ETH ETFs Begin Trading | Matt Hougan

The ETH ETFs have officially launched, but wen $ETH moon? We saw $1.1B in volume and $100M in inflows yesterday. Is that good? When will this factor into price? Matt Hougan, CIO of Bitwise joins Ryan and David midway through the show to go over the above and also how the ETH ETF launch went, predictions going forward, and much more. ------ 🍵MATCHA | NEW PRICING ENGINE https://go.0x.org/matcha-v2-pod ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🦄UNISWAP | BROWSER EXTENSION https://bankless.cc/uniswap ⚡️ FUEL | EARN FUEL POINTS https://bankless.cc/fuel 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle ⚖️ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum 🗣️TOKU | CRYPTO EMPLOYMENT https://bankless.cc/toku ------ TIMESTAMPS & RESOURCES 0:00 Intro 2:35 ETH ETF Launch https://x.com/EricBalchunas/status/1815489137484722333 https://x.com/JSeyff/status/1815422061365305494 https://x.com/NateGeraci/status/1815487451726499864 https://x.com/Ashcryptoreal/status/1815677145810649151 https://x.com/JSeyff/status/1815737082129650047 https://x.com/RadarHits/status/1815674577726406748 https://x.com/JSeyff/status/1815737643948286104 https://x.com/BitwiseInvest/status/1815486131376370002 https://x.com/BitwiseInvest/status/1815716188447482341 https://x.com/QuintenFrancois/status/1815624631115460662 https://x.com/BitwiseInvest/status/1815486261337182504 https://x.com/VitalikButerin/status/1815697566614655158 6:44 Matt Hougan Interview https://x.com/JSeyff/status/1815958023317205232 https://x.com/NateGeraci/status/1815885624467210263 https://x.com/JSeyff/status/1815958023317205232 33:02 Grayscale & Grayscale Minitrust: Wen Moon? https://x.com/JSeyff/status/1814347183522754773 https://x.com/Grayscale/status/1815688403381531021 https://x.com/NateGeraci/status/1815556927918600209 38:40 Hildobby Dune Board WIP https://dune.com/hildobby/eth-etfs 39:31 Bitcoin ETF Flows https://x.com/News_Of_Alpha/status/1815532026486776288 https://x.com/TrustlessState/status/1815713932453028059 41:16 Bullish Setup Going into the Rollup tomorrow https://x.com/TrustlessState/status/1815390176132186202 https://x.com/DeItaone/status/1815813380256719213 https://x.com/DavidFBailey/status/1815848521205178404 44:00 Closing & Disclaimers ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures ⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:04Ryan Sean Adams?

  Bankless Nation, the Ethereum ETFs are here. I was out yesterday, so David, I feel like I need to get fully up to speed. And there's a bunch of people listening who need to get up to speed on this absolutely historic event. Ethereum has never had an ETF. Now it does. There was 1.1 billion in volume on the first day of trading. That was yesterday at the time of recording. 100 million, over 100 million in inflows. My question to you, is that good? We gotta talk about this. And most importantly, when moon? When will all of this factor into price, David? It hasn't yet.

• 0:36David Hoffman?

  Well, last time we got an ETF, first, everything went down because of grayscale, and then it went back up. And I think one of the big questions is, is that going to be the same? Is that the same path that we're about to take? Or is it different? Because we've already taken that path, and now the future is always different than the past. We got Matt Hougan later in this episode to talk to you all about some of these questions and these answers. Before we get there, a message from our friends and sponsors over at Matcha. For all of you with vanilla ether on-chain in your custodial hardware wallets, Matcha is a place that I've been trading for a long time. Whenever I want to execute an on-chain trade, and they have just released their V2 of their order routing engine, new pricing engine that is multiplex and multi-hop, which are

• 1:18David Hoffman?

  some big words for making sure that it goes through the entire possible permutations of ways to order and structure your trade, chopping it into pieces, sending it through different liquidity pools, to make sure that you absolutely get the best price. And I'm pretty sure, Matcha, if you are trading anywhere between like 1,000 and multi-millions of dollars on-chain, Matcha will give you the best price because of this new optimization engine. I've been a longtime user of Matcha, and this is something that I think I personally hold as very dear to the space, which is, can we get on-chain price discovery? And it's innovations like Matcha's V2 that definitely allows for that to happen. If we get price discovery to happen on-chain, we can get out of the shadows of the sexes.

• 2:00David Hoffman?

  And Matcha's V2 is making that happen, making sure that you have the best pricing possible for your on-chain trades. You don't gotta go to a sex, you don't gotta go to BlackRock. You can just go to Matcha.

• 2:11Ryan Sean Adams?

  David, that is a great shill for an on-chain dex. Now, the rest of this episode, we're not talking about decentralization. We're talking about ETFs, the Ethereum ETF.

• 2:20David Hoffman?

  For all the people who haven't made it on-chain.

• 2:22Ryan Sean Adams?

  Yeah, look, I got some ETH in a retirement account. So, and there's people out there like that. And they want to buy more. That's allowed. Thank you, David. So, let's talk about the launch. This was the tweet that I saw first to launch things. This is from Eric Balchunas.

• 2:36David Hoffman?

  It's official. The spot ETH ETFs have been made effective by the SEC. The day is finally here after being gaslit and, and plot-twisted by the SEC for months. No, no, no, no, the Ether ETFs are here. James Safer put out this meme of the classic horse race with the nine Ether ETFs. ETH, ETH, E, E-Z, E-T, ETH, V, ETH, W, C-E, ETH, F, ETH, ETH, A, Q, ETH. All of the Ether spot ETFs that you can now get on the New York stock exchanges. We're also getting the website pages launches, because of course we were. Bitwise opens up their, their website to focus on their Ether ETF. BlackRock, it says, "Meet ETH-A," which is the BlackRock one.

