In a world where financial markets are increasingly volatile and complex, the introduction of a Bitcoin ETF (Exchange-Traded Fund) stands as a beacon of potential transformation.
In a world where financial markets are increasingly volatile and complex, the introduction of a Bitcoin ETF (Exchange-Traded Fund) stands as a beacon of potential transformation. This blog post delves into a conversation with a Wall Street veteran who brings a unique perspective to the table regarding the impact of a Bitcoin ETF on the market. With decades of experience in proprietary trading and investment, our guest sheds light on the significance of this development and its potential to usher in a new era of financial innovation.
The discussion revolves around the journey of Bitcoin from a niche digital asset to a mainstream investment vehicle, thanks to the anticipated launch of a Bitcoin ETF. The guest, a former math PhD and prop trader, emphasizes the scale of ETFs, which have grown from $300 billion in 2000 to a staggering $10 trillion today. He argues that the crypto community underestimates the wall of money poised to enter Bitcoin through ETFs.
He also touches upon the differences in asset allocation strategies between traditional investors and crypto enthusiasts, suggesting that Bitcoin will likely become a significant beneficiary of ETF investment. Furthermore, he predicts a substantial influx of capital into Bitcoin ETFs, potentially amounting to $100 billion within a year, which could drive the price of Bitcoin to new heights.
0:00 - Intro
6:01 - The scale of ETFs
13:35 - The pace of incoming money
20:48 - Perspective of an ETF buyer
28:16 - Will the ETF change the cycles?
36:33 - Bitcoin improving payments
40:13 - Financial degradation
47:06 - Inflation from the perspective of the wealthy
51:39 - Apathy towards Bitcoin
1:00:56 - Older generations hold the wealth
1:12:14 - Bull vibes will return with ETF
1:17:19 - ETFs will have the largest stacks
1:29:14 - Playing it safe
1:35:57 - Fred represents the majority
1:38:11 - Block size and other dev issues
1:42:14 - Money printer go brrr
1:46:55 - Likely date for the ETF
1:49:22 - How Fred got into Bitcoin
1:53:57 - The Anti-SBF event
2:02:02 - ETF is inevitable
2:03:55 - Wrapping up
Fred: [00:00:00] Okay. Pick back up. That's cool with you. Okay. Perfect.
Marty: Perfect. Logan gave me the thumb up. We're live now. Fred, welcome to the show.
Fred: Marty. Thanks for having me, man. Enjoy.
Marty: I'm really excited for this conversation because I think I was telling you I've had a few of your monologues that you've been posting on Twitter about the ETF, particularly over the last few weeks, coming to some of the group chats that I'm in, I thought it was.
perspective considering your background. So I think just as a jumping off point for this conversation, it'd be good to get a little bit, uh, of background of yourself, how you came to Bitcoin and why you think this ETF is something that people should really be paying attention to.
Fred: Sure. So I'm a, originally, uh, a math PhD.
From Stanford who was hired in the late eighties, uh, on wall street to [00:01:00] become one of the first, you know, prop traders on wall street. So I was with the, uh, Solomon brothers prop trading team, uh, under John Merriweather. So if you've ever read the book, liars, poker, um, you know, that was my world. Uh, so I, you know, I traded at Solomon.
I traded at Greenwich capital. Um, you know, I was directly trading, uh, you know, a billion dollar balance sheet, um, back in the late eighties, early nineties. Um, so that was my prop. Are you there? Oh, okay. Yeah. So that was my prop trading, uh, experience and, you know, I, I've since then I've been, you know, I've, I've, I've been an investor, I've funded and started multiple companies.
I've had 10, not totally non crypto exits. Um, And, you know, I'm still in touch with all my Wall Street buddies and, and very much look at the world from a Wall Street perspective, right? [00:02:00] Um, and so I think that the crypto world that, that I'm now a part of, um, doesn't really understand the scale of these ETFs.
Uh, and doesn't understand the kind of the, the, the wall of money that, that potentially could be coming into Bitcoin. Um, And, uh, just to give you a number, uh, you know, I, I asked a friend of mine who's in crypto, uh, who's pretty active, written, wrote a couple of books on Bitcoin is pretty active in the podcasting, Mark Jeffrey, I said, Mark.
What would you estimate the size of the global ETF market? He's like, I don't know a trillion dollars. I said, what if I told you there's 10 trillion dollars of ETFs, you know, so That number is kind of crazy, right if you think about it, and what's even more crazy is that number was? 300 billion [00:03:00] in 2000 right so right around when I left Wall Street, it was 300 billion So it's grown from 300 billion to 10 trillion So there's not some sort of cycle, you know, theoretical, like what if the property market, when became tokenized?
What if people, this is like active ETFs that are trading today. Um, and, uh, you know, it's a 10 trillion market and it's, you know, primarily in our jurisdictions in the U S uh, you know, European jurisdiction. So this is not, you know, stocks that are trading in China or anything like that. This is, you know, ETFs run by, I think BlackRock itself has about 6 trillion in ETFs right now.
Uh, just to give you the scale of the market. So I just don't think that people in the crypto world understand that there's, you know, 10 trillion [00:04:00] of actual movable money. Um, and the way that this money is, is, is, is, uh, kind of allocated is also very different from, you know, I would say the way that, uh, crypto people think about buying and selling or degens think about investing now.
So it's really allocated in a very passive investing strategy. Where people, um, where the people come in and they say, great, I'm going to put X percent of my money into say S and P, you know, so typical, typical, you know, fund or management managed account, we'll say I will put 40 percent of my money in the S and P, you know, one of the S and P index ETFs.
Then I might put, you know, I might put 20 percent in more of a, like a bond ETF, right? And then I will put, you know, 5 percent [00:05:00] in a gold ETF. And so, it's a very bucketed approach that is very different than the way a crypto person will look at, you know, say, deploying capital. Um, What you have is these big buckets and they're held very passively.
They're held for, you know, years typically. Um, and you know, the adjustments are really on the edge. So somebody will say, great, I will lower my, uh, stock allocation from 40 percent to 35 percent or I'll increase it from, uh, 35 percent to 37%. And that, that's pretty much. That's pretty much the way assets are allocated.
And so in this world, we have this new asset class, which is Bitcoin, right? Which is, which is on the broader side is crypto, right? But let's just, let's just start by saying it's Bitcoin to [00:06:00] start. And these people aren't gonna only say we only like Bitcoin. They're gonna say well, we're mainly interested in Bitcoin because that's what our Our user base of financial investors are interested in.
So I think Bitcoin is going to be the primary beneficiary of the CTF, um, uh, explosion, but I don't think it's going to be the only beneficiary. But I think proportionally to everything else, it'll, it'll get, you know, 80 percent of the money. So. That's the, that's really the, the first thing I think that people don't understand is the, the wall of money that's about to hit, um, with the CTF.
And, you know, that's coming in two months. And it's not going to come all at once. It's going to come It'll, it might be $3 billion the first day. You know, that's, that's sort of the estimate that like Mark Yuko, I, I would agree it would [00:07:00] probably be in those waters, two to $4 billion in one day. Um, and you know, we just saw a one and a half billion dollars sale of Bitcoin for at 44, and it brought the price down to 40,000.
So I think you're going to get two X that on the, on the, on the other side, when the first day of actual trading, whatever the price of Bitcoin is, I would be, I would not be surprised if we go up, you know, eight to 10, 000, uh, points on Bitcoin on that day. Does that make sense? Yeah,
Marty: that makes sense. I guess the question in most people's minds is, is that wall of capital just.
Um, basically shaking down the gate, waiting to get into Bitcoin. Why? It's
Fred: not quite shaking down the gate and let me explain why. So, so first of [00:08:00] all, you know, this is a gradual process, right? So most of these funds, they're not, they're, it's sort of a slow recognition that this is an asset class that they want to get into, right?
So I don't see this as like all happening in the first month, whatever. I think this is going to happen over a period of years, right? Uh, but I think it could happen in a two to three year period. And the way these people are going to look, there's, yes, there's some early people that are going to come in on day one.
They're going to say, great, I need my allocation. Give me my allocation on day one. This is like an IPO. Right. So if you remember when Marty, do you remember when the Google IPO happened in, in 2000, it wasn't like a big, you know, you know, like watershed moment. It was those people just got in, they, they were well aware that Google was going to be an enormous player, but they didn't get in immediately.
Right. And you know, then it sort of crept [00:09:00] up. In fact, the Facebook IPO is another one, right? Facebook IPO actually went down right after the IPO. Right. And then, then it kind of went up. So I think that, you know, this is going to be equivalent to those kinds of things. I think it's going to, it's going to hit, but after it hits, you can expect that there's just going to be a steady wall of money that comes into this thing.
And, and that's why I think a lot of the crypto people are not looking at this thing properly, because what they're looking at is they're looking at great. Does the existing crypto money, um. You know, try to trade this thing, try to front run it, try to sell the news, all this stuff. And that doesn't matter, right?
Because really what's going to happen is, over the next year, once people can access the CTF, and once this thing is now just one more bucket. Uh, in this, in their choices, like do I invest [00:10:00] in S and P? Do I invest in real estate? Okay. There's, you can invest in the QR, uh, you can invest in, uh, equity office.
Uh, You know, do I invest in a energy ETF? Okay. Do I invest in a bond ETF? Right. Those are single decision points. And you know, with five or 10 ETFs, you can, you can pretty much create any portfolio now. So I think over the next year, this thing is going to make just an enormous difference because the amount of money that probably is going to come into this thing.
Is I, I think it could be a hundred billion. It could be 200 billion in just a year. Uh, you know, and, and again, a hundred billion out of a total of 10 trillion in ETFs, um, that's just on the ETF money. That's just kind of [00:11:00] currently in the ETFs. Now there's all kinds of other add on money that's going to come in.
That's not even in the ETF stuff, but that's just now going to come in because this thing has been legitimized. So, you know, what's the impact of a hundred billion dollars coming into Bitcoin? Uh, you know, well, I think we've seen what the impact of, you know, 10 billion coming into Bitcoin in 2021 is.
What's the impact of a hundred billion dollars coming into Bitcoin? I think it could 10x Bitcoin. That's, that's kind of my gut feel. So, you know, uh, and, and roughly speaking, rough math on these numbers is we kind of know that, uh, well, let's say it's at right now at 50, 000. I'm just going to round it up to 50, 000.
100 billion and 50, 000 is 2 million Bitcoin, right? How are you going to get 2 million Bitcoin [00:12:00] into an ETF when there's only 2 million Bitcoin trading on exchanges right now? It. Michael Saylor's not selling his Bitcoin block. One is not selling their Bitcoin. Satoshi is not selling his Bitcoin, uh, or her Bitcoin.
Um, you know, Draper is not selling his Bitcoin at 50,000. Um, so this Bitcoin, you're talking this very small supply of 2 million Bitcoin and sort of almost an equivalent demand right there in that first year. The math is just very clear. This, the price has to go up to match the, uh, to match the demand.
