market, you know, attempts to rally above this level, usually we see another wave of liquidations because finally those people, you know, thank God we rallied back to this level. Let me get out to my in, out of my break even price. And that's where we really struggle to really go above this line. And we, we came into this like last year for example, where the market struggled. We came into this early this year and again we are now there as well. And I think that's why sort of like the market struggles here a little bit. But of course it's a lot of the, the year end flow that we're seeing, a lot of the unwinding of the ETFs. But you know, happy to talk about those, of course, in detail as well.
- [08:17]
C
Yeah, so we'll get into that. But I want to just stick on the topic of comparing this bear market which you say we've been in for a little while now, with some of the others you talked earlier this year that had to have been around the Trump Liberation day tariffs that spooked everybody. And then another I guess analogy I've been hearing is going back to 2022. And I know bitcoin hasn't dropped down to those levels yet, but at least like in 2022 and then again with deliberation day tariffs, there was a clear sort of like driver for this, a clear end for like when the market was going to reverse itself in 2022. It's like when FTX happened, that kind of flushed out the rest of the liquidity in, in earlier this spring, Trump reversed some of his tariffs or paused them, delayed them. The whole taco trade everybody was talking about and that sort of let everybody, everyone have time to breathe. This bear market we're in right now, it's hard to see where the bottom is. I mean, there's some bearish factors as you mentioned. I mean, low expectations for another Fed cut. We had the China tariffs and the massive liquidations on October 10th. That sort of drew out a lot of liquidity that I don't believe has returned and people are kind of really wondering what's next? Is tech still too overpriced? Like, so how do traders approach this particular market when they're not quite sure when the bottom sets in? As, as you know, nobody wants to catch a falling knife.
- [09:49]
B
Yeah. So the key difference is that for the first time really in three years, Bitcoin broke the 50 week moving average. And I think that's sort of like one of the rule of thumbs how a lot of, you know, institutional investors, long term investors really, you know, base their decisions upon. And you know, we didn't break it earlier this year, we didn't break it last year. You know, people were sitting on healthy profits, but of course right now people are not sitting on so healthy profits anymore. And I think the key difference is also that, you know, a year ago when Trump was elected, bitcoin was trading around 67,000 and we very quickly rallied up 20,000 points or a little bit more. I was in there. It was in basically a two week frames. So there was not a lot of trading between 67,000 to 93,000. So there's like a window here where there's not a lot of support. It's almost like a, you know, like, like a void really. And I think it's, that's really like the difficulty when we, you know, when we look back the last couple of months, you know, we had a trading range of you know, 90 to 100 and then 100 to kind of like 116 for, for, you know, for many weeks really. And of course the market has really set its technical levels there. But this time we are really at a period where there is a, not a lot of support. You know, as you correctly said, you know, where is really the low here, there is some more liquidity, let's say at 84,000. And I think 84,000 is also like a, like a level where a lot of people suddenly sit really underwater. I think the market right now as a whole is still up around like 20%, but it's actually not that, that much. Right. When you look at, you know, where bitcoin really came from. So that the true short term mean of really everybody who bought the last couple of years sits at 83,000. And of course if we go below it then of course a lot of people are going to be underwater. And then I think the next level is probably the 73,000. And as you probably remember, that was really the kind of like the ceiling where we saw last year. And that really state really between March of 2024 to really just before the Trump election. And you know, we bounced around, we, we dropped to 50k. You know, we came back up, but we didn't manage to go above it. So it really seems that this bull market is very different than all the other bull markets because we seem to, you know, trade in a kind of like stop and go environment. You know, there's a big catalyst. We rally up, you know, in a very short period of time, in a week or two, but then we go sideways for a couple of months. And a lot of stuff, you know, a lot of stuff seems to happen but nothing really seems to push prices up. And of course, as you also pointed out, October 10th was suddenly a really, you know, important event because just like you know, two, three days before bitcoin was making new all all time highs, really we were at 126. But it was also sort of like a dangerous level at the same time because every time when bitcoin makes a new alt all time high but doesn't really accelerate and goes back to this level, it actually seems to be a level where, where it does collapse. So what we want is we want to have make a new all time high on high volume and then a parabolic move. So we want to distance ourselves. And you