• 3:21David Hoffman?

  BlackRock also drops this ETH ETF investor video.

• 3:25Ryan Sean Adams?

  Oh, wow.

• 3:26David Hoffman?

  Which, which is the first words. Remember when we had this big game of like, how will, how will TradFi pitch to their investors?

• 3:32Ryan Sean Adams?

  Hey, I do remember that. Don't you still owe me an NFT, David?

• 3:37David Hoffman?

  You know what? I'll mint it today, I promise. Okay, so now we can finally get settled. We have some material, some glimpse as to how BlackRock and other TradFi people are selling Ether, since we have this video. So, let's watch, let's watch for like the first like 45 seconds of this video, just to kind of hear how they sell it to TradFi investors.

• 3:54Ryan Sean Adams?

  Here it is, from BlackRock.

• 3:55Speaker 02

  Ethereum is the second-largest cryptocurrency by market cap after Bitcoin and has key characteristics that make it distinct. While many see Bitcoin's key appeal in its scarcity, many find Ethereum's appeal in its utility. Ethereum is a highly programmable blockchain that provides infrastructure for a diverse range of assets and use cases. You could think of Ethereum as a global platform for applications. This platform enables applications referred to as smart contracts to run without a centralized intermediary. Transactions on Ethereum require a transaction fee to be paid in the network's native token, Ether. Investor interest in Ether has been expanding as more people adopt digital assets. And that's why we're introducing Ether, the iShares Ethereum Trust ETF,

• 4:40Speaker 02

  which provides investors convenient exposure to Ether.

• 4:42Ryan Sean Adams?

  Then he gets into the mechanics of it. What do you think of that pitch from BlackRock?

• 4:47David Hoffman?

  Honestly, like, who am I to judge BlackRock's articulation of Ether to their client base? I think it left more to be desired. I think other people can do it better. VanEck, of course, also launching their marketing material as well. VanEck, a little bit more crypto-native. They're into the Ether campaign. They are ETHV. But then Bitwise, who we have on the show today, Matt Hougan, we're about to get into that conversation with him. Bitwise launches ETHW, the Bitwise ETF, with some standout properties about their ETH ETF. 22.2% management fees. So on the lower side of the fees, that's 20 bips for all you bippers out there.

• 5:31David Hoffman?

  But 10% of this 0.2% management fee goes to Ethereum open source development. That is Protocol Guild and the Proposer Builder Separation Association as well, which is a new open source advocacy group, which is pretty cool. And Bitwise had an outsized showing with their Ether ETF today. Not only are they donating to Protocol Guild, but also they have all of their addresses under bitwise.eth. So they have five relevant Ethereum addresses that are associated with their Ethereum ETFs. And it is 1 bitwise.eth, 2 bitwise.eth, 3 bitwise.eth. They are using their ENS subdomains to label

• 6:16David Hoffman?

  Their ETH ETF addresses, which I think is really cool.

• 6:19Ryan Sean Adams?

  Oh, they're dot ETHs, aren't they?

• 6:20David Hoffman?

  They are dot ETHs. That's right.

• 6:23Ryan Sean Adams?

  Yeah, even Vitalik was excited about this. He always appreciates donations to public goods. He said, "I really support this." He's talking about the Protocol Guild donations from Bitwise. "Look forward to seeing more projects and organizations. Follow your lead and donate to this important ecosystem-wide public goods initiative." David, so let's get to Matt Hougan, because I think there's more analysis to do with respect to day one volumes, inflows, the letter grade for like how the Ethereum ETFs are performing.

• 6:53David Hoffman?

  How did we do?

• 6:54Ryan Sean Adams?

  Yeah, A, B, C.

• 6:55David Hoffman?

  Are we excited about nothing? Or are we excited about a very big day?

• 6:59Ryan Sean Adams?

  And look, most importantly, I want to hear, "Wen moon? When is price going to go up?" So let's bring in Matt right now.

• 7:04David Hoffman?

  Thank goodness we got Matt Hougan here, Chief Investment Officer over at Bitwise. Matt, how did yesterday go? Better than expectations, met expectations? First impressions as to the ETF launch day?

• 7:16Speaker 03

  I would say better than expectations. You know, these new ETH ETFs traded over a billion dollars. We had positive inflows despite significant outflows from ETH. We saw over $200 million of inflows here at Bitwise. There's a chance that these things, you know, came into the market, no big response. That's what we saw with ETH's futures. That's not the world we're living in. We learned yesterday that people want ETH exposure in an ETF. It was a great day.

• 7:43Ryan Sean Adams?

  Matt, so I saw over a billion in trading volume, which a billion in inflows. Is it inflows or trading volume? Sorry, I was out yesterday. I'm still catching up.

• 7:51David Hoffman?

  Inflows would have been phenomenal.

• 7:55Ryan Sean Adams?

  All right. And on the podcast, Eric Balchunas gave this an A. He said, "It's not an A+, but a solid A for the first day." What would you letter grade the first day for the Ethereum ETF?

• 8:06Speaker 03

  I mean, that's a harsh grade. You know, let me put on my ETF hat.

• 8:10Ryan Sean Adams?

  You think an A is a harsh grade?