It's just that simple. And it has nothing to do with, you know, the prior prices, the price. Like it doesn't matter. It's just, there's that much money that's going to come into this asset and it's just going to force the price up. So I think it's. I think it's a very, [00:13:00] very, I mean, it's an incredible bet. Um, the CTF alone now on top of it, you, you add in the halvening that's happening just coincidentally, sort of the same time.
Uh, I think, you know, where half the money that's going out right now. The money going out to pay miners is going to go down by half in April. So, these two things together is adding nitro and glycerin together. And, uh, you know, hold, hold on because I think it's going to be a wild ride, but I think it's going to be a wild ride that's going to end much, much higher.
So, uh, that's kind of why I can't give financial advice, but I would say. My personal opinion is you don't need to time, you cannot time this and, uh, but you do know that there's 30 days left for, um, you have 30 days left [00:14:00] to get your chips in because once that, once that thing ETFs approved, you know, uh, all bets are off, you know, like it's like when they spin the wheel in the, uh, in the roulette and the dealer says, uh, You know, uh, in French, you know, it means you can't place your bets anymore.
You're done. And I feel like we're, you know, this is a great time. You know, we pulled back a little bit, but you know, overall, we haven't pulled back that much. I mean, the market was at 38, 000 on December 1st, so we haven't pulled back that much. I don't think we're going to get much more pullbacks. And, uh, I think the relentless, the relentless math of, of this asset coming in, it's just, it's, it's, it's going to be mind boggling.
Um, I mean, are you going to buy the ETF? I'm just asking you, like, would you buy the ETF personally? Personally,
Marty: no. [00:15:00] I mean, I'd rather buy spot Bitcoin and hold it myself.
Fred: Well, here's the thing. I would, I, I am going to buy the ETF as well as, you know, hold my, hold my own Bitcoin there. And people are like, why would you do that, Fred?
And I'll tell you why. Because I'm, you know, I'm an old school investor and I have a bunch of money in. You know, major brokerages, you know, and you know, that money doesn't leave those brokerages, you know, and, and that's the kind of the way broom boomers like me think, you know, you know, once you have an account at Goldman, you're not, you're not wiping out that account and putting into Coinbase, you know, like that's just not happening.
Right. But, you know, I've got money at Goldman, you know, that I could easily. You know, with one click, as soon as that ETF comes out, I can say, you know what, I might actually go a little longer Bitcoin, you know, I, I, I've got, I got the, you know, I've got a [00:16:00] very big stash of Bitcoin myself, you know, that I have, you know, off, you know, uh, cold storage, but you know, I'm, I'm pretty happy buying some more if it's in the ETF, because if I want to get rid of it, I want to go into some AI stock or something.
I'll do that. Yeah. But it's, it's in the, it's in the buckets in the place that I keep it. Right. I don't even move money between my broker's account very much. It's very, it's very rare. Right. And I think that's, that's sort of the normal behavior I think for, for most people, uh, most people over 40, really, you know, I would say that's, that's, that's typical, I would say.
Yeah. So.
Marty: That makes a lot of sense. Just the ease of clicking a couple of buttons and getting exposure.
Fred: It's, it's, it's very easy. It's click, it's, I click a bunch of buttons and I don't have any [00:17:00] risk, right? That I wired the money the wrong place. That I, you know, I sent something to some scam account or something, right?
It's, you know, and I may even be talking to a broker, like I'm not even doing the clicking. I'm just calling my guy and saying, pick me up some, uh, pick me up some of the Vanguard, uh, not the Vanguard, the Fidelity ETF, or what do you think? Do you think I should go to the Fidelity ETF or the BlackRock? And the guy goes, yeah, we reckon we had Morgan Stanley recommend the BlackRock.
Okay, great. Pick me up, uh, 10, 000 shares of the BlackRock, you know, like that's the way things are going to get done. Um, so. You know, I think everybody on, in, in kind of non, in non, uh, Bitcoin crypto is always saying, when's my token going to get listed on Binance, right? Remember that? Like, you know, every, every one of these, you know, altcoins is trying to get listed on Binance, right?
But imagine getting your [00:18:00] coin listed on Schwab, E Trade, Ameritrade, Merrill Lynch, Fidelity. You know, you just name it, right? And that's what's about to happen, right? You're talking about something that's, you know, it's 10x. Like the idea of getting listed on Binance or Coinbase, you know, for, for, for, for everything.
So you've got, you've just got this. It's really the first time ever that most of these people will actually buy this asset. They're just, they've held off. They've held off. They're not going to buy it. They're not buying GBTC. They're not buying some Canadian ETF, but forget it, you know. Um, and you know, MSTR, maybe they'll buy a little, they bought a little bit of it.
Some people have, but. MSTR is a software company that owns a lot of Bitcoin that has a lot of debt. You know, it's, [00:19:00] it's not a great proxy for Bitcoin. So, I mean, I happen to own MSTR, but, um, but you know, I think MSTR could actually get hit by this ETF, you know, on a relative basis, you know, I think, I think that's going to do fine on a absolute basis, but this is the first time.
Major financial, uh, players, not only major financial, but this is the first time a hundred million American retail investors are going to be able to buy Bitcoin. Uh, so I don't understand why anybody is not like super, super, super bullish on this, this fent. Uh, now I understand that it's, you know, it's, uh, it's not in the total decentralized peer to peer, uh, you know, your keys, your own money kind of thing.
But, but I think that has to be [00:20:00] balanced with the fact that this is going to really drive Bitcoin adoption and Bitcoin holdings. Dramatically higher. Um, I mean, it could literally 10 X Bitcoin holdings in the U S I really believe that. I mean, I think if you look at how many, how many Americans have over a hundred dollars in Bitcoin, I bet you that number is.
10 million, you know, now once this thing kind of goes live, I mean, there's apparently about 20 to 30 million people who have any form of crypto, but a lot of those are people have 2 worth of crypto or something like that. You know, they were, they've opened a Coinbase account. They've, they've, they've not made money.
They have a little bit of dust in there and that's it. So I think once you give, You know, 100 million [00:21:00] adult Americans with brokerage accounts access to buy Bitcoin and you can buy one of 12 different ETFs. That's when the, that's really when the game starts. Um, so, you know, and what percentage of those are going to have Bitcoin?
Maybe it's, it could be, you know, 50 percent pretty quick. So that's a five X as to where we have now. And that's. Real money because that Bitcoin is now directly connected to all of their other money pretty much So if they want to double that triple it It's just one button click and add whereas, you know The person who has a little bit of money on coinbase adding more money to that account is is a is a problem so I think this is just Such an enormous event There's just no chance that this thing does not have a very positive effect on the price of Bitcoin in my opinion
Marty: Yeah, and this gets into [00:22:00] a bunch of other questions because like you mentioned not your keys not your coins I would wish for people to own their own Bitcoin and custody it the right way.
But if we're being Honest and pragmatic, like most people aren't going to do that. And Bitcoin is an open source protocol that anybody can engage in, including the black rocks and fidelities of the world. If they want to create these ETF structures, but to your point of. The game just beginning that's the thing I've been trying to really grok in my mind is we've had this First 15 years of Bitcoin where you've had these cycles these four year cycles Usually after the having the price pumps for 18 months And that's the big question in my mind is the ETF launch in the stamp of approval from the black rocks of the world like a no turning back moment where maybe the cycles moving forward aren't as pronounced as they happen in the past and Um, to the upside, particularly, uh, does the, um, [00:23:00] idea of these diminishing returns every four year cycle is that get thrown out?
I think it
Fred: will happen. So I do think you, I think that this cycle will be the last and potentially one of the best of all the cycles, right? So if I had to guess, right, we've had diminishing every time, right? All three cycles so far, they've been down, right? But I think this one's going to be an up cycle.
So I think we are going to have. I think we'll do north of 10 X this cycle. Okay. But then that's it. That's what, that's kind of my thinking, right? Because I actually think that the, the ETF impact is going to be bigger than the halvening impact, right? I think that the, the ETF, I think it'll maybe be five X the halvening impact, right?
I think this is the, this is the big event. This is, I think in general, the halvening is less important now. Uh, just because of the [00:24:00] sheer amount of Bitcoin that's left to mine. Um, But I also think this cycle gets us to a price where, uh, you know, where we're kind of at parody with gold, for example. Right.
And, and at that price, you know, I, I'm not even sure we might even have some negative cycles, you know, it's possible. Right. Um, so I just think this, this particular. For four years is, is really the key, the key thing. Um, and we may even go into a sort of almost non cycle. Cycles don't matter after this. Uh, so I think the, the, the real question is overall Bitcoin adoption.
I think this could be the catalyst for that. Uh, because. You know, people were saying, I don't know, if one of the metrics I look at a lot is how many people own Bitcoin. [00:25:00] Uh, how many single whole coiners are there, right? Well, there's a million whole coiners, right? Uh, but you go, how many people have a hundred dollars on Bitcoin?
And that number is actually pretty small. I think it's on the order of 30 million. That's it. So the entire Bitcoin universe really is just 30 million people. So. You know, that's point, you know, 0. 3 percent of, uh, of, of the, of the world population, you know, that's a very small number. So I think, uh, I think we're going to get to something like two, three, four, 5 percent of the, of the world population using holding some Bitcoin.
But I think at that point, you're going to have some. You're going to have some problems with just the numbers on, uh, um, block space, uh, you know, unless they increase the [00:26:00] block size. You know, you have 200 million possible transactions per year on Bitcoin. That's, that's the math right now. So, you know, if you have 200 million users of Bitcoin, that's one transaction per user per year, uh, hold your own keys.
So if, you know, does, does that change with block size? Yeah, they may. But like, if, if that happens in the next couple of years and we get there. We're going to have a, we're going to have a transaction problem. It will, fees are just going to go astronomical and it has nothing to do with ordinals or anything else.
So I think the way we get there initially is to have institutions do the custody and people are buying into BlackRock, they're buying into Fidelity and that's their main exposure to Bitcoin, not people holding their own keys. I, [00:27:00] right now I would say, yeah, hold your own keys once this thing is out for a year.
I'd say if you're an American, yeah, uh, it, it, it, it might be a much better idea to actually hold the ETF. Um, and there's a couple of reasons I say that because first of all, from a tax perspective, I think holding the ETF will less have less problems with audits with the IRS that probably be tax advantage to holding the ETF.
Um, I think getting your money from an ETF to fiat will be easier than getting money that's held in a noncustodial wallet back into fiat. Um, so I think the ETF, uh, you know, inheritance planning is a lot easier with the ETF. [00:28:00] You know, if I own an ETF, I. Um, you know, I, when I die, I want to give it to my kids.