know, you might also remember like last year when bitcoin made the new all time high in March and I think it was around like 67,000, 68,000, you know, we, we went up to a little bit above 70,000 but we failed to accelerate. So there was suddenly not a lot of, you know, money coming into the market. Quite the contrary was of course a lot of the OGs, a lot of the long term holders were suddenly liquidating. Probably a lot of people who got into the highs of the previous bull market work really happy to see those levels again and then really liquidate and really keep a ceiling on the market. And I think that's very similar where you know, we started to make a new high and but then we didn't really accelerate. And I think the biggest example is probably in 2021 when we made a new all time high in you know, in April and then we sold off in May and that was of course, you know, the end so like of the defi narrative. But then we started to make new all time highs in October, November based on the whole NFT story and NFT minting. But then of course new all time high but the market didn't accelerate and then we quickly collapsed. And I think that's sort of like the worry here as well. But of course, the issue, I think, is a little bit, you know, I think there's a lot of stories to tell, and I don't think the last chapter has been written about this October 10th crash because so many people were stopped out. But I think what's most important, you know, we wrote about it and hardly anybody wrote about it, you know, I assume, but the liquidations on binance were only 59% longs. And I think that's kind of like, puzzling because the market went down, you know, 20%. A lot of altcoins went down, 30, 40, 50%. But how come only 59% of the people that were stopped out were longs? Right, so instead of shorts. Right, so. So a lot of shorts were stopped out. And I think there is a mismatch between people's people, people's trading books that were basically market neutral. They were suddenly stopped out at levels where they couldn't really reconcile the trades.
- [15:01]
C
Yeah, I remember that. Just like anecdotally, because there were lots of people that had profitable short trades that were stopped out and they were upset and obviously they were upset and some felt that they were perhaps even mistreated by some of the exchanges because of what happened. We need to take a break soon, but I want to just ask you, before we do, what are some of the tactical ways that people might be able to trade in this type of bearish climate? You, you talked about how there could be some brief relief rallies from time to time. Maybe we might even be in one right now in light of the Nvidia earnings. So, so what are some of the things that people can, can try to do and like, what's like one or two signals to, to look for, to, to know when, like these perhaps, like, brief respites might be over?
- [15:55]
B
Yeah, of course there's, you know, the, the technical side. There's, of course, the, you know, the rsis, the stochastics, you know, every time they're really oversold levels, you know, there's a chance that we're going to rebound. There's, of course, a lot of sentiment indicators, but of course there's, I think, two kind of very interesting ones. There's, of course, the Coinbase Bitcoin premium or discount. And you know, since actually end of last month, this, the premium has actually evaporated and went into a discount, which, you know, we can argue that a lot of institutional investors, a lot of US investors really trade, you know, on Coinbase relative, let's say, on the global exchanges. Relative onto binance. And of course every time this is in a discount, it probably indicates that more US flows are selling off. So that's kind of like a level where, you know, we have been seeing the discount actually quite steep, but a discount sort of started to narrow a little bit. So maybe there's less outflows. And I think we saw this, you know, on Tuesday. Basically there's a lot, you know, there was actually some net buying despite the market started to go down. So maybe some US investors started to pick a bottom here a little bit. You know, the RSI actually started to, to turn around a bit. So there is some positive divergence happening. But also something that we noticed was that the skew, so the price or the implied volatility that is used for puts versus calls, you know, which of course was in heavy favor over the last, you know, five weeks, really, you know, for in, in favor of puts, really. So a lot of people were buying puts relative to calls, but that started to actually shift a little bit. So it's still negative, but it's not as negative as it was on Monday morning. So there were some factors that looked actually that on the margin the market is starting to trade a little bit more positively. And of course maybe with the Nvidia, you know, story now, Nvidia earnings, so the market maybe looks a little bit more on the positive side because the AI spending room doesn't seem to be over. And that's kind of the factors that we look at. You know, just a couple of, you know, top of my head, that is more market timing, perspective because very often in these bear markets we see rallies of like 10% very quickly. And I think we can capture those rallies. And up until of course, the price goes back to some resistance level and I think the resistance level is around 100,000. So we'll be very difficult to go above 100,000. But it still can be a rally, you know, that we can catch here.