• 8:12Speaker 03

  Well, let me explain why.

• 8:13Ryan Sean Adams?

  A is the best you can get. There's A+ too.

• 8:16Speaker 03

  We live in an era of grade inflation. You know, we're talking A pluses here. Let me put on my ETF hat and then I'll put on my crypto hat because it depends which perspective you're looking at. So just to level set for the non ETF experts, the average ETF trades about a million dollars in its first day.

• 8:34David Hoffman?

  One million dollars. We got, we got over a billion.

• 8:36Speaker 03

  Yeah, this is a thousandfold better, right? That is, that's pretty phenomenal. I think it's the second biggest debut of any ETF in history. There have been 5,500 ETFs that have launched, covering stocks, bonds, countries, sectors, et cetera. No, ETH was the second best of all time. That sounds pretty good. It's only from the lens of the Bitcoin ETF, which was absolutely historic, first in its class, $4.6 billion in volume, that it's, you know, maybe only an A. But this was, this was a great debut. It says a lot of good things about where this is going.

• 9:11David Hoffman?

  I feel that that's always Ethereum's case. It's always like the middle child syndrome. It's always like the, the little brother trying to catch up to big brother. And maybe that's just like destiny for a very long time.

• 9:22Speaker 03

  It, it, it seems to be the case. That is right. And graded on a curve, adjusted for its market cap, it's right in line. It was a great, it was a great first day.

• 9:30David Hoffman?

  What would have been like, if you, you had said like this met expectations, it didn't blow anyone away, it didn't disappoint, it was just par for the course. What kind of trading volume number might that be in the range of?

• 9:42Speaker 03

  Yeah, 400, 500 million dollars.

• 9:45David Hoffman?

  Okay, and we're, we're over double that. We're over double expectations.

• 9:49Speaker 03

  We're over double expectations. And also, I can't stress how important this is. Even for someone inside the industry, there was a chance you get to the starting line and it just fizzles. There's 50 million, there's a hundred million dollars in trading volume. You don't know for sure. And so we completely removed that negative case and we ended up on a very good case. You know, we did 86% of the inflows that Bitcoin ETFs did on day one on a net basis. That's way bigger.

• 10:17Ryan Sean Adams?

  Wait, wait, wait, wait, wait. So, so trading volume was about 23%. But inflows, give me that again?

• 10:24Speaker 03

  It was, it was, I think in the mid 80s versus Bitcoin for day one inflows. We had a very good day.

• 10:31Ryan Sean Adams?

  Percentage wise, like mid 80s percentage wise, 85, like 85%, something like that?

• 10:36Speaker 03

  Yeah, I mean, I should say this, this is probably obvious to everyone out there, but there's a big difference between trading volume and inflows.

• 10:42Ryan Sean Adams?

  Yes.

• 10:42Speaker 03

  A product launches, people can trade it back and forth, but that doesn't mean money is coming in. We had, you know, what was it? $590 million come into the new ETFs. That's a very, very lot. And even if you adjust out for the money that came out of ETH, it was north of $100 million. That's a great day. I mean, that's, that's, that's $100 million that didn't own ETH yesterday and owns it today.

• 11:08Speaker 03

  Let's, let's extrapolate that out for, you know, a year. Not that we'll continue at that pace, but extrapolate like net new buyers coming into the market. It's, it's really significant.

• 11:18David Hoffman?

  So I think this is some of the things that we're processing on Twitter is that in comparison to the total trading volume, the net inflows into Ethereum have surprised, into the ETH ETFs have surprised to the upside. Have we understood as to why we are getting more net inflows than what would be indicated by the trading volumes?

• 11:39Speaker 03

  You know, I think we're still figuring that out. You could have firms that had, you know, sort of pre-wired expectations. Sometimes you get inflows that aren't tied to trading volume. Or you could have just, you know, more, maybe it's a more ownable asset and a less tradable asset. Maybe there were more traders in the Bitcoin product on day one because they expected high volatility. Whereas maybe the people positioning here just are, are buying ETH for the long run. We don't know for sure. You won't. It's hard to tease that out with public products on day one.

• 12:14Ryan Sean Adams?

  So Matt, Nate Jarsey put out a tweet, hopefully I'm pronouncing his last name, I think you know. He says, "Look at Bitwise putting on yet another masterclass on how to launch an ETF. You'll love to see it." And then it has a tweet saying that Bitwise had $203 million of flows, just your guys' ETF. What did you guys do? What is a masterclass in an ETF launch and how did you guys go on executing one?

• 12:42Speaker 03

  I love Nate's commentary. He's covered ETFs for a long time, so that means a lot. And it is great to see us ranked in flows right behind BlackRock and ahead of Fidelity on day one. You know, Bitwise is 65 crypto native people. Those companies are tens of thousands of people.

• 13:01Ryan Sean Adams?

  Wait, but while we pause there, I'm going to get you to finish, but let's just go over the benchmarks. So iShares, that's BlackRock, 266 million in inflows after the first day. That's the number one. Number two is ETHW, that is the Bitwise Ethereum ETF, 204, within striking distance to Larry Fink's BlackRock. Pretty impressive. And then number three is Fidelity with 71 million. I gotta say, that's a distant third. That's a bronze medal, very, very bronze. And then like after that, no one is even close. So you guys got the silver for this, Matt. And like, like closing in on the gold, of course, that's just day one, you know?

• 13:46Ryan Sean Adams?

  It's a longer race than one day, but like punching above your weight class here.