It's a lot easier just that they own, they, they own the broker's account, right? We know how to do that. Uh, and then finally, you know, custody is difficult. Um, you know, multi sig is, you know, is, is complex. Single sig is, is very dangerous in my opinion. And, uh, so multi sig is complex. And, uh, as you get older, a lot of people don't even want to, they don't want to trust themselves.
They don't, they don't want to be. Uh, banging out multi sig keys on, on plates and storing them in safe deposit boxes as you know, it's just, it's people are, are fundamentally, uh, they fundamentally don't trust themselves right after, and you get to a certain age where you, you just, you don't remember what you had for breakfast this morning.
So why would you remember necessarily where you had all your multi sigs? [00:29:00] So. I think for all these reasons, I think the ETF is going to be very, very, very popular. And I think even even core Bitcoiners, I think it's going to change our industry because, you know, right now we're sort of pushing this parallel, you know, path, like, Oh, your own keys.
You have to like, you know, in have the Bitcoin values and so on, which I think are all great. I mean, I love, you know, say for Dean's books. I mean, I, I, it's. I like, you know, your posts and stuff. I, I think there's a lot of value to all that. And there's a lot of value to everything that swan Bitcoin's putting out in terms of content.
Um, but, but having said all that, you know, I think holding Bitcoin becomes in an ETF becomes a lot more, uh, sort of mundane, right? It's just like, you have Bitcoin. Yeah, sure. I own the ETF. [00:30:00] End of story. You don't have to talk about eating steak or cast iron pots or anything like that, you know, anymore, uh, or best way to custody.
It doesn't matter. All you've just simplified the entire equation. And now it's basically down to what do you think of Bitcoin? Or possibly, what do you think of Ethereum if you're, if you're so inclined, but I think it's going to be a big simplification and I think, uh, and that's happening. And then the, once that ETF starts trading, I think a lot of these other conversations become sort of irrelevant.
But what do you think? Yeah,
Marty: I would disagree to an extent, because I do think this is what I'm seeing. In terms of being a user, being an investor in the space, like I do think at some point in the future, maybe not the next day, decade, maybe like in 15 years, maybe sooner, potentially sooner, like the step [00:31:00] function improvement that Bitcoin as a settlement layer, whether that's at the protocol layer or layers above it, lightning, show me events, whatever it is.
Far superior to what we have in the incumbent system and that people are actually going to need to use Bitcoin transactionally to Participate in reap the benefits of these step function improvements at the payments layer and the final settlement layer Which will dictate that they can't Have indirect exposure via an ETF.
I think the ETF exposure will certainly have its place, but I don't think I don't think Like mainstream Bitcoin use gets siloed into the ETF in the future. I do think there'll be tech improvements at the payments layer, particularly above the protocol layer that dictate that people need to actually take possession.
Fred: I think that's going to be [00:32:00] certainly more true in, uh, in the third world. I mean the third world, the developing world, right. Um, then it is in the U S right. I just think that, you know, for me, I don't need another payments. Layer. I really don't, you know, I have Apple pay Venmo, whatever I, I, there's 10 ways I can pay, you know, for anything.
And, you know, I have credit cards, et cetera. You know, you get to a lot of the world where they don't even have bank accounts and, uh, or whether they don't trust the banks or like Lebanon where the. You put your money in a bank and you get it out every, you know, you get one 10th of it out every, uh, month, you know, it's sort of like a roach motel.
So I think in places in a lot of the world, I would agree with you. I don't think so in the US, you know, uh, I don't think so in Western Europe. I think there, uh, it's. [00:33:00] I just do not believe that, uh, that we're going to see Bitcoin payments really, you know, explode. I, I'm, I'm, I would like to believe in lightning.
Um, I've, you know, used lightning quite a bit and I know a lot about lightning, but I just don't see it. Completely taking off in the next five years in the U S I just, I don't, I don't see if I'm not negative on it. I'm just, you know, that's just my honest opinion. I just don't think it's going to really, uh, I don't think I'm gonna wake up in five years and say, I'm going to order everything on, uh, you know, I'm going to order everything on Bitcoin or lightning.
I feel like I'm going to still be ordering everything on Amazon. I'm going to be using my visa card and, or my Amex and, uh, And that's kind of the way [00:34:00] that I'm going to get stuff done in the U. S. Um, now in Turkey and Argentina, uh, yeah, sure. Um, it may very well be Bitcoin because you can't trust anything.
Uh, so, you know, I think that, I think that's going to be a big opportunity, but, um,
Marty: I mean, that gets to do another question here. Like, how long are we going to be able to trust? Sorry. Infrastructure. That gets into the question of like how long can we trust the banking system here? Like, how bad are
Fred: the issues on the back end?
I mean, that's, you know, it may be, we're going to have some, I feel like we are on, you know, a shorter timeline than, uh, than decades, right? I think we have, we probably have from a macroeconomic perspective. You know, we have, we've, we've got about five more years before the, really the perennial shit hits the fan, you know, pardon my French, [00:35:00] but, uh, you know, I think they can keep the game going as long as they lower interest rates.
And, you know, we go back to a, it doesn't have to be a zero interest rate policy, but a lower interest rate policy, I think. I think we can buy ourselves some time, maybe even decades. I mean, Japan, I was in Japan recently and, um, you know, it, the country is great. You know, the country works fantastically. The roads are clean.
Everything's great. Um, Meanwhile, they have 200, uh, odd percent debt to GDP. Uh, you know, their, their entire system is propped up by vapor, but, uh, you know, so they've got almost twice the debt problem as us now there's clearly differences, they don't have big armies to support and everything, but, um, you know, there's somehow can, can make it work.
So low interest rates will. We'll keep the game going and uh, I think that we are headed back into a low interest rate [00:36:00] mode and so I think that's what's going to save the banks in the US. Um, you know, I think that if you, you know, people like James Lavish who are talking about debt spirals. I, you know, I like James Lavish, but, uh, I think at the end of the day, I do think we're going to go back to a very low interest rates and the banks will, will be okay.
That's, that's kind of what I think. Um, I do think at 5%, you know, 5%, we have a fundamental problem with 34 trillion in debt. Times 5% that math doesn't work. Uh, so I think, you know, whether Trump gets in or Biden or whoever, , whoever the Democrats are on, uh, gets in, I think no matter what, we're gonna have lower interest rates.
Um, so yeah, I'm not too worried about, I'm not too [00:37:00] worried. It seems that we get to the same place no matter what, which is lower interest rates, which is also very good for Bitcoin, right. And, uh, I think they're going to try to preserve the system at all costs. And so I think the system gets preserved. I think banks get preserved.
I don't think we're going to wake up in 10 years and there's no rails and there's no money and there's no dollars 10 years from now, there will be the U S dollar, it'll just be worthless, you know, worth less than it is today. And, uh, and interest rates are going to be low again, and there will be a lot of, you know, asset inflation.
And you know, same old story. So I think that's, that's kind of where things are going in the U S and in Europe. Um, at the end of the day, I think all those things are extremely positive for Bitcoin. And, and I think you've got about three years to, to really get in because after three years of, I mean, you [00:38:00] know, the P the people who've got in right now are going to have all the, all the toys and the nice houses and everything else.
And everybody else will kind of the, everybody else won't really have a great egg out because, you know, if Bitcoin is trading at half a million dollars, you know, it's, you know, I don't know, I don't know what's more risky, you know, buying Bitcoin or, you know, you could really, you know, you could have, you could, you could argue that Bitcoin might be just too risky at that point.
I don't know. Potentially. Yeah. You know, so I think right now is just we're just in this like Sweet spot where the risk return is just so excellent, right? You know, we've we've just got and I I think that You know i've been i've been in crypto really since 2017 bitcoin uh, and really got into bitcoin in 2019, but um But I think [00:39:00] this is the best risk return that I've seen, because once the financial market gets in, irrespective of happenings or anything else, that's, you know, that's a wall of money that's going to come into this asset.
Once that story gets played out in the next three years, two, three years, uh, I don't know what the next narrative is that, that really makes sense. You know, that, that, that goes us, brings us up another 10 X, but you know, you never know. I don't know. I'm, uh, but I definitely think right now is, is, is a great period.
So, and it, it doesn't really matter to me afterwards, you know, like if we, if this plays out, you know, I'm, I'm happy, I'm happy diversifying a little bit into, into other things. I think there's, there's always great investments. I just think right now, Bitcoin is that great investment.
Marty: Yeah. [00:40:00] When you, I mean, when you.
Um, add up all the factors, ETF having geopolitical situation, who knows what's going
Fred: to happen between. And rate cuts. Right. And that's the other thing. Right. That's the other thing
Marty: to mention. So
Fred: we've got a trifecta of things that's coming, that's coming our way.
Marty: And Bitcoin sort of shrugged off the narrative that its price is wholly dictated by interest rate policy over the course of this year.
Where we're up, what, 120 percent despite the fact that rates are at 5. 25%.
Fred: Well, imagine, I don't think, I mean, I do think it's been fighting that, right? I do think that interest rate hikes are really bad for Bitcoin, right? But, so, it's shrugged off it, but I do think it will benefit when interest rates come down, right?
So, it's not like independent of interest rates. When interest rates go down, And all that bond money starts going, Oh, wait a second, [00:41:00] we no longer can get 5 percent interest raise anymore. Oh, they're 3%. Oh, maybe I should buy some Bitcoin. Maybe the price, you know, you know, may, maybe, and I, I'd like to talk a little bit about inflation because I think that, you know, I, I do have something to say on that, that front, you know, I think that really there's almost two kinds of inflation, right?
There's the inflation for, you know, for the poor, I will say, you know, the, the, the, the inflation for the masses, which is, you know, the cost of beef, the cost of eggs or whatever, right? That's the first kind of inflation. And then the other kind of inflation is inflation for the 1%, right? Or the 5%, whatever, you know, the top, the top of the pile, which is, the inflated, the cost of, um, the cost of premium healthcare, the cost of [00:42:00] private education, the cost of a vacation to, you know, the best hotels in Aspen, little Nell or the Jerome, or, you know, the cost of private jets, you know, so they're really two separate kinds of things.
Right. And I think that But you know, if you, and the cost of secondary houses, you know, so, you know, you want to buy a, uh, you want to buy a condo in Manhattan, you know, on 5th Avenue, uh, you want, or Park Avenue, you know, you want to buy, uh, you want to buy a ranch in Wyoming. You want to, you know, you want to do these kinds of things.
Well, I think, you know, those, the price of those things is, is really heavily dictated by the amount of money that's in the system. And I think, I think if you want to, if you want to preserve your purchasing power in that [00:43:00] category of things. Um, I, I think bonds are not going to do it for you, even at 5%.
It's just, it's not going to do it. So I think Bitcoin will keep up with that. I think it'll actually, I do think that the price of Bitcoin is going to, you know, it'll, it'll. Outperform the price of, uh, the price of New York condos or the price of, uh, Malibu real estate or Paris apartments or whatever, you know, so, or, or even, you know, premium healthcare or hotels in Aspen, Colorado.