- [18:18]
A
Hey, founders and developers, if you're looking to bring on chain trading to your product, wallet or platform, check out the new Uniswap Trading API from Uniswap Labs. It's your plug and play gateway to global on chain liquidity. No deep crypto experience required and no need to manage complex integrations or ongoing maintenance. With the Uniswap Trading API you'll get enterprise grade on chain execution, combining both on chain and off chain sources for the most competitive prices. Simply put, more liquidity, less complexity. And this isn't just any API, it connects directly to the Uniswap protocol which has securely processed open over $3.3 trillion in total volume with zero hacks. So stop worrying about liquidity infrastructure and focus on building your product. Get access to the same liquidity that powers billions in swaps through one powerful API. Visit hub.uniswap.org to learn more.
- [19:16]
C
So I want to touch on a few other topics in the news. First, you were a little more bullish on ethics than, than, than even Bitcoin in one of your most recent reports. Can you just explain what you, what you saw?
- [19:31]
B
So for Ethereum, we were actually, you know, more bearish. That's actually something that we recommended as a, as a hedge, as a, you know, underperformance against Bitcoin end of last month. So we actually, we, we predicted that Ethereum should drop from 3,800 to 2,700 800 because we are still in this negative environment. We were pointing out that, you know, based on some transaction volumes from activity on chain activity, that there might be a value level and we define this value level below 3300. It doesn't mean that people should buy Ethereum immediately if it goes below this level. But if we look into next year where for example, we probably have a new Fed chair, we probably have probably a more dovish environment. So, and of course maybe a lot more stuff is going to happen on, you know, the defi space, you know, if they, you know, the market structure report is going to come out. So I think there's a lot of stuff brewing in the, in the background. It doesn't mean we want to, you know, buy it today, but we want to define where there is value and the value is not when it's at 4,000. The value is not really coming from the stablecoin market. The value is only really going to come if there's more transactions on Defi and, and defi maybe might be a bigger theme next year with the, you know, with the market structure build. But of course we don't have this yet. But we just wanted to point people, you know, towards you know, where is really the level to buy if sort of like the market turns around, whether it's really, you know, more value approaching. Because I think, you know, defining value in crypto has always been quite difficult. The last couple of years. I feel like it was more, it was a lot easier in the last bull market because there was a lot more revenue. You know, of course Ethereum, they switched the, you know, the revenue mechanics and you know, there's a lot less Revenue going around these days. But last cycle we could really define it. You know, certain, you know, NFT minting, you know, generated X amount of revenue and that usually associated with a price of, of Y. But this cycle, it's a lot, you know, there's not a lot of revenue because a lot people are not really using defi. The action is somewhere else. Yeah. Okay.
- [21:46]
C
Are there any other tokens that really stand out to you? Privacy coins or alts that have really interesting charts or sort of like any overlooked gems that investors might really want to pay attention to?
- [22:01]
B
I think that's a very tough one in this environment simply from the fact that if, you know, if for example, bitcoin dominance, you know, grinds up a little bit as it's, I think it's going right now a little bit higher, you know, while the market cap goes down. It's sort of like the period where actually you don't want to be exposed to anything. And I think very, you know, it's a little bit surprising because normally in these like sell off periods we see of course the bitcoin dominance actually rising more sharply because people selling altcoins and you know, and putting the money back into, into bitcoin. But I think what we're seeing really the last one or two weeks is actually people are off ramping. We saw of course that USDC had some, you know, redemptions. So that's I think a sign that people actually are not going from altcoins to bitcoin. They're going from altcoins to USDC to probably off ramping. It's small, it's just a couple of hundred million dollars. But it's almost like people don't want to, you know, keep a lot of money right now in the crypto space because also a lot of the altcoins they're seeing around, you know, around like US$59 billion of unlocks per year currently. So there's a lot of overhang and I think a lot of the BCS from, you know, from the previous bull markets basically have to really liquidate some tokens because their LPs want the money finally back and maybe want to, you know, go all into AI. So I think there's a lot of headwinds for some tokens. Of course there is momentum and we are looking momentum traders in crypto. So if something is breaking out, you know, we are sort of like jumping on it. But you know, all these like, you know, favorite of this, you know, cycle, you know, the Athenas of the world, you Know, they're not really great, great, you know, investments here unless really there's a lot more money coming into the space. And it really seems, you know, as long as the Fed is hawkish, not a lot of money is going to come in. So I think that's why, you know, staying on the sidelines is probably know, the right approach and we don't have to trade all the time, you know.