• 13:52Speaker 03

  I appreciate it. Thank you. It feels good. I think there are two big factors at work. You know, one is Bitwise. I think we executed well. We've been in this market for seven years, building relationships. We had good media and advertising campaign. We did an extensive amount of media yesterday. We did things like the public donation program to ETH developers. We published our ETH addresses. We gave them ENS domain names.

• 14:20Speaker 03

  The other piece of it, though, really goes to the community because the lane that Bitwise is in is we are the crypto native ETF issuer in this space, right? BlackRock is a big traditional asset manager with a huge brand, so is Fidelity. We're crypto native. I think what we learned yesterday was that resonates with a lot of people, right? People want someone who's going to embrace what crypto can do from a transparency perspective. It's going to donate back to the ecosystem. So it's a victory for Bitwise, but it's also a victory, I think, for the crypto community, showing that it recognizes and wants there to be a crypto native asset manager. We happen to be that horse.

• 14:58Ryan Sean Adams?

  Yeah, so I asked this question on Twitter because I do have some, you know, full confession for everyone who didn't know, both David and I do have some like bank accounts here somewhere, okay? Not completely bankless. So one of those, one of those is some IRA accounts that I have, like Roth IRAs, 401Ks, that sort of thing. And so I have some grayscale Ether inside of those, some ETH-E. And I was asking Crypto Twitter, hey, if I'm considering swapping for a like lower fee ETF, which one should I do? And the resounding answer was ETH-W, was the Bitwise. And the reason for that was because Protocol Guild donations, because is it 10% of the

• 15:41Ryan Sean Adams?

  management fees are going back to Protocol Guild? And so there is this niche, and apparently it's not kind of like a small niche of crypto native capital that's like tied up in retirement ETFs, and that is just like glad to participate with Bitwise. So that's got to be a big source of the inflows, at least, I mean, from my small bubble of the world, it was.

• 16:04Speaker 03

  Yeah, it is a big source of the inflows, and we just, we love to see it. It makes us feel very good. Maybe less transparent is also on the, you know, family office, RIA, professional investor side, there's often a crypto champion at those firms who is crypto native himself, even though he exists in a larger firm. And the same things that resonate, you know, with you resonate with them as well. They care.

• 16:30Ryan Sean Adams?

  They're one of us, right?

• 16:31Speaker 03

  They are one of us.

• 16:32Ryan Sean Adams?

  And we also can't ignore the impact on the marketing material that you guys have been putting out, right? Like, that's got to have something to do with it.

• 16:40Speaker 03

  The marketing team is incredible. We got a lot of credit for our ETH ads. Thanks for calling out. My Twitter profile picture, I appreciated that. That was an oversight. But the team's incredibly creative and we've gotten great resonance. You know, ETH is decentralized, doesn't have a, you know, a team that puts together those ads. So we're able to do our little piece of that. And there are plenty of other people doing their piece of that as well.

• 17:06David Hoffman?

  Matt, as we move forward with the story of, the story arc of the Ethereum ETF, I think we're really looking for the differences between the Bitcoin ETF to really allow Ether, the asset, to stand out. The fact that Ether, the asset, is materially different is, is what attracts a specific investor to Ether, the asset. And so while it's great to have another ETF shoulder to shoulder with a Bitcoin ETF, now I think people on Wall Street and TradFi are looking at two crypto asset ETFs and be like, well, now there's two of them. What do I do about this? How do I think about the differences here? Bitcoin, I think I understand Bitcoin, and now there's this Ethereum thing. And everyone in crypto understands that the Ethereum story is a little bit hard to tell. So I'm kind of looking for like, as we move forward, the differences

• 17:51David Hoffman?

  between these two story arcs of these ETFs. There's a headline from an article that was citing you and your, some analysis that you gave at Bitwise, saying that the ETH ETFs will have a larger price impact upon Ether than the Bitcoin ETFs had on Bitcoin. And you cited three main reasons. Ether's inflation rate effectively amounts to zero. ETH does not have proof of work sell pressure, and ETH is locked up on staking. Now, I would call all of these reasons more like, you kind of need to be in the know, in the world of crypto. But one thing you don't need to be in the know about is that it can impact the price faster, better, quicker. Maybe you can unpack this and how these narratives, these ideas, might permeate

• 18:34David Hoffman?

  through Wall Street and as well as your job of just like educating Wall Street on like, what is, what is Ether?

• 18:39Speaker 03

  Yeah, I think this idea of price impact on flows is really important. People ask questions about that all the time. Some of them are obvious, right? Net inflation rate of ETH is zero. So the same amount of flows is going to have a larger impact than it did on Bitcoin. A significant portion of the ETH market is locked up and therefore not available for sale. It's like not in the public float. It's staked, it's used in DeFi assets, it's bridged to layer twos. That's, you know, you get to 40, 45% of the market that's just not available. The thing that I think is really powerful, which isn't poorly, isn't well understood, is that middle one, which is this difference between proof of work

• 19:22Speaker 03

  and proof of stake. The way I think of the market is there are two types of people. There are people who are forced to sell and people who sell if they want. And in Bitcoin, you have miners that are forced to sell because they have hard costs. And so every day you have to buy a certain amount of Bitcoin to keep it here. In ETH, you don't have any forced sellers. No one has to sell ETH. And the result is flows, you just, you just don't start in a hole, you start level. So $100 million had to buy ETH yesterday from people who didn't have to sell, who would only sell if they want to. And that just means particularly if we get a bullish market, if the market is going up and people are

• 20:03Speaker 03

  disinclined to sell their ETH, it's going to be hard for ETFs to find ETH to buy. I mean, we will, of course. I don't mean they're illiquid. Of course you can, but you're going to have to chase that price. And I think that's, I think it's a really big deal. I think it's going to become apparent if we see strong inflows.