So I think Bitcoin is, it's the only one of the only ways that you're going to be able to edge against that kind of inflation. And as people, as the interest rates start going down, everybody's going to start going, wait a second, how I'm rich. [00:44:00] Okay. So they're going to say, well, I, I'm rich or I'm wealthy, or I've got some assets, right?
I've got a couple extra million dollars and, uh, right now I could buy, you know, I could buy a condo and, and, uh, in Brooklyn for that, but I don't need that condo in Brooklyn today. I might want it in five years. What asset do I have that'll keep up with that purchasing power? And that's where I think people are going to go.
Well, I no longer trust bonds. I no longer trust. Uh, I may not trust the S& P 500 really, even for that, right? Um, because we all know that there's only seven stocks that have kind of been doing well, which is the, you know, the FAANG So, how do I, how do I hedge my
Uh, you know, I don't have [00:45:00] a great answer to that. You know, maybe somewhat gold, but, uh, but Bitcoin will probably do better, much better than gold because of the adoption. Um, you know, everybody, everybody who has ever wanted to have gold has gold. You know, I bought gold, physical gold.
Uh, so, you know, I don't need more gold, um, but Bitcoin, uh, There's almost all my Wall Street friends from my era do not own any Bitcoin and just, they, they have not, they don't want to, they don't want to spend the time to understand it. They don't, but if it's just buy a little bit of the ETF, they can do that.
Um, so
Marty: what do you think is driving that lack of ambition to understand it? They've already made it.
Fred: I just think, look, it's, it's, it's a combination of, um, it's a combination. Well, there's [00:46:00] people somewhat lazy, right? But it's also, let me give you a couple, without saying their last names or anything, I'll give you a couple actual kind of case studies, right, of people I've tried to red pill, orange pill, right?
So, case study number one is my friend Philippe, okay? French guy, um, worked with him at Salomon Brothers, he went on to UBS. Super intelligent guy, um, you know, high net worth guy, been following Bitcoin. I've been trying to get him interested in Bitcoin and, you know, the first thing is like, where do I buy it, Fred?
And like, how do I hold it? What happens if I want to sell it? You know, all these questions, you know, he's analyzing them, but he can't bring himself to do it. You know, it just seems so foreign to him, you know, so that's, that's one case. The other [00:47:00] case is my friend Jim, right? And I, my friend Jim had a little bit of Bitcoin at one point, just doesn't understand the difference between cold wallets, hot wallets, custody.
He's a little older. So now he's, you know, he's, he's. He's getting confused, right? There's this actual confusion about Bitcoin, the asset, like, you know, what is it? Where is it? You know, if I own Bitcoin in cold, you know, on a cold storage, what, what is, where is the Bitcoin stored in that, in that device? Oh, it's not stored in that device.
So it's stored on multiple devices at the same time. What's multi sig, like it's too much for, for him. Right. Um, and then I'll take a third case. And the third case is actually my father and, uh, my father got into Bitcoin and, um, he got it into two places and he got [00:48:00] at a good time, actually. He got some in Gemini right and he got very worried because Gemini was pushing Gemini urn and so that you know that whole he avoided that but it you know, that was a narrow miss right and The sec and the second place he had some was on GBTC Which, you know, he, he bought at a, when GBTC was out trading at a premium, it ended up trading way down, you know, to a 45 percent discount.
Now it's trading at about a 10 percent discount. But, um, but overall I would say. You know, his experience as a owner of Bitcoin was, has not been great, right? From a financial guy, old, old school banking guy, a banker. My dad was a banker. And you know, he's not going to [00:49:00] hold keys, you know, like in, in a, in a, in a treasure or a ledger.
That's just zero chance that that happens. Um, but, uh. You know, even something like Gemini was, was a very bad experience for my father. Um, GBTC was a very bad experience. So, you know, now he's, he's, he's happy because Bitcoin's price has gone up, but, uh, you know, it's just, it's, it's not the experience of my generation kind of with Bitcoin is not good.
Generally, you know, um, and I'll tell you one last thing is I have another friend whose daughter, um, had a Coinbase account and I don't know how much she had in the Coinbase account, but the whole thing got drained by, um, somebody coming in and, uh, draining out [00:50:00] 1, 000 a day from the Coinbase account over, you know, A course of 100 days or something.
Right. So she lost like a hundred grand on Coinbase. Now I can't even imagine that happening on like, you know, any traditional brokerage account, but here it is happening on Coinbase. So, you know, and there are a lot of people I know who've had problems with Coinbase with 2FA, you know, and all these other things.
So, you know, these things just don't seem to happen with regular. With regular, uh, brokerage accounts, partly because you wire money and so on. You have to wire it to somebody it's the KYC aspects are much better understood, but you know, you wire money out of a Coinbase to account, you know, wire it. Sorry, if you.
Move Bitcoin out or any other crypto out of a coinbase account. That's it. It's done So I think you know for all these reasons, I think that [00:51:00] you know, it's it's generally been a very bad Impression for most people and because they've had a bad impression. They do not tell all their friends Yeah, I had such a great experience on Coinbase, right?
A great experience on, uh, you know, uh, on, uh, Gemini or something. So their, their experience is negative is all negative. And, uh, on top of that, you have another, uh, another group of people that they just said. This is all too complicated for me. I'm going to buy Coinbase for the stock. And of course that did badly, right?
So that's also negative. So I think, you know, basically we're looking at this incredible negative experience combined with that Bitcoin now is down 40 percent all top from its all time high. So I would say until Bitcoin is, has an ETF and until it's trading at its all time high, [00:52:00] I would say my generation is generally.
A pass now that completely changes once Bitcoin is again at an all time high. And again, the ETF is out so I can just buy the blessed ETF, you know, uh, has the word fidelity on it or has the word BlackRock on it now I can trust it. So, uh, yeah, that's, that's what I think. I think that that totally changes the psychology of, you know, everybody with substantial assets, moving money into Bitcoin.
So that makes sense. Yeah. It
Marty: makes a lot of sense. Um, even though
Fred: I just think it's, it's, it's so much bigger than you kind of think, you know what I mean? And, and. You know, we're not seeing, you know, we're seeing a little bit of a, you know, Bitcoin's moving up a little bit in anticipation, but I really don't think that the [00:53:00] people who own Bitcoin and the people who are about to buy it in these ETFs know each other.
They, they really don't, you know, it's sort of like, you know, the, the banker, you know, Uh, you know, with the top hat and, you know, going and talking to the baker, you know, to buy two separate worlds, right? Like, you know, the, the, the, the world of people with deployable assets that can buy this thing is just, there's so many more assets, there's so much more money.
is in the world of Crypto now. You know, if Crypto is done great, you know, well, made some money in crypto. I've had an amazing year personally in Crypto in Bitcoin, but, um, but you know, I, I, most people, if I go to a party and they say, Fred, what are you, what do you do? And I'm like, well, investor, you know, Bitcoin.
They're like, Oh, I'm sorry to hear that. [00:54:00] I'm really sorry to hear that, Fred. You know, like I, I'm in a member of this, this, uh, I'm a member of this, uh, This club in L. A., right, called the Jonathan Club. It's, you know, it's a premier club, you know. And literally somebody sat down to me the other day and was like, Fred, I just, you know, just want to give you a little bit of warning, you know.
You know, I'm, I'm concerned, you know. I'm concerned because Bitcoin, you know, is, you know. And this is, you know, because I'm a lawyer. I've been a lawyer for like 30 years. And, you know, this thing's going to get banned, you know. And I just want to, you know, I like you, Fred, I like you, you're a good guy, but you know, this Bitcoin thing you've been talking about, not, not really cool, you know, so that's, that's kind of where I sit, you know, now, I think once that ETF comes out and once, you know, he's got a little bit of it in his, in his 401k, you know, I think that we're having a different conversation.[00:55:00]
You know, so, and I think
Marty: you touched on something very important here too, which is in the grand scheme of things, the older generations have most of the wealth right now too. And so it's,
Fred: we have all the wealth, I mean, like, like, you know, and look, my mother's a very wealthy woman, right? So she's, you know, she's, and I can see.
And every month I listened and it's interesting because you know, she's, she's kind of from that generation and we're managed accounts, right? So we talked to her broker from Morgan Stanley, my brother and I talked to this broker and he's like, Hey, Dorothy, how's it going? And, uh, Uh, we're going to put a little bit of money into, you know, we're going to put a little bit, we've deployed a little bit of money to this emerging market fund, you know, you know, 2 percent of your portfolio.
And then I'm just like, well, I just would like to put a word in for the Bitcoin ETF when it comes out. And then. They're looking at me [00:56:00] like, Hmm, Bitcoin ETF. Yeah, I've heard that that's coming out. Right. And I said, as you go, who who's managing that? I said, BlackRock. Ooh. Okay. Well, that's good. Yeah. I said, were you comfortable with that name?
And they're like, we, we are very comfortable with the name BlackRock. Actually we have, you know, we're. We at Morgan Stanley, we, we quite like that name. Thank you. So my point is, uh, you know, that's That's the people giving advice to you know, an 80 year old woman you know in Boston and You know, she's she's looking for that kind of advice and you know, forget forget saving Forget saving your your crypto to a key.
That's just never gonna happen But, you know, even, even just getting into an ETF, that's already going to be, it's already going to be like, well, my neighbor [00:57:00] had this ETF and that's done well. So, you know, I think we're going to be, we're going to be in a new world where everybody in her Boston condo is going to start talking about the money that they made in the ETF.
And that's going to take a year to play out, right? And you know, that's, you know, the other thing is all these people eventually will die, right? And eventually in the next, that generation in the next 10 years, it's going to pass away. And, you know, what, what do their millennial children or Gen X children, what are they going to do with, you know, those portfolios when they talk to that same advisor, they're going to be like, Yeah, I think we might want to sell the Caterpillar stock and sell the, uh, Exxon Mobil and, uh, I think we'd, you know, it's time for us to buy the Fidelity.
Uh, BTC it's all, you know, [00:58:00] it's only trading at 200, 000, uh, per, per Bitcoin. So pretty good. Yeah, we'll, we'll buy that. So, so that's, that's what I expect to happen. So I really, really think this is not a, you know, I don't really have a super short term perspective, but I have a, you know, a medium term perspective or.
You know, two year, two to four year perspective. And I just think that in a two to four year perspective, you're going to have this entire generation of new millennial inheritors, as well as even the older generation of people who, you know, finally can buy this stuff. And it's now got this, uh, it's got this, uh, this era of, uh, acceptability.
Right. And so it's like, it's an acceptable asset now. That's just going to change everything. And. You know, this is all new money coming into Bitcoin. So all, all, all, all the people like me and you who have owned it [00:59:00] prior and who, who, who love it and love the ecosystem and lightning and everything else.