- [23:57]
C
Yeah, I guess moving money out of crypto to stable is off. Offchain is the ultimate form of capitulation. So that, that is something interesting to follow. All right, so let's talk about DATs and, and ETFs because I know this is a topic that you also watch closely. It's no secret to anyone watching or listening that, that Dats have been struggling. MVavs have been dropping, even strategy dropped below 1 briefly, although I don't know where it is exactly at this moment. But times are really tough and I'm wondering if you could kind of give me your assessment there. But also I know that you look at the interplay between ETF flows which are net negative for a little while now, and how that also impacts. Negatively impacts, I guess, the ability of DATs to try to begin to raise accretively again.
- [24:48]
B
Yes. So I think the very interesting aspect, you know, is really, I think there are two really notable points. I feel like, you know, last year in February, end of February, when the market really started to ramp up after the introduction of the ETFs, you know, suddenly microstrategies NAV was expanding, you know, significantly really from you know, a little bit above 1, I think 1.2 to kind of like 1.5 and then it's 2 and then higher. And people were really puzzled by this because people expected, here's an ETF that trades at an NV of, you know, one. So why would somebody pay a lot of premium? And of course people argue that maybe there are some restrictions where people cannot buy ETFs, but they can only buy these companies really. But we have a slightly different theory and the theory is really that once bitcoin went above $45,000 per bitcoin, which is literally, you know, the average price of a car in the US which is the average first year salary, people actually thought, you know, bitcoin is actually quite expensive and you know, I cannot really afford to hold bitcoin. And I think there's some psychology, you know, going on here where people sort of like just bought. So like the, you know, the cheaper alternative. But of course the Whole dad trade, you know, they don't really use a lot of free cash flow to buy additional shares that buy basically they use basically, you know, the NAV premium. And when we came into the summer this year, we expecting that actually the volatility would decline a lot. And with a decline in volatility, you know, the, the right tail probability of higher returns were actually also diminished. And I think that really, you know, coincided with the navs really being compressed. And of course there was not really a lot of ability to raise more capital. So not a lot more capital were coming in into the space. And I think that's where sort of the theme ran out really for the dads, because there's no really real story about generating some additional yields. I think they have of course, a big balance sheet now, especially MicroStrategy, and I think they should become more like hedge funds in the sense that they selling upside calls, you know, because you can generate 15 to 20% yield with, you know, these overwriting strategies. And I think there are some other, you know, tools in the box really that they can, you know, bring out. But it's no longer, you know, waiting for retail euphoria and then selling high shares, you know, telling a great story because I think retail, you know, has been, you know, burned a lot. So we calculated that MicroStrategy raised around, you know, $45 billion since August 2020. And around 20 billion was really raised with an NAV above 1. So basically retail investors who were ever bought, you know, paid a premium of $20 billion in total. And as you correctly said, the Navy is basically back to, you know, around 1. So basically $20 billion has been literally evaporated, you know, into. Into nothing really. And I think that's kind of like a loss that a lot of people probably like, you know, question if this is the right strategy for them to invest again. And I think we saw something similar in Japan, in Japan with Meta Planet, where, you know, people were buying the shares at an implied bitcoin price of 800,000 USD. And of course now we are sort of like materially lower because the NAV is also, you know, below one. So basically a lot of money has been lost there too. And I think that's why it's very difficult to restart this, this narrative. But I think it brings also like very interesting concept because you know, that Ethereum had around, you know, two $10 billion of inflows year to date and for the Ethereum ETF, but they were only really in, in July and in August and There wasn't really any material inflow before, there wasn't any material inflow after. But we're seeing of course this month a lot of outflows for the Ethereum etf. And I think it's really the question now that because the futures traders, especially the perpetual futures traders, you know, almost like the crypto native people, they were literally all stopped out, you know, on October 10th. So basically Bitcoin is down year to date. Ethereum is down more than 10% year