• 20:20Ryan Sean Adams?

  Okay, so I have maybe a dumb question at this point, but I think some listeners are asking. So we had 1.1 billion in volume, we had 100 million in inflows. Let's focus on that inflows number. 100 million in net new buying activity. And yet, Matt, the price is kind of where I left things at the opening of the day. I checked at the beginning of the day and I checked at the end and it really hadn't moved. If what you're saying is true, wouldn't 100 million in net increase in flows buying activity that's effectively like there's like not a lot of supply out there, wouldn't that affect price? And how come it hasn't?

• 20:58Speaker 03

  Yeah, great question. I would just say patience. It hasn't because we knew these ETFs were launching. Trading desks build up inventory in the run up to this period and they're ready to sell it. Of, you know, it's not one for one prices. Money doesn't come in and price goes up the next day. But I can guarantee you, if there's three, not guarantee, compliance says, I can't guarantee anything. I believe that if we see, you know, billions of dollars of inflows, it's going to push the price of ETH up to new all time highs.

• 21:32Ryan Sean Adams?

  Well,

• 21:32Speaker 03

  It eventually overwhelms.

• 21:34Ryan Sean Adams?

  Yeah, give us a number. So I saw you quoted recently 5K. And then I was looking at by end of year, maybe I was looking at where that prediction was. I couldn't quite find it. Is that, is that a true source? Did you really say that? What, what are your current price predictions?

• 21:47Speaker 03

  Yeah. So, so I have a above new all time highs price prediction by the end of the year. The, the reason it's, it's that vague is in short term price, I think what matters is supply and demand. And I think there's significant sale pressure at any all time high, right? When we get to an all time high, there will just be people who want to sell. We've seen that in Bitcoin. We'll see that in ETH. I think there'll be enough demand for these ETH ETFs to push it up to all time highs and then get through that sale wall. I think that's how much demand there is. If that happens, I don't know where it goes above that. So the thing I'm confident or feel confident about is we'll get, you know, 5,000 or so this year. If we see strong inflows and, and who knows above that?

• 22:31Ryan Sean Adams?

  Above all time highs, my favorite like chapter in any crypto bull cycle. I mean, is that obvious? Is that everyone's pick too? Is that everyone's favorite movie?

• 22:42Speaker 03

  It is.

• 22:43Ryan Sean Adams?

  It's like price discovery because you just don't know apart from that, because we've never been here. You're forging into new territory, right? And to your point, that reflexivity loop is now investors see, oh, ETH is making a run. I better like sell some Nvidia stock and get in on this crypto thing. And like, maybe that's my fantasy, but like, who knows where it could go from there? Now that we have this, this pipe open to traditional investors that we didn't have in previous cycles.

• 23:09Speaker 03

  That is right. I want to stop on that Nvidia thing because I know it's a fantasy, but I think it's actually true. I've been telling professional investors every time I meet with them that if you're investing in technology and you don't have ETH, you're missing a portion of the market. Look at the smartest tech investors in the world. Look at venture capitalists. They invest in AI, they invest in chips, they invest in biotech, and they invest in crypto and blockchain. If you only have the queues and you don't have ETH, you're missing what some of the smartest investors in the world say is one of the most important areas of technology. So I don't think it's a pipe dream. I think you are going to see people sell some Nvidia and buy some ETH just so they have tech covered.

• 23:51Ryan Sean Adams?

  Well, how about this from a narrative perspective, Matt, because I want to ask you around narratives. But how about Ether is money for AI. It's money for the robots. I mean, the least banked class of entities on the internet, it's got to be bots. I mean, they can't go to Wells Fargo and go apply for a bank account, can they? And so maybe that's something that can take hold, but not yet. We've got some other narratives to work on first. And so I know last time you came on, Matt, you gave this like brilliant elevator pitch for Ethereum that I thought was like one of the best I had ever heard. And I've noticed that now that we're getting into kind of like TradFi and some of these issuers, they're testing out ways to talk to their investors about Ethereum.

• 24:36Ryan Sean Adams?

  I saw a BlackRock video that was pretty good where their main thing was if Bitcoin is about scarcity, Ethereum is about utility. And so they focused in on this utility. I gotta say, though, this word utility, I mean, like, what does that mean? I don't really know what that means. I've seen Bitwise really double down on like a lot of different things, but almost like a more bankless theme. It's just like, yeah, you know, TradFi takes weekends off, they take bank holidays, Ethereum is always going, right? Or TradFi deplatforms like the pickleball player is sort of like the joke, but you know, they pick and choose who the winners are in this game. So Bitwise has taken a bit more of a crypto native type take. Anyway, what's your theory of narrative? Because it is true that Bitcoin

• 25:19Ryan Sean Adams?

  Has had this like, single cohesive coordinated narrative of digital gold and everyone just like repeats that and parrots it. Whereas Ethereum, we don't have consensus yet from traditional investors on like, what the one big narrative to like to invest in really is. And maybe that's just the nature of Ethereum, but it would be nice to have some cohesion here and some coordination to really figure out what works. What are you thinking at this stage in the game as far as what narrative is working?