We're still there, you know, we're not selling. So this is all new money coming in. And I think that new money is, is what's going to, that's, what's going to take us 10 X from here. You know, and let's not even like worry about beyond that. Like that's the only thing that matters to me. Is can we get a 10 X from here?
And the answer is, I think we can. And, uh, you know, can we play it? No, we have zero ability to time this thing. Uh, you know, but it's coming pretty quick, you know? And so I, I, because the timeline is happening with predictability. I think, you know, I think the better way to play this is to just get in, forget about it, try, try to take a chill pill and relax, try not to worry about.[01:00:00]
The blips and the panic attacks and the wicks down and everything, let's not worry about it. And, um, you know, get, get to as close of your maximum exposure as you can pretty quick. That that's what I would say. Uh, and if you're thinking about buying a house or something, I would delay that decision a couple of years because I think that Bitcoin is going to be a lot less.
I think you could get that. You could get, uh, you know, I have a friend who's thinking about buying an apartment in Paris. And she, she recently just said, yeah, you know, I think I'm going to buy Bitcoin instead and then buy the apartment in Paris two years from now. And I'll get a much bigger apartment.
And I'm like, yeah, but you know, you have to buy the Bitcoin now because. Buying the Bitcoin a year from now may not get you a much larger apartment in Paris. You kinda gotta get the Bitcoin. You gotta make the, [01:01:00] you gotta make the decision, you know, to go to the gym. You gotta, you don't lose weight if you don't actually go into the gym and work out, so.
You know, this is a case of, you can talk about it all you want, but if you don't own it, well, you know, you're just talking about it. So, yeah, that's kind of my view is like, you got to be in the field, you know, you got to take this, you know, like days like yesterday and today. Right. Or today, really, you know, where the, you know, the market gaps down and nobody knows why, right.
And people are saying one guy sold one and a half billion dollars in Bitcoin. But, you know, I don't know anybody who predicted something like today or really even understand. I don't know, but that's just, that's Bitcoin. So, you know, you, but you can't time it. You can't analyze it and analysis will get you nowhere.
So, uh, I think, uh, I think you just got to get [01:02:00] involved and you, you got to get involved and you got to fashion, you know, somebody was saying, uh, Yeah. It's a rocket ship to the moon, but the other guy goes, fasten your seatbelts, which I think, I think that's, that's accurate, man. And it's like, this is going to be a bumpy road, but it's going to be, it's, it could potentially be the best, one of the best investments, you know, investment times to invest that I've seen period, you know.
But it's going to be, you know, you, you got to have, you got to have conviction. You got to have, but there really is no, there's no plan B here. It's just like you jump in, you're going to get out, get out in two years. You know, put your, your time. The only thing you're going to do is when, when I get out, that's it.
But it's not, I'm not going to trade this. You have to sort of convince yourself. I will not trade this. I will not trade this. Yeah. I will not try to find the, the, the bottom. I will not try to get in and out. [01:03:00] Bad idea.
Marty: That's the other thing, too. There's only 21 million of these things. And that'll be the psychological factor on the back end of the cycle.
If we do 10x, it's like, all right, I could sell it now. It doesn't run. I have to buy that Bitcoin back eventually. What is the, uh, the appropriate way?
Fred: I think it all depends on the person, right? So I think it's sort of like. Where you are in life. Right. So, you know, the question is, are you at the point where, you know, 10 X is going to give you your ultimate number or not?
Right. So if you're a college kid and you got, you know, let's say you got 5, 000 in Bitcoin, well, 10 X is great. You got 50 grand, you know, like great. You know, that's, that's probably not enough, right. You know, it's not, it's not going to buy you 50 grand. It's not going to buy you an apartment, you know. So, you know, that's, that's, that doesn't matter.
Right. If you, [01:04:00] uh, you know, if you got 10 million in Bitcoin and at 10 X's, you got a hundred million dollars. Well, maybe that's enough, you know, it depends on the individual, right. But maybe that's really all you need. And then you're gonna say, well, at that point, I may take 50 million and put that aside and buy an Island with that.
And you know, whatever, whatever, whatever, whatever you want to do in your life, you know, uh, But so I think it depends on on your your your amount right and where you are in life Again, if you're if you're young you get your entire life in front of you Um, why sell it at all? You know, it's great. You know, it's like you might be, you might get a 20 year run on Bitcoin.
Fantastic. Right. If you're, you know, if you're 70 years old, yeah. I mean, just take the money, diversify it and, and, and, and, and don't get out completely, just sell some, you know, but that's what I think, you know, I think we are, [01:05:00] I just think the risk return is going to be different. Let's just suppose Bitcoin is at 500, 000.
And what, how would I look at it? I would look at it. I would say, okay, okay. It's that 10 trillion asset. Now it's at the same market cap of gold, right? Could it go to two times? Yeah, I could see it two, three times the price of gold, but you know, we're kind of getting into like a lot of things have to happen, you know what I mean?
Uh, you know if the government start, you know, Really retaliating at that point, you know, that could that could impact my position, you know Um, so, you know, I, I definitely think it, it has as a, as a risk return, it's, it's a little, you know, I, the next 10 X, I think it might be a little bit more difficult to see, you know, at that point, then [01:06:00] where I see now, I see this, this initial 10 X from here.
Is amazing because it's like finally going to go on sale at every store in America, right? It's like Bitcoin is going on sale at every brokerage in America. I asked him, that's a big deal right now. This is the IPO. And it's unique because
Marty: it's like the first time retails had this much runway to front run something like this
Fred: happening.
Well, retail. Yeah. But I mean, and yet people aren't really doing it, you know, because I think. We're still, you know, I keep on forgetting, but look, we're still, uh, FTX. That was when, uh, 12 months ago, right? Yeah, it was like 12 months ago, Sam Bankman freed and he's in a jail right now. Right. So, you know, that's still weighing on people.
I think, you know, uh, you know, Doquan, Sam Bankman freed Celsius. I mean, [01:07:00] this was not that long ago. So I think, you know, front running it. Yeah. I mean, some people are just, you know, they're, they're still in shell shock from that whole process. So I think, I don't think people are really in the front running mode.
I think people are still, still, there's still this shell shock kind of like. Are we really back? Is it really a bull market? Is it really a bull market? I don't know, you know, like, you know, it doesn't, it doesn't, even though Bitcoin's up 130 percent year to date, it doesn't feel like a bull market, you know?
Because, because that pain was so insane on the way down. Um, so I think it's going to take, it will take an ETF. It will take us hitting that all time high. I do think we're going to get to that all time high shortly after the [01:08:00] ETF. Uh, and I think that psychologically will totally change the, um, it'll change everything.
And, and then you're going to get the psychology. Of the ETF, uh, the, you're going to get the psychology of the new, of the ETF buyer. Where all of a sudden they're up, right? So the people who bought in, in, say, February, right? When the ETF goes live. In June, they're gonna be up 20%, you know? So now, it'll be like, Oh, I got in early, I got in in February 2024 in Bitcoin.
Wow, you know, back when it was only 50, 000. Wow, amazing, you know? Now it's, uh, now it's trading at 80, 000. I should have got it in in February. Oh my god. So, so I definitely think that's the case. And I think those guys are not front running it because First of all, if they buy, even if, [01:09:00] you know, for the same reasons that we talked about, they're not, they're not going to do self custody and stuff.
They could do Coinbase. That's one possibility. But even if they do, they can't roll that Coinbase money into an ETF, which is what they really want. Right? It's not possible to roll it in. What you were going to do. Let's say you bought, let's say ETF goes live and it's 50, 000 and now, uh, two days, three months later, it's at 80, 000.
Guess what? Okay, great. Good news is you made 000, okay? So you got a 60 percent gain. Bad news is it's all ordinary income, right? So you pay half of that in tax right off the bat to the government, right? Uh, you know, I mean, not that great. And then now you're, you're rolling it into the ETF. So you have this huge tax bill and, you know, in 2024 and, [01:10:00] um, and you have to fund that where you're going to get the funding because now you're rolling it into the ETF, you know, you're going to either, you're going to just, you're going to have to sell half of it just to pay the tax, right?
And so I think, I think a lot of people are going to be more into, especially if people who want to just put it into their, as a passive, uh, asset allocation kind of thing. They're just going to wait for the ETF. They're not going to try to front run it. They're not going to try to buy something different.
Actual Bitcoin on Coinbase, you could say it's not even actual Bitcoin, but Coinbase Bitcoin, you're not going to be doing that, uh, two months before the ETF. I don't see that happening. So. I don't think the ETF is front run and certainly not from the point of view of like the sheer amount of money that's out there that's gonna probably go into the CTF.
I mean, we're talking, I would say on the low end, [01:11:00] 30 billion on the high end, 200 billion or 300 billion, uh, you know, how much money has front run this thing so far? I don't know, a billion, maybe, you know, so, you know, it's, it's, it's, it's inconsequential, I would say. Relative size of money that's coming into this market in consequential does not make a difference.
Um, so
Marty: that's a good point. And maybe the last point we could touch on or something. I have no idea how it will play out, but do you foresee a scenario in which the ETF launches massively successful here in the U S and then you have financial hubs and other parts of the world, Southeast Asia, Middle East, like we want some of that action.
And then they begin spinning up similar products, opening up the floodgates in their parts of the world. Or is that not likely?
Fred: They can. Right. But I mean, look, [01:12:00] that world is international, right? So So even if you're, if you're in Hong Kong or Singapore, you'll be able to buy the BlackRock ETF, right? So, uh, you know, I, I do think they might build some of their own products, but I don't think, I mean, we got, we have 13 ETFs that are being applied.
Do we need 20? You probably 13 already. There's going to be the competition among those ETFs is going to be intense, right? So I don't think we need more Bitcoin ETFs really, uh, what I do think you're going to see is Bitcoin and this may be negative too, right? But you're going to see some derivative action on the Bitcoin ETFs, right?
You know, you're going to see, you're going to see calls, you know, can you imagine? You can buy calls on MSDR right now, right? Now, you're going to be able to buy calls on Bitcoin ETFs, right? So once things, these things start getting launched. The real DGENs, right, the, you know, the [01:13:00] 25 year old version of me on wall street is going to be like, you know, buying some calls on, uh, uh, you know, super out of the money calls on Bitcoin ETF, right?
That's what, you know, so, so, and that could, that could fuel even more, you know, people are saying, well, they're going to make it short at like the gold market. Uh, maybe, but, but I do think that, you know, I think that this, this ETF. Um, you know, one of the things that's going to happen, I don't know if people really have realized this, but BlackRock is probably going to own, it's probably going to end up owning the second, it'll be the second largest owner of Bitcoin beyond behind Satoshi.
You think so? I I'm, it might even exceed Satoshi's, it might even exceed Satoshi's stash. Right. [01:14:00] It's like, just think through what that means, right? It means that Bitcoin is going to be an asset that is owned by BlackRock. Okay. I mean, they own six, they manage 6 trillion in ETFs. Okay. Uh, Michael Saylor is the, I don't know, the fifth largest.