to date. You know, the futures traders are basically sort of like, you know, neutral relative. You know, if you compare really the change in open interest where we are currently versus where we were on January 1st. So basically, you know, nobody is long except really a lot of the ETFs. And the ETFs. You know, the Bitcoin ETFs they have net bought you know, around like 23, 24 billion year to date versus the Bitcoin price is down year to date. So it's definitely some overallocation and it's not that the 13F filings really make a lot of, you know, the Harvard endowment funds or some of the institutional investors really look good here in if they have increased their exposure because they're looking actually not so great now because the price has gone down. And very similar with Ethereum because Ethereum a lot smaller market cap. But here the ETFs are net long $10 billion year to date versus Ethereum is actually down 10%. So that's why we were arguing over the last two, three weeks that we probably going to see more outflows from the ETFs because people need to be, you know, adjusting their books. And if you are a multi strategy investor, you know, you're having some stocks, you're having some commodities, you're having some crypto and then you're sending out your statement to your investors and they look at your statements like oh, you're along, you know, a billion dollars in Ethereum ETFs. You know, but Ethereum is down 10%. It wasn't a great move. You know, why didn't you buy more QQQs, you know, why didn't you buy more NASDAQ? And I think that's sort of like the story that institutional investors want to get ahead and that's why they're probably liquidating some of their portfolios. And that's where we're seeing this sort of like selling pressure now in, in the market.
- [30:40]
C
Okay, just quickly Last couple things, one, with the rise of staking ETFs how does that impact the, the debt calculus? I would imagine it, it like makes their theoretical hurdle, hurdle rate now much higher. And, and I, I know you also pointed out some, some hidden costs that may not be apparent to investors that actually lower the yield or premium that people might get from buying some of these stats. Can you just walk us through that quickly?
- [31:11]
B
Yeah, I think when we go back to the last bull market, which was of course extremely exciting because retail investors were basically getting 4 to 6% yield on their crypto holdings and of course the blockfi of the world there's were generating 8% yield and they were generating this yield really through you know, lending to SRI Arras Capital or through Alameda, you know, research really who really took, you know, billions and billions of dollars and leveraged it up. So it was really they were willing to pay high, high yields and they were passing some of the yields down. And back then, you know, the treasury yield was at the low 50 basis points, it was trading more between 1 to 3%. So there was a huge arbitrage, you know, for even institutional established players, you know, taking Tradfi, you know, interest rates really and deploying the capital in crypto. And I think that was the, the yield arbitrage that was possible this cycle. Right now of course we having the Ethereum staking yield, you know, at 2.85% versus the 10 year treasury yield at 4.1%. So there's of course negative carry for anybody in Tradfi and I think that's why know the staking yield right now is not that attractive. And I think when you look at for example Coinbase, they only I think pay 1.8 or 1.9. So there's even you know, a lot more cost involved there. So in the end investors sort of like are they really going to give up more than 2% to stake in Ethereum that is extremely volatile as collateral versus the TradFi market? Maybe, but maybe not. And maybe that's why we're seeing a lot of unwinding in, in Ethereum staking, you know, per se. But you know, as you correctly pointed out, if for example BlackRock can push through their ETF staking for Ethereum and they're currently charging only really 25 basis points and they were actually charging I think only 12 until the summer until they get a certain AUM really for their, you know, for the Ethereum ETF. So that's of course a lot less than what some of the other, you know, the DS are based on basically proposing. Right. So of course it's not really transparent, so we're not really so clear what are the costs are. But a lot of the dads have, you know, 10 year contracts with, you know, with the strategic advisor and the strategic advisor usually gets you know, 1% of the AUM per year. So that's a cost of you know, 100 basis points. Then management gets also, you know, paid, you know, for you know, for, for their compensation basically. And then of course there are some other hidden warrants and hidden costs with some optionality where management can buy out, you know, 5% of the shares for example, at you know, at a really fraction of the price. So that's, that's kind of like all these costs and I think these costs can easily add up to sort of 1.5 to 