• 25:48Speaker 03

  Yeah, I love it. And I note that Bitcoin went through a number of narratives, right? It's cycled through as well. So this is part of the process. What we find that's working best is it's a technology platform that most of the interesting applications in crypto are built on. If you're interested in tokenization, it's built on Ethereum. If you're interested in stable coins issued on Ethereum, if you're interested in DeFi, most of that is built on Ethereum. D pin, NFTs, etc. It is the fundamental platform for sort of rewiring the internet. And if you want to invest in tokenization, or stable coins, or the growth of DeFi, or the growth of NFTs, you need to own some Ethereum. And

• 26:29Speaker 03

  I think that really resonates with investors. The other thing that really resonates with investors is you just want to be diversified, right? You just want to own crypto, own some Bitcoin and own some ETH. And I recognize there are flaws with both of those analyses. The tech platform doesn't talk about ETH money-ness, which I think is very real and a very big part of the story. But that's probably a second or third meeting. The first meeting is, you know, Bitcoin, digital gold, ETH technology platform. For what? For all these things that you read about in the news. And I think that resonates with a lot of people.

• 27:07Ryan Sean Adams?

  So Matt, now that the opening day of the Ethereum ETFs are behind us, what does work look like at Bitwise? Are you guys on the just the ETH campaign trail? Like, what's going on? Like, what are the next steps? What are you guys all heads down doing?

• 27:21Speaker 03

  Yeah, 100%. I use this stat all the time. We do 20,000 meetings a year with professional.

• 27:26Ryan Sean Adams?

  I'm sorry. Thank you also.

• 27:30Speaker 03

  Yes. So, you know, today I'll do, I'll speak to, I don't know, three, four, 500 investors that manage north of $100 million, talking them about Ethereum and ETH W. And the team, the sales and distribution team, 20 plus, will do all the same things. And we'll be doing that for the next few months. And we'll be writing about ETH. And, you know, other firms will be doing the same thing. You don't see all that. People get very excited when they see Larry Fink on TV talking about ETH, or, you know, less excited when they see Matt Hougan on TV talking about ETH.

• 28:05David Hoffman?

  We get excited.

• 28:06Speaker 03

  But behind the scenes, there are, there are literally tens of thousands of meetings. There's a huge education platform now moving forward. And you're going to see that in the flows.

• 28:16Ryan Sean Adams?

  What number should we be looking at, do you think, in the, in the coming? Let's just give it a month in terms of like flows. Like what would maintain our A to A plus grade with respect to this ETF?

• 28:27Speaker 03

  Man, if we did a billion dollars in the first month, that would be outrageous. Even if we did half of that, it would be really significant.

• 28:34Ryan Sean Adams?

  So 500 million to a billion in inflows, in net inflows would be the A to A plus rate?

• 28:41Speaker 03

  That is right. Yeah. Cause you got to remember money's going to come out of ETH. So it has to be net flows. But yeah, if we can do that, it's, it's a home run. It's a home run.

• 28:51Ryan Sean Adams?

  Well, Matt, thank you so much for your time. This has been a really cool, congrats to everyone. 10 years after the Ethereum ICO, it's like same week. And here we are. And you are going to be gonging the bell on the New York Stock Exchange for this Ethereum ETF on Friday. Is that correct?

• 29:05Speaker 03

  That is right. Imagine that ringing the bell at the New York Stock Exchange for Ethereum.

• 29:10Ryan Sean Adams?

  So weird.

• 29:11Speaker 03

  What a day.

• 29:12Ryan Sean Adams?

  Bell ringing.

• 29:13David Hoffman?

  The juxtaposition is, I think the word oxymoron is there, but like, hey, we're here for it.

• 29:19Ryan Sean Adams?

  We'll take it. We'll take it. Well, best of luck, Matt, with the Bitwise ETH W asset. And thanks for coming on.

• 29:24Speaker 03

  Thanks for having me.

• 29:26David Hoffman?

  Man, I'm really glad that we have Matt Hougan and Bitwise on our side. That was really helpful. That was really educational. Every time I talk to Matt, I feel like I get educated. I feel like there's just a lot left, though, Ryan, in this conversation. We got the grayscale and the grayscale mini trust that is getting in the way of us and the moon. So when does it get out of the way is like when we have some tweets to pull up and some things to talk about. We got Hill Dobby's work in progress dune board for the Ethereum ETFs, which is just so glad to see it. Like a dune board for the Ethereum ETFs. And then amidst all of this, Bitcoin has had some record inflows for the last like two months. So the Bitcoin ETFs is also awakening at the same time that the ETH ETFs are launching. You gotta love it when things line up.

• 30:08David Hoffman?

  And then also, since it's politics season, we have to invoke some modicum of political content because that is also bullish. So bear with me as we get through all of that and more. But first a moment to talk about some of these fantastic sponsors that make this show possible, especially Kraken, where I buy my vanilla on-chain raw ETH, raw Ethereum. And perhaps you should too. So if you do not have an account with Kraken, consider clicking the links in the show notes to getting started with Kraken today.

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• 33:02Ryan Sean Adams?

  All right, we said Grayscale was going to be in the way of our moon and our price. And that's because it's a source of outflows, isn't it? With EtherE. And David, I have some EtherE in a retirement account, as I mentioned earlier in this episode. Can you tell me how this works? Because there's not just EtherE. Now Grayscale has a mini-trust, I believe, with lower management fees. Does that automatically convert over? Or does a portion? Like, how does all of this work? And what do we need to get out of the way in order to have this pure price discovery moment that we were just talking about with Matt?

• 33:32David Hoffman?