He has one and a half billion. They're going to exceed Michael Saylor on day one. On day one, BlackRock will have more Bitcoin than Michael Saylor. On day one Okay By the end of the year, they will be 10 michael sailors Okay so so just think through what that means like you're gonna have the The institutionalization of this asset is coming in 2024, right?
It is going to be an institutionalized asset in 2024 and uh You [01:15:00] know and it and and and eth too by the way, you know once once they finally approve that And that, that's going to have all kinds of consequences because, you know, in ETH, you own more, you have more voting power, right? You can stake, right?
That means, but basically BlackRock is going to control all the decisions in ETH, right? Which is a bit polite. I mean, literally think about it. They, they will, you know, they're going to control the validators like, okay, right. They're all controlled by BlackRock, done. It's called BlackRock coin now, right?
Yeah. No, they're not. They don't. They won't come. And by the way, they also owned a massive amount of miners right now, right? They're the second largest or the largest or second largest shareholder on most miners marathon, riot. Hot, right? Iris, all those guys. Iris, of [01:16:00] course, right? So, you know BlackRock is gonna be It's gonna be the numero uno player in Bitcoin whether we like it or not.
That is what's happening and They have the biggest marketing arm of any of any entity in the world, right? So these guys, these guys can, uh, these guys can market the shit out of Bitcoin. You know, I mean, just imagine everything that swan Bitcoin's done and they've done a pretty good job right now.
Multiply that by 100, 100, they have 100 times the marketing budget of swan Bitcoin, you know, the GBTC stuff. It's going to be 10 X that it's going to be like, you know, and it's going to be subtle. It's going to be, you know, it's going to be at these, you know, it's not going to
Marty: be a dump gold campaign. What?
It's not going to be a dump gold [01:17:00] campaign.
Fred: Yeah, like, but much better. Like, it, it won't be just like this stupid retail dump gold shit, but, I mean, it's gonna be a private dinner, you know, with Larry Fink and, you know, and just, you know, walking around to his, the rich people in Hollywood, or the rich people in, you know, Bellevue, Washington, you know, and just like, let me, we're, we're gonna have a little lunch, dinner, let's uh, Okay, uh, Jeff, uh, Jeff Bezos, uh, I'd like to put in an order, would you, is one billion or two good for you, you know, I mean, that's literally what it's going to be, and Jeff's will be like, I'm kind of feeling like three would be a good number because, you know, I mean, that sailor guy has got, you know, he's got three.
So actually five, make it five, make it five to give me five. Yeah, that's what we're going to, right. You know, and you know, once these billionaires are, can sailor, he went through hell to get his [01:18:00] stuff, but once these guys can just click a finger and buy it and they've got, you know, black rock sales team coming to them and having this nice private dinner.
You know the, yeah, I know this world. I mean, you know, I know I, I know this world and I, I know how this stuff works and, um, the institutions are coming. It sounds the institutions are coming and the ultra rich are coming. Right? The ultra rich are going to, this is gonna be viewed if you're a, if you're a mega billionaire.
And, you know, Bernard Arnault, does he own any Bitcoin? Probably not. Does Francois Pinault own any Bitcoin? I know Francois Pinault, I've met him a couple of times. I'm pretty sure he does not own any Bitcoin, okay? He has a net worth of 40, 50 billion. But, you know, does he own any Bitcoin? No. You [01:19:00] know, like, So, I think, I think this stuff's going to, you know, I think it's going to really You know, once they could, they can sit there and go, yeah.
Okay. Larry, you're telling me, Larry, this is good. I'm in done, you know? So that's, that's the way these ultra rich people are going to play it. And they all go to the same. They all live more or less in the same areas, you know, they all go to the same parties. And so, you know, once, once one of them has decided that they're going to do it with Blackrock, all of them will, and it's just, it'll just catch on like wildfire.
So that's what I think is going to happen. I think we're going to see this ultra rich kind of, um, stuff. And then, and then lower below it, just the high net worth worth, you know. People, you know, with the, you know, managed accounts, uh, Morgan Stanley and Goldman [01:20:00] Sachs and so on. They're going to get pitched this stuff.
And then Goldman's going to come out with their own product, right? That's how many, I know it like we've got the Goldman Bitcoin opportunity fund where we're going to take an allocation to the, uh, to the, uh, ETF. And then we're going to sell some calls on it to generate some additional yields. You know, I, this is, if I was a goal, if I was at Solomon or Goldman right now, that's what I'd be doing.
I'd be coming up with the enhanced Bitcoin Goldman enhanced Bitcoin fund. Right. Yeah. The higher yield. And I would say, you know, it's better than Bitcoin because you know what we've done, we're selling these calls and we're going to make 10 percent a year. We're going to give you Bitcoin plus 10%. How does that sound to you?
And then we're going to buy some puts. So we have downside protection, you know, like, you know, well, that, uh, that
Marty: begs the question. Are these, is Wall Street going to learn the many lessons that a lot of the crypto DGNs [01:21:00] have learned, like could this take under some Wall Street firms that get overextended on these types of strategies?
Who
Fred: knows? Who knows. But I just think that I think we're headed into a very different world, right? Because you know, Everybody talks about all this money that's out there, but I can tell you it is out there, you know, it really is out there and, you know, these, as the government prints money, that money kind of ends up in these kind of asset pools, right?
And that's where it ends up. It doesn't really end up in inflation. Right. Because it's just, it's going into other assets and, and those other assets now can move around and they, that money kind of like it's, it's, it's, it's, it's, it can move into different buckets and this bucket now becomes a movable bucket.
You know, it's, it's a bucket where that money can go in. And so. [01:22:00] Once this stuff really hits, we got a couple more months, but we don't have a couple more years because this stuff's going to start, this will totally change the game in 2024. And, uh, that's why, and that's part of the reason why I want to be in the ETF too, you know, because what I'd like to do is I do think we got a 10 X right in front of us.
So what I'd like to do is have that 10 X in my ETF. Right. So ideally, you know, I will take some pain on, on some taxes soon. Right. And, uh, and I would, I will take some pain. I'm not going to move everything to the ETF, but I will, I will do some, because I do think that this is going to be when it does come time to sell.
I don't know when, you know, for me, that might be 10 years from now, it might be five years from now, you know, [01:23:00] whenever it is. I want to be able to be, just click a button and sell my ETF. Right? And then, then if I want to bring it into finance, great. Mr. Kruger, uh, we'd like to, uh, send, uh, 50 million. Where should we wire the money to?
Oh yeah, here's my account, right? You know, no problem, right? So, uh, much different than, Oh, I got 50 million dollars on Coinbase. I'd like to wire it out. Uh, excuse me, sir. Uh, you just breached protocol level 3. We have, uh, the SEC on line 2. And, uh, you know, like, that's the other thing. Is just, do you want to be somewhat outside the system?
Or do you want to be in the system? Right? I'd rather be in the system. I'm, I'm, I'm more kind of a You know, if I can, if I can be in the system, that's great, right? Because I don't know what Elizabeth Warren and these kind of people are going to do. You know, they, they're threatening this, that they're threatening that.
Um, I [01:24:00] don't think they're going to threaten holders of the Bitcoin ETF. I, I just don't, you know what I mean? So, I feel like I'm, I'm very happy holding my Bitcoin ETF. You know, I'll, I'll pay some tax, get out, pay, get into my Bitcoin ETF and it's just, it's so much simpler. Um, and so I think the new guys are never even going to think about these other assets.
So, you know, I mean, there's some will, but I think most people are going to just, it's going to be so much simpler just to buy that ETF and, you know, the thing is going to track pretty well. There may be, you know, you can argue that there's some fees, but it's immaterial, you know, whatever 1 percent in fees for an asset that goes up, you know, anywhere from, you know, 50 percent plus or minus 40%, I, you know, I don't care, you know, it's a 1 percent fees does not bother me.
So yeah, [01:25:00] the, uh, I think we're on the right track here
Marty: or what? I mean, I think there's definitely going to be a mountain of money coming in. Due to the reasons that you laid out, it's just gonna be so simple. But I do worry that, uh, ETF will be pointed at by Elizabeth Warren and say, this is the only way you can get Bitcoin.
That's a battle for another day. Um,
Fred: but also that's another thing is yeah, the, you know, fighting the Elizabeth Warrens, uh, first of all, I don't even know if she's gonna be in power, you know, two years from now. Right. But like, uh, you know, hopefully not, but you know what I mean. Uh, I, I, I think that, um. Um, you know, just from a pure, like legitimacy point of view, you know, I think, I think that's, that's probably your safest longterm place to be as a, as a Bitcoiner is, or at least have some, some percentage of your net worth in [01:26:00] that, in that ETF, you know, because, you know, you may lose as, as, as good as you are, you think you are, you know, safeguarding your keys, You may lose some of them, right?
But you're not going to lose your ETF. You're not going to lose your ETF. Right. So I'd say just as a, almost as a security thing, I think having BlackRock custody, some percentage of your assets, your crypto assets, I think is a probably a good, it's probably a good idea. You know, they're going to do a, they will do a better job than me of custody.
For sure. Yeah. Right.
Marty: And that's why I'm bullish on the trend of multi institution, multi sig. With the auditable address where, yes, you don't hold any keys, but it's distributed against across Unchained, Kingdom Trust, BACT,
Fred: whatever it may be. Yeah. Look, I mean, there's good stuff out there, but like, especially as I get older, I'm like, [01:27:00] you know, I, I actually test my memory.
Now I have like go through every year. Now I test my memories to figure out like when I was 25, I was a very smart young kid. I got to tell you. You know, uh, you know, my, but I can't, and I look at my PhD thesis right now. I don't understand. It's like a different person who wrote that thing. You know what I mean?
I do not understand a word of it, you know, and, uh, so, you know, I, I, you have to recognize that, you know, we're all mortal and we all, we all degenerate, right? Like our brains can't, you can't solve the same problem at 45 that you can at 25 or at 65 or at 85, you know? You know, I think that, um, it's not terrible to have.
A custodian ETF, it's not, it's not the end of the world having Sam Beckman freed as your custodian is the end of the world as it turns out. But, uh, you know, having BlackRock [01:28:00] probably okay. You know, Fidelity, they've been in business a long time. I think they're going to do a pretty good job. So, you know, I, I trust them.
I might even spread it among two, just to be, you know, to be double sure. Right. Uh, But, uh, I think that, uh, I think this custody thing is like, it, it, everybody was always talking about custody as being a play. If you go back to 2018, right? Novogratz was like, what's the biggest problem? Custody custody is going to be the biggest problem.
Well, actually the ETF solves custody, right? It solves the custody problem for ordinary people because you don't need to have somebody to custody. You ETF, you hold the ETF. It solves custody. It solves inheritance. Um, It's going to be massively liquid, right? So if you want to get in and out, it's going to be easy, right?