2% depending on, you know, which dad you look at. And I think that's sort of like a hidden cost that people are not really aware of because they're not really publicized there of course a lot of SEC filings but it's very difficult to go through. It's not really clear, you know, we have tried to go through it. But nevertheless, I think when you look that you know that you buy a lot of the dads, you know, initially before at the premium, you know, why should you buy it at the premium when you can just buy it at really at an nav of one and then probably get your staking yield as well. And I think because BlackRock is of course a huge player, they're probably, probably get, you know, a fair price really for you know, for their, you know, staking yield that they're going to pass on because they want to be the, you know, one of the low cost ETFs. And I think that's why they were so successful and raised so much capital year to date. So I think there is really this, this big shift happening. And then one of the key arguments that a lot of the dads were playing might not actually be valid anymore for next year. So there might be also some story and I think, you know, if I may add one more point because it goes, you know, to our Ethereum comment like earlier, you know, so far we have not seen that blackrock was pushing the Ethereum narrative. Of course we have seen Larry Fink on TV quite frequently, you know, has slowed down a little bit. But you know, Bitcoin is digital gold and there has not really been a narrative around, you know, Ethereum. And we're waiting for, you know, the, the marketing department of blackrock to push this story with. But once they push the story, we might get a little revival in the defi story. And I think that's why there might be a level where we want to buy Ethereum and we want to be look, looking out for that. But we need kind of more than macro indicators to turn around first.
- [35:42]
C
So thanks for all that, Marcus. Before we wrap up, I just want to see if you have any final thoughts and anything that was kind of left on the, the cutting room floor, any contrarian opinions that you, you're, you're itching to get off your, your chest as we move into year end.
- [35:58]
B
Well, I mean year end is, you know, it's almost there. So I think, you know, we're not going to see much. You know, we expect actually the Fed will stay on hold in December. I think that's not the news that we, you know, we crypto investors want to hear. But you know, we just have to trade with whatever we get. And then I think, you know, even in January it's not going to become so clear as well. Right. Because you know, the Fed doesn't have economic data. It doesn't really seem that even like the employment data is as weak, you know, besides some of course, anecdotal layoffs here and there. But it's going to be actually a very tough narrative unless really the Fed starts to shift a little bit, you know, dovish here. And I don't think that's going to happen. And of course then we're coming into, you know, next year and next year is really the, you know, the fourth year of the bitcoin cycle. And you know, we don't think the bitcoin cycle has much to do really with the halving. But you know, nevertheless there is this, you know, force here where bitcoin tends to be weak. And this year was supposed to, you know, of course be a positive year. So maybe we still finish a little bit marginal in the positive side. But you know, I mean the human psychology, the human life is really built on, you know, on really these, these four cycles, right. Four seasons, you know, four quarters. You know, I mean, I think there's you know, there's also, you know, spiritually, you know, a lot of the signs. So I think when you look deeper, there's a more meaning in this sort of like fourth year where things need to re itself, reset itself. And I think that's why we actually we little bit void and that's why we think actually next year will also be a tough time. And it might be that, you know, we're seeing, you know, a low earlier in the year and then sort of start to rally because, you know, the Fed is going to turn dovish. I think that's, you know, almost like pretty clear. But the question is, are we going to be then at 84,000? Are we going to be then at so like, 73, 75,000? You know, at that level, it's probably very, you know, interesting levels because again, if BlackRock files a staking ETF now, that means they got to get ready. They're going to get their marketing and their salespeople ready for next year. They're going to push this product, I think there's no doubt. So, as always, there's a lot of stuff happening in crypto, but right now, you know, the macro headwind is, you know, still forcing us to be a little bit on the sidelines. But I think there are still some great opportunities next year.
- [38:15]
C
Great. All right, well, thanks so much for joining us. We'll have to have you back. Thanks to everybody for watching and listening. And we will be back next week with another episode of Bits and Bits, the interview.