  So say you have 1,000 shares of ETH, the Grayscale trust, which is now an ETF. If you had 1,000 shares, you now also have 1,000 shares of the ETH mini-trust. And so you doubled your shares. Congratulations.

• 33:45Ryan Sean Adams?

  Oh, yeah, that's great.

• 33:46David Hoffman?

  Yeah, now but also the Grayscale ETH E trust has also devalued by 10%. So because 10% of the AUM of the Grayscale trust has been transferred by Grayscale to the Mini trust. And so this is why in the order of AUM, it goes Grayscale ETH E, number one. Number two, Grayscale Mini trust, number two, because it took 10% of the Grayscale trust, followed by BlackRock, followed by Bitwise.

• 34:10Ryan Sean Adams?

  Okay, well, but that's a confusing way to say, I think, what happened, which is for my ETH E position, now I have 90% of that, you know, like, position, my total value in ETH E with the higher management fees and 10% in the Mini trust, right? Which means I'm still paying the high management fees on like 90% of like the assets that I held there, yeah?

• 34:31David Hoffman?

  That is correct.

• 34:32Ryan Sean Adams?

  Okay.

• 34:32David Hoffman?

  So now if you had $1,000 of ETH, you have $900 of ETH now and $100 of ETH. Interestingly, the Grayscale Mini trust ticker is ETH? ETH?

• 34:43Ryan Sean Adams?

  Oh, nice.

• 34:43David Hoffman?

  Somehow they won that one, kind of like lucky for them. When I was talking to Eric Balchunas yesterday, he was saying that the brand damage of Grayscale, by kind of cornering their ETH holders and not letting them out, due to either they don't want to pay a very high capital gains tax, or I can't remember the other reason. But like, there are people who are just cornered into...

• 35:05Ryan Sean Adams?

  Oh, wait, you said away from keyboard is what you said, you know, like, which is a lot of people are just gone.

• 35:09David Hoffman?

  Away from keyboard capital, yeah.

• 35:10Ryan Sean Adams?

  Yeah.

• 35:10David Hoffman?

  But like, so yeah, the people who are just like dormant and just like aren't aware that they're paying a very high management fee to ETH will be the people who hold ETH. Then the other people who hold ETH are the people who don't want to pay the capital gains tax. So of your capital gains tax, 10% that got rolled into the Mini trust, you don't have to pay capital gains tax on that because that happened automatically. But if you want any more to roll into it, then you're gonna have to pay capital gains tax on that. Which is why people are like with Grayscale now and ETH now. And they might buy non-Grayscale ETF, maybe they go to Bitwise and pay five more bips in fees, because I think according to Eric Balchunas, it's just like an F you to Grayscale.

• 35:51David Hoffman?

  It's like, we don't like, you guys are intentionally cornering us. I'm just not gonna buy your cheaper fund.

• 35:57Ryan Sean Adams?

  I'm gonna trade mine out. But like, one thing, of course, is if you're in the US and this is in a retirement account, you don't have to pay capital gains on any of it. So you could trade whatever you want, and it doesn't even matter. So you just bypass the capital gains because it's in that like 401k or IRA type shield, so not applicable. So I can't wait to swap mine out for lower management fees. I was away from keyboard yesterday, so I didn't get to do that yesterday.

• 36:18David Hoffman?

  You've paid one whole day.

• 36:21Ryan Sean Adams?

  Man, all those gains.

• 36:24David Hoffman?

  So now the big question is, we needed for the Bitcoin price to go up last ETH, the Bitcoin ETF, we needed the grayscale GBTC to clear out. And we're watching this happen. So when the ETH ETFs launched yesterday, we went from $3,500 Ether to $3,400 Ether, like we went down in price.

• 36:43Ryan Sean Adams?

  Yeah.

• 36:44David Hoffman?

  Didn't meaningfully dump. But now like everyone is, the traders are looking at, is this a sell the news event? Like now the grayscale is gonna unload. No one really knows because we've seen this movie played before. And so now this movie is different. But we did see 5% leave grayscale in just one day, which was a larger outflow out of the grayscale ETH trust on day one than was an outflow out of the grayscale GBTC trust on the Bitcoin ETF. So we're seeing a faster flushing so far, just half of day one of trading, which is good. So we need to clear these ETH skies. And they're clearing faster. And it's only gone down like a little bit of price. And so that's optimistic. We don't really know what flows are gonna be like. We need, we need like a week of trading activity to really see.

• 37:29David Hoffman?

  But like, we have some kernels of positive indication that this is going better than the grayscale GBTC trust, mainly because we did not have the grayscale mini trust for Bitcoin as fast as we do have it for Ethereum.

• 37:46Ryan Sean Adams?

  Well, but isn't that what I heard? Like the inflows, day one net inflows were actually like 80% of Bitcoin?

• 37:54David Hoffman?

  Which is crazy.

• 37:55Ryan Sean Adams?

  Like, that's something I just learned from our Matt Hougan conversation. So 80%. And again, when we say net inflows, that is already taking into account the grayscale outflows, right? And they were just saying.

• 38:06David Hoffman?

  Which was larger. The grayscale largers were larger than expected compared to the Bitcoin ETFs. And the Ether inflows into the ETFs were also larger than expected.

• 38:15Ryan Sean Adams?

  Yeah, it does seem to me like grayscale is going to be less of a factor on this than than Bitcoin. But we'll have to see what the net inflows look like. That is the that is the number to to watch. And what Matt said is, if you're looking for that like A plus grade, 500 million by in a month's time. By the end of August, let's say, of net inflows would be like A, A plus grade. A billion would be absolutely like phenomenal.