It's going to be as liquid as Bitcoin itself. So maybe not [01:29:00] quite, but it's going to be pretty damn liquid, right? Yeah. Um, so it's going to have all the attributes you love, uh, I think. And, um, so I'm, I'm actually just selfishly interested in, in, in having it for some of my other assets that, you know, that I, That I still have some, you know, stock and, and, uh, fixed income stuff, you know, I'll move, I'll move more into Bitcoin, you know, um, and then, you know, that's, that's probably what I will do is probably just add to my Bitcoin exposure and then sort of slowly sell off my, uh, you know, my, the, the Bitcoin that I have in, uh, multi sig, you know, um, non custodial, you know, stuff.
And this, yeah. And as I get really old, I'll end up with just a bunch of ETFs. That I can [01:30:00] easily give away to my wife and kids, so. Yeah, no, I think
Marty: you're a very interesting archetype of people that probably don't come on this show most often, but if we're being honest with ourselves, people like you exist out there and these are,
Fred: well, I'm, I'm, I'm the majority, you know, like I represent, this is what I'm saying.
Like we're two separate worlds, like my type, that's, there's a lot of people like me, you know what I mean? A lot. I really. I just, we're not on your show. We're not on, you know, these Bitcoiner shows was honestly, we, you know, I'm, I'm the rare kind of intersection of these things, you know, but I think in a year from now, you're going to get a lot of people on CNBC who are going to be like talking about the, their ETF positions and so on, you know.
And, and that's it. It's just going to be another, another thing you invest in, you know what I mean? So, [01:31:00] that's why it's, it's interesting now, because, you know, we, we see this stuff. We have held stuff now for all these years, right? We've tried all the different ways of holding it, you know? Including, you know, I, I even had some Bitcoin at Celsius back in the day, right?
Um, fortunately I got out. But, um, you know, I think, uh, I think, uh, you know, we're the kind of people, we're the dying breed, uh, you know, of people who, who self custody and, you know, Uh, worry so much about this, you know, you're not your keys, not your Bitcoin. I think most, I think the majority of Bitcoin is going to be in places like BlackRock.
That's, I actually think that will be the majority. It might be the BlackRock, a BlackRock fund that's, you know, sitting in Qatar, you know, but, uh. [01:32:00] Or Saudi Arabia or something, but I think they're going to own the majority of Bitcoin over the years. You know, once we get into the, you know, past the next decade, I think it's going to be heavily institutionalized asset, which, which will then solve to some extent, the, um, the block space problem, because, you know, people who are just using it as a store of value, we'll just use it, they'll just.
Own shares in ETFs, right? People who want to use it as, um, you know, for transactions. That's going to be a, that'll be kind of a premium use case, right? And you're going to have to pay up for that. So, you know, you want to, you want to trade Bitcoin, um, the main, you know, trade it, holding your own keys and your own wallet.
Great. You can do it, but the average cost now is a hundred [01:33:00] dollars. Right. Unless they increase block size, right, which might not be a bad idea at some point, not a good idea now, but it might be a good idea in two, three years to try to increase block size. So does that make sense? Yeah, that makes
Marty: sense on the block size thing.
Like I think definitely more creative things that we
Fred: could do. I mean, I trust that the Bitcoin, I trust that the Bitcoin devs are going to find a path, right? Because we, we did it with SegWit, right? Um, you know, it's, you know, I am interested in this ordinals thing independently, just like almost from a purely intellectual thing.
But, you know, I, I don't think, I think at the end of the day, block space is rare. It's cheap. I mean, it's, it's, it's expensive. Uh, it, it will probably be more expensive and it'll stay expensive for a while. It, this is not a problem with Bitcoin. It's, [01:34:00] it's, it's just a fact of the fact of what Bitcoin is. And, uh, if it becomes too much of a problem, it'll, it'll get solved.
Um, and I, I'm not, I'm not too concerned about it. Neither am I.
Marty: Pressure. Creates diamonds when it's like Segwit was a perfect example of Yes, Segwit
Fred: was a great solution for this thing, you know, and, you know, for the time, right? It's not that, not a solution for all time, but it's a, it was a good solution, right?
You know, and look, Taproot was very useful for lightning, right? So, you know, um, you know, it had this sort of side effect of ordinals, but, you know, it was very, very useful for lightning and light, lightning has. Yeah, it's, it may not be the ultimate solution, but it's a solution, but there's other solutions to, you know, there's, you know, as you know, so like, you know, [01:35:00] there are other ways around, you know, Bitcoin as a payment system, as a transaction system.
Uh, and. You know, just to keep the subject on, to finish off on the ETF though, I do think that none of those things affects Bitcoin's core value or the, the, um, the value proposition that we have today in front of us with this ETF. So, you know, I'd like to kind of end on an up note and say that I'm, you know, I remain, you know, despite yesterday or today's, uh, move, I remain super, super bullish.
And, uh, you know, I think it's going to be, it may be a little bit of a bumpy ride, but that's fine. You know, you, you don't go from, you don't go up, uh, you know, 10, 000 X in a straight line, you know, it's just not going to happen. We're not going to go up 10 X in a [01:36:00] straight line either. You know, it's not happening.
No,
Marty: there's going to be a lot of bumps in the road. So place your bets now. Mentally prepare for the bumps. Yeah.
Fred: Fred is You gotta be mentally prepared. You got, you know, you got, You gotta just love the value proposition. You gotta love the, the finite amount of Bitcoin. And, and just kind of the, the money printer go brr.
I, I feel that is, that argument is so strong, right? And, you know, whether it's Lynn Alden or You know, all the, all the guys that, that, you know, the, that we follow and love. Right. They've really kind of, um, I think they've really made a great case for why the 20th century has been the era of money printing.
Right. It's just, it's just, it's been like, and it's really almost nonpartisan, right? It's like, you know, the Democrats, Republicans, doesn't matter. Right. That [01:37:00] they're all, everybody's affected by it. Everybody's, everybody's doing it. Europe's doing it, you know, America's doing it, China's doing it, Japan, everybody's money printing.
And, uh, the only hope that we have of fighting it, you know, is to own, you know, rare digital goods, rare physical goods like real estate or gold or rare digital goods. And really, the only one that's sufficiently rare, in my opinion, And it's sufficiently rare that people believe in it to the extent. That is, you know, a world asset is Bitcoin.
Everything else is just not like, I just do not see a scenario where Solana becomes the world currency. I just, I cannot imagine. I mean, I don't [01:38:00] know. It may be very fast or whatever, but like, it's, it's like, how can you have a world currency where a criminal loans 10 percent of it? You know what I mean?
It's like, no. You know, like it, or 20%, I don't even know what Sam Bagman Free does, you know, but like, you can't, the origin of Bitcoin is, you know, people say it's a religion. I think that's a good thing. You know, I think to me, it's sort of like, it better be a religion because you're, you're actually betting like, you know, a huge percentage of your net worth on this thing, you know, so.
Like, I think the religious aspects are like really accurate. Like, okay, how, what was the origin story of it? How did it happen? You know, you know, what's its history, you know, like, so all that to me is why I'm a Bitcoiner because I believe in this asset, you know, and I don't believe. And while I own a little bit of some other crypto, I [01:39:00] don't, I don't think any of them is going to be digital money.
You know what I mean? It's just, none of them have, have no shot, zero of being digital money for the world. And, uh, and Bitcoin is that. To me, Bitcoin is, it's going to be the world's digital money. You know, that, that's what it's, it's intended to be. That's what it's going to be. If you can wait it out, if you're young, oh man, you've got a great, if you can hold this thing for 20, 30 years, you're going to be in great shape.
You know what I mean? You know, I probably still have 20, 30 years. And I, I think it's a great longterm bet. It's fantastic. And just, you know, and so, you know, I just would say to anybody, just get as much as you can now, never sell until you really have to, until you really, you know, you, something you really want.
But I think it, I think this thing has, you know, it, it really has the potential to be that, that, [01:40:00] you know. And, and it's going to be a winner take all that there is no, you know, sailor, there is no second best. There is some second best. Ethereum is the second best. It is the second best, you know, but Ethereum is not digital money.
It's not like, you know, there's not even a finite amount of the thing, you know, it's like, so it doesn't matter. Like it could be a security. I don't, I don't know, but, but I don't care. I'm not even going to try to find it. I don't want. Like doesn't matter to me. I don't think it's useful to try to fight these wars with other cryptos or other things.
It doesn't matter The only thing that matters is did you get your Bitcoin? Are you holding your Bitcoin and you know, are you gonna hold it safely for the long term? And I think the ETF is gonna be that I think it's gonna be a safe way to hold Bitcoin for the long term So, you know, that's what I would say to do two [01:41:00] months Likely
Marty: approval next month.
Fred: 45 think next month we'll get the approval. I mean, hopefully, right? Unless, unless Gary Gensler's got some kind of, uh, you know, torpedo ready to kind of just blow us all up. But no, I, I think March, I mean January 8th, you know, 29 days from today. I think January 8th is we're going to have the ETF approval.
Jan 8th. And then you have
Marty: 45 days until it starts trading after
Fred: that, correct? Well, we don't know. Do you know? I have not seen any definitive anything on that. That's what I've heard. I do not know for sure. Yeah, but some of these other ETFs have started trading in the week. Really? Yeah, like these Bitcoin Futures ETFs, they've traded a week.
Not even, like they were announced on Friday, they started trading on Monday. Could be the case. But, but, but that, look. Jen and Jen, once they [01:42:00] announce that thing, okay, man, that's when the, you know, the checkered flag starts and the races are going right. That's it. So we're very close to the beginning of the, the, you know, the Indy 500 here, you know, we are very close gentlemen.
Start your engines. You know what I mean? Because that is like, is there going to be an ETF? Well, they just announced that there is going to be an ETF. So yeah, there was going to be an ETF. Okay, so Bitcoin is not a security? No, Bitcoin is not a security. Okay, so, well, in the prospectus it says that it still might be a, yeah, well they put that in to cover themselves, right?
But, we are a month away from that revelation, and then once that hits, these firms are just gonna like, okay, what PR campaign do we, what, what's the ad campaign? Great, let's put a billboard out on Times Square. Can you see that? I mean, I can just see it right now. Yeah. Larry Fink, [01:43:00] Bitcoin ETF, full Times Square, you know, multiple billboards on Times Square, you know.
Whole pages. You're going to see
Marty: Whole pages of advertisements and barons and I
Fred: mean, you're going to turn CNBC on, and it's going to be It'll be the Bitcoin ETF. They should change it to the Bitcoin ETF channel. Okay, because you're gonna have Joe Kernan You know You're gonna have
Tom Lee You know from fun strat and by the way, he is one of the main reasons I got into Bitcoin by the way Really? I'll just tell you. Yeah, so I was at this crypto event in the Bahamas, sorry Bermuda In 2019 and I was hanging out with him for four days or three days, right? And you know, there's like 40, 50 people at this event.