• 38:39David Hoffman?

  Would be S tier, S tier. Hill Dobby, who is something that we use to watch many, many doom boards. He's putting his Ethereum ETF doom board together. This is very much a work in progress. But the fact that we have an Ethereum ETF doom board is something to celebrate, I think. But Hill Dobby, I'm going to need you to finish that up by the time you roll tomorrow, please.

• 38:58Ryan Sean Adams?

  Yeah, you know, this is like the ETFs are like TradFi's version of an ERC 20, isn't it? And that's why when you when you asked Val Chunis yesterday in your conversation with him, whether he was like how he felt about the tokenization narrative. He was like, nah, we have ETFs, right? He's like, that already is tokenized.

• 39:15David Hoffman?

  That is tokenization, dude. That's what that is.

• 39:17Ryan Sean Adams?

  Yeah, so he's he's like, he's doing tokenization via ETF. And that's why he's more bullish on that.

• 39:23David Hoffman?

  Tokenization via fax machine.

• 39:25Ryan Sean Adams?

  Well, let's talk about this convergence of things that that might happen as we close this episode out. So the Bitcoin flows have been impressive, particularly lately. Well, we've had the summer doldrums, right? Where price hasn't been at all time high in crypto. We've taken a bit of a hit. Bitcoin was down 25%, yet the inflows into the Bitcoin ETF have kept coming. Give us an update on this and how this might like affect Ethereum ETF.

• 39:54David Hoffman?

  So this was Monday. Just BlackRock on Monday had $523 million of net flows. Not trading volume, net flows, just BlackRock. And so that's one of the bigger days in Bitcoin ETF flows history. And it's coming after like a very long era of just like nothing. We had there were like ignoring this June 5th and 4th big days, respectively $880 million of inflows. And then 600 $480 million of inflows. We have been flat on inflows ever since like. Middle of April, and so we are now waking up.

• 40:34David Hoffman?

  We have consistent inflows into the Bitcoin ETFs since July. July has been inflows only. So we're like approaching 30 days of inflows only, and it's been crescendoing throughout July. Maybe this has to do with the election season, because now people are just like kind of pricing in a more favorable outcome to crypto, no matter what. But we're seeing bullish flows into the Bitcoin ETFs at the same time that we are now also seeing the opening gate for the Ether ETFs. So you really just got to appreciate when like stars line up, because that's how a bull market happens, is when we get enough stars to line up, like bull markets just happen. And so I'm just noticing these very two big stars like line up perfectly with each other.

• 41:16Ryan Sean Adams?

  Well, let's end it there on the bullish setup that we have going into this week, the last week of July and the roll up tomorrow, which we're going to record. This insanely bullish setup. This is what you tweeted. The Trump election locked in. He's of course pro crypto. In addition to J D Vance, the most pro crypto VP possible. David, you didn't include it here, but now Kamala Harris, I saw yesterday, is talking about going to a Bitcoin conference.

• 41:42David Hoffman?

  Considering talking at the Bitcoin conference in Nashville, which starts tomorrow.

• 41:47Ryan Sean Adams?

  So maybe that's a pivot on the Democrats kind of anti crypto posture. They see crypto as an election issue. Anyway, crypto is an election issue. The prospect of a pro crypto president. Also, Jamie Dimon is turning bullish because of Trump and because of this political influence. Gary Gensler resignation. This rumor is in the air. It's nothing confirmed yet. The ETH ETFs have just been approved. Trump wants Bitcoin on the balance sheet. Talk about a central bank buying crypto. That would be absolutely crazy, particularly the US, the Fed. And the Fed rate cut cycle also looming. All of this points to an incredibly bullish setup as we move into the second half of this year.

• 42:30David Hoffman?

  There needs to be some asterisks on most of these. Like, is the Trump election locked in? No, actually. Like, Polly Market has him at 63% odds, which is like pretty good. It's not locked in. JD Vance, the most pro crypto VP possible. I think that's right. I think that's a very fair statement. Jamie Dimon bullish Bitcoin because of Trump. That actually might be just a rumor that got circulated. And so this one actually might need to be stricken from the record. Sorry about that. Gary Gensler resignation. This is under the assumption of a Trump victory. I think if it's a Trump victory, it's a very safe assumption that Gary Gensler will not be the SEC chairperson and understanding that Kamala Harris is poking her head up just two days after getting the Democrat nomination by Biden.

• 43:16David Hoffman?

  And like two, within two days, she's now considering crypto. And she is considering going to Bitcoin conference in Nashville. The fact that that's on her, in her brain space so quickly after receiving the Biden nomination, I think is very indicative of she needs to right some wrongs that the Biden administration accidentally stumbled into. Regardless of whether she is a pro crypto president, the fact that like she's considering crypto so quickly into her candidacy, I think is very telling. ETH ETFs, that just happened. Speculation that Trump wants Bitcoin on the Fed balance sheet. Definitely speculation, but you can see it. You could definitely see it. And then the Fed rate cut cycle looming. That's not, don't hold your breath for that one. But like, it's definitely coming. It's something. I think this is a fantastic setup of catalysts.

• 44:00Ryan Sean Adams?

  Well, let's end it there. Of course, none of this has been financial advice. We have no idea what crypto is going to do in the future. We have no idea what the future volumes for the Ethereum ETF look like. You know that crypto is risky. You could lose what you put in, but we're headed west. This is the frontier, not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.

• 44:17David Hoffman?

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