So I got to [01:44:00] know, I got to talk to him. I'm like, so Tom, what do you think? You know, like, and Bitcoin is at 5, 000 at the time. Right. And I was like, so what do you think? Yeah. 2019 depths of the, you know, is come, you know, come up from like 3, 500 was low. Right. Um, but it was like early 2019. Um, and I was like, well, where do you think it's going?
He's like, my price is 1 million and I'm like, it's at 5, 000. Right. And he's like, yeah, but it is the perfect asset for the millennial demographic and millennia and demographics drive investment decisions. He goes, that's the number one thing is, you know, the silent generation, they wanted gold. The Baby Boomers want S& P 500, Gen X want tech stocks, and Millennials, they're going to want crypto and Bitcoin.
So he goes, Bitcoin is very simple. That's it. It's all demographics. [01:45:00] You don't have to go, you don't have to look any beyond that. It's all demographics. They want, An asset that's truly digital, they want to control it themselves, they want to use a mobile phone to, uh, and no, no intermediary. And so, I think it's going to a million.
And, I was like, you know what? I think you're right. So, I bought some Bitcoin after that conference. I, I met him afterwards, I told him, I said, you know, Tom, you, you really made me a lot of money. Uh, because, uh. You know, it's like, you know, it's, it's kind of like one thing, like just hearing it on TV and then the other thing is hanging out with him and listening to this stuff, I was like, wow, that is a great argument.
You know, it makes a lot of sense. It makes a lot of sense, but it's kind of like, it's so simple, but the, the reality is it's all this stuff is all great investment decisions are real simple. There's like some [01:46:00] real simple thing that's based on, you know, 21 million simple, right? Totally decentralized, simple, you know, great.
Nothing else you need to know. That's it. And you know, I think the demographic thing, it's very simple, but I think that's, that is the key to this thing. And, um, and that's kind of where I think, I think we're going to get to this million dollar level. Inside of two cycles, right? I think this cycle, we may, we may end up in the 500, 000 kind of three, 300, 500, 000 kind of range.
Next cycle might be a million, might be 2 million. I don't know. But, you know, I think this cycle is, you know, this is gonna, this is the, this is the, we're just find ourselves at this amazing kind of cycle, right? Where we've, we've got the stuff's kind of ready for prime time now from a financialization of it.[01:47:00]
And, you know, we finally got this ETF over, you know, at the finish line level. And then people are saying, yeah, but it's overbought. No, what are you talking about, man? We've been waiting for this ETF for fucking for 10 years. Four years, excuse me. 10 years. The 10 years the Winkle vi, I mean 10, 10 years.
Really? Yeah. Like 20, I mean 14. Yeah. The winklevie, right? Remember they were gonna do one back in the day. Mm-Hmm. back. Think got next, right? And so, 10 years we've been waiting for this thing. So now we are at, we are finally there. And what do you prefer an ETF managed by the Winkle V. Or an ETF managed by BlackRock and Fidelity.
I'm going with BlackRock and Fidelity, man. You know, tell
Marty: me you don't want your ETF, uh, managed by a cover band because by the name,
Fred: their music is terrible. By the way, these guys, even their music honestly have the worst, they're, they're one of the worst, uh, [01:48:00] cover bands I've ever seen. So look, I think all this stuff's going to make Bitcoin much more legitimate.
And I think this is going to be the anti Sambach Munfried, right? We've seen the Sambach Munfriedization and, you know, Doquan and all this other stuff, right? But, now we're going to get the anti that, which is, it's legitimate, it's managed by pros, by adults, you can trust it. Um, you know, there'll be research reports, I mean, I used to get these Goldman Sachs research reports.
I, I mean, I'm, I'm just looking forward to looking at those things for Bitcoin, you know. Research report, Morgan Stanley, Q4, 2024. We're pleased that Bitcoin made a new high of 120, 000. Our analysts have been analyzing the, uh, the penetration, blah, blah, blah. You know, we think that, you know, so. I've seen this [01:49:00] thing play out with a couple of different industries in, in, in finance.
I saw it with gold, right? So I was involved in gold before the gold ETF, right? Gold ETF hit, I think it was 2003 and I might, it's from memory, right? But it was, you know, gold was about
200 when the gold ETF hit, right? Now it's at 2, 000, right? So, you know, it's gone up 10 X, uh, it took 20 years, but like that's gold too, right? And not in a period of inflation, right? So we have not had inflation from 2002 to now, I mean, last two years we did, but this has not been the seventies, right? This has been the era of low inflation and gold is 10 X.
Why? Part of that is because of that ETF, right? So I saw that ETF and you can just look back on how that ETF did. It did great, right? So I [01:50:00] saw it with gold and I also saw it with commodities, right? Like Um, Jim Rogers, you know, who did the investment biker book, great book to read. And, you know, talking about emerging market, you know, pioneer and emerging markets investing, you know, he co led the quantum fund with George Soros, you know, very, very smart guy, right?
And his thing is, well, we got all these markets of soybeans and all this other stuff. I'm going to make the Goldman Sachs commodity index, the Rogers commodity index, right? And all of a sudden, everybody on wall street could invest in the Goldman Sachs commodity index. Great. Well, I can get exposure to sugar and soybeans and everything you see in trading places frozen concentrated juice, pork bellies, all this stuff, you know, uh, and you know, I can get exposure to that price basket, right?
Well, guess [01:51:00] what? Now everybody owns a little bit of commodities, you know, like nobody in wall street invested in commodities. A third example of that is real estate. Now, when I was in Solomon, there was no such thing as reets didn't exist. Okay. Didn't exist. And Sam Zell, you know, who recently passed away, brilliant man.
Right. And he's, he's got a great book out. I forget the name of it. It was a great, great book on Sam Zell stuff. He created the equity office, uh, trust. And, uh, equity residential trust, right. And, uh, sold it to Blackstone, uh, 20 billion kind of sale. And, uh, you know, he basically created a first institutionalized product for real estate because, [01:52:00] you know, before Sam Zell, it was a bunch of people buying individual office buildings, right.
And it was considered sort of a dirty asset class. And after Samzell, they said, great, we're going to own office buildings in all the major metros. We're going to have them serviced by a, uh, you know, common company. Uh, we're going to have, you know, CBRE did a lot of that, right? And, um, we're going to, we're going to have these things, uh, appraised and vetted and everything else.
And all of a sudden now you have an institutionalized product that you can buy in one click. E. O. P. Right. Equity office. You want to buy residential instead? E. Q. R. By residential, right? Um, and so that later led to Voronado and all those other kind of reets. But the concept [01:53:00] was, let's create a product that institutions can participate in the product that's ready for institutions.
So Black Rock is They've built their entire business on making products like this for institutions. And we 100 percent know that these products made for institutions appeal to institutions, right? I mean, before Sam's Ell, there was no way that an average fund in Minnesota could take exposure to office, uh, properties in New York or in Chicago, right?
Where Sam's from. So. You know, I think we are now in this next phase, which is we got these digital assets and let's expand from Bitcoin to include everything in the digital. Let's even throw in NFTs for that matter, right? But all these digital assets are going to be institutionalized [01:54:00] and packaged in a way that they can be purchased.
Legitimately at low cost, with low transaction costs, low holding fees by institutions all over the world, right? And that's what's going to happen with crypto. It's the, it is the packaging of crypto, the packaging of Bitcoin into something that fits in the existing financial system. And, you know, you may not like it, but that's what's happening.
Um, and. You know, I think, I think the world we are going to be in three or four years from now, it's going to be very different. I mean, I love whatever Swan Bitcoin and everybody else is doing, right? I think all those things are really great and they definitely play it apart. But I think Swan's going to have a hard time selling people like me on [01:55:00] why they should use Swan Bitcoin instead of just putting their money in the ETF.
I think that's a losing fight, you know. Um, So we'll see, we'll see, uh, but, you know, I mean, there's certainly a role for Swan Bitcoin. They're, they're doing great. They just raised a lot of money and they're doing great. Um, but, uh, but I do think that the big story in all of this is the ETF, uh, it's the elephant in the room, you know, and everything else is just, you know.
Rabbits, you know, but the financialization of this thing is really going to be the big story. And I think it's going to be tremendously, tremendously successful. That's my, that, that would be my gut feel. We gotta do not underestimate the, do not underestimate the dark force, you know, Luke, you know, this is Darth Vader saying, come to the dark side.
You know, that's what it is.
Marty: Yeah, I think I, I mean, like I said earlier, it's [01:56:00] nothing, anybody who doesn't want to see this not in the world can do to prevent it. Like it's going to happen and it is, um, really insane to think about the amount of money that it can bring in to Bitcoin, what that can do for price.
Um, and there's perception.
Fred: It's going to be beautiful. It's going to be great for the price. It's going to be great for The reputation of Bitcoin right and it would be so good to have You know people in suits You know on CNBC talking about how excited they are about it Uh, as opposed to guys like you and me, I used to wear a suit, but you know what I mean?
You might have as well. But like, I'm just saying like you want, you want that guy on CNBC pounding the table and not pomp. Well, pomp does wear a suit, but you know what I mean? Yeah. But like that was the best we had. Right. Kind of at, at, you know, at the time. Right. [01:57:00] But you know, what you want is, I mean, Michael Saylor has done such a fantastic job.
Right. Like, you know, Yeah. Because he, he kind of straddles that public company, you know, he's well spoken, he doesn't, you know, he, he, he chooses his words very carefully, you know, he's, he, he's, he's believable, right? Um, but even more believable than Michael Saylor is, uh, you know, is traditional Wall Street analysts, you know, from Fidelity or from, you know.
Yeah. Li li, Lizanne Saunders, you know, from Bank of America. You know, that's, that's what we want, you know, we want those people talking about Bitcoin. Right. You know, and that's what we're gonna get. Right. So we're gonna get, we're gonna get a whole different world of people. And I for Well, I welcome it. You know, I'm, I'm like, I'm all for, go for it.
So come pump our bags. [01:58:00] Yeah. But anyways, that's, uh, that's kind of what I got. Um, it's been a, it's been a while, feel free to cut it up, whatever you want or not, whatever you want to do. We don't
Marty: cut anything up here, Fred. This is a fascinating discussion. Thank you.
Fred: But thanks a lot, Marty. And I, I'm going to definitely follow more of your stuff too.
Uh, it was great.
Marty: No, I appreciate it. I think, uh, I think this perspective is incredibly bullish number one, but two, it's important to be realistic about. What people, uh, at the institutional level are thinking about Bitcoin, how they're viewing it, particularly their exposure to it. So I appreciate you taking the time to do this and who knows, maybe we'll have to meet again.
Yeah. I want to do something maybe mid next year or this time next year when the ETF is, let's
Fred: see how we do in a year. Let's see how we do. All right. I'll talk to you later. Enjoy the rest of your
Marty: afternoon. Peace of love.
