Spot bitcoin ETFs begin trading today: Here’s what investors can expect

Anthony Pompliano, Pomp Investment founder and partner, joins ‘Squawk Box’ to discuss the SEC’s approval of spot bitcoin ETFs, what it means for investors and the crypto community at large, and more.

IS LONGER TERM. >> DO HODLers EVER SELL? >> THIS IS A HISTORIC MOMENT. THE FIRST TIME THE INTERNET AND WALL STREET HAVE HAD THE HEALTHY RELATIONSHIP. THE FIRST TIME THEY BLINKED. INTERNET BASED ASSET AND ARMS WRAPPED AROUND IT BY WALL STREET. NOW ETF REGULATORS ARE ON BOARD.

THE VOLATILITY WILL DAMPEN FROM HERE. >> IT COULD MAKE THE MOVE TO AN ANDREW’S CURRENCY. YOU DON’T WANT TO BUY A PIZZA FOR $25,000. THERE IS TOO MUCH VOLATILITY FOR IT TO BE TRANSACTIONAL. IF IT HAS NO MORE VOLATILITY, MAYBE IT TURNS INTO SOMETHING.

>> I SAY NO MORE VOLATILITY, VOLATILITY DAMPENS. BITCOIN HAD A GROWTH OF 50%. IF YOU GO BACK OVER THE LAST TEN YEARS, IT IS STILL 50% COMPOUNDING OVER GROWTH RATE. IT WILL TAPER OFF A LITTLE BIT. IN THE NEXT FIVE YEARS, IT WILL BE 20%. THAT IS STILL DOUBLE.

>> THAT WON’T GET THE TOM LEE’S $500,000. >> YOU ARE ASKING A DIFFERENT QUESTION. IS IT A FINANCIAL ASSET? IT APPEARS TO BE A FINANCIAL ASSET. >> IT BECOMES TRANSACTIONAL. >> IS IT A CURRENCY? ETHEREUM MIGHT BE SOME FORM — >> IT IS UP MORE THAN BITCOIN

TODAY. >> THERE ARE A LOT OF OTHER OR BETTER TECHNOLOGIES IN THE BLOCKCHAIN FOR THAT PURPOSE IF THAT IS WHAT YOU THINK THIS IS HERE. >> IF I GO ON WALL STREET AND ASK PEOPLE WHAT IS YOUR BE BENCBE BENC BENCHMARK. THEY HAVE THE EQUITY-BASED BENCHMARKS.

IF I ASK A 25-YEAR-OLD OR YOUNGER, BITCOIN IS THE BENCHMARK. THAT IS INTERESTING. AN ENTIRE GENERATION OF PEOPLE WHO SAY IF I CAN’T BEAT BITCOIN, I’LL BUY IT. AS THOSE PEOPLE AGE, NOW BITCOIN IS THE BENCHMARK AND IT WILL GET INTO EVERYONE’S PORTFOLIO. IF YOU WANT MASSIVE ADOPTION,

EVERYONE HAS TO PUT IT IN THE PORTFOLIO. THE DAYS OF THE 1,000 INCREASE IN A SINGLE YEAR IS GONE. I STILL THINK IT IS VERY ATTRACTIVE. >> IF IT BECOMES LESS VOLATILITY AND EVERYBODY ABLE TO GET INTO IT, DOES IT STILL HAVE GROWTH? >> THERE IS AN INTERESTING

MECHANISM. WE NEVER HAD AN ETF OF A FINITE ASSET. THIS IS THE FINITE ASSET. YOU HAVE TENS OF BILLIONS D DEPENDING WHO YOU ASK IN THE NEXT TEN YEARS. >> THE QUALITY ETF? >> GOLD EXPANDS, BUT NOT VERY FAST. >> WHEN IS THE LAST BITCOIN MINED? >> 2140.

YOU HAVE TO REMEMBER 70% OF BITCOIN HASN’T MOVED IN THE LAST YEAR. NOW INSTITUTIONS ARE BANGING ON THE DOOR. IT IS INTERESTING TO TALK ABOUT THE FEES. BITWISE IS THE CHEAPEST BITCOIN FUND IN AMERICA AT .2%. THEY DROPPED TO .0%. THAT IS A DIFFERENCE FROM THE

PUBLICLY AVAILABLE BITCOIN FUND. >> WHY DID THE ETFs SAY THEY WERE LOWERING? >> THIS IS A FEUD WAR. >> IS IT PROFITABLE FOR ANYBODY? DEMAND BUILT UP, BUT HUGE AMOUNT OF PLAYERS WHO WANT TO MEET THAT DEMAND. >> GRAYSCALE DROPPED TO 1.5%. WHY DIDN’T THEY DROP TO .2%?

IF YOU WANT TO GO SELL GRAYSCALE, YOU HAVE TO PAY TAXES. THERE ARE A LOT OF ASSETS THAT WILL STAY IN GRAYSCALE. THEY WILL NEVER GET ENOUGH CREDIT TO PUSH IT FORWARD. WHAT YOU SEE IS GRAYSCALE SAYING WE HAVE A LOT OF ASSETS. LET’S HOLD ON.

EVERYONE ELSE SAYING WE WANT THE NEW ASSETS. WE HAVE TO GO COMPETE IN THE FEE WAR. .2%. .4%. HOW MUCH DOES IT MATTER? OTHERS SAY I WANT TO BUY SOMETHING AT THE ATTRACTIVE PRICE. WHAT WILL OCCUR IS TENS OF BILLIONS OF DOLLARS FLOWS INTO THE ETFs.

IT WILL GO UP. >> HOW MANY OF THE ETFs EXIST IN A YEAR OR TWO? WILL THERE BE CONSOLIDACONSOLID? >> I THINK THERE WILL BE MORE 12 MONTHS FROM NOW IN THE AGGREGATE NUMBER. THERE WILL BE CLEARLY TWO OR THREE WINNERS. BLACKROCK WILL BE SUCCESSFUL. G GRAYSCALE WILL HOLD ON.

COMPETITION WITH THE DIGITAL OR INTERNET INNOVATION TECH ETFs TO FIGHT IT OUT. IF YOU HAVE THREE BIG WINNERS, THAT ENDS UP BEING TENS OF BILLIONS. >> IS THAT A HUGE CONSOLIDATION WAR? >> EVERYONE WILL KEEP IT. >> IN THE LONG TERM, IT WILL

SHOW IN THE INTERVIEW LATER WITH BRIAN ARMSTRONG OF COINBASE, DO YOU THINK THIS IS GOOD FOR ROBINHOOD? IF YOU NO LONGER NEED A COINBASE ACCOUNT BECAUSE YOU CAN BUY THROUGH THE FIDELITY ACCOUNT AND THEY WILL MAKE MONEY BECAUSE THEY ARE THE CUSTODIAN. >> I HAVE INVESTED IN BITCOIN

AND EQUITIES ACROSS THIS THING. THIS IS AN INTERESTING DAY. I’M AN INVESTOR IN 21 SHARES. I’M AN INVESTOR IN GRAYSCALE AND IT IS INTERESTING HOW IT PLAYS OUT. THE ETF FEE WAR MAY LEAK OUT. COINBASE MAY HAVE TO DROP THEIR FEES. IT MAY BE MORE INEXPENSIVE TO

HOLD THE BITCOIN ETF FOR A YEAR THAN TO MAKE ONE SIMPLE TRADE ON COINBASE. THERE IS PRESSURE THERE. ALSO, I THINK THERE IS A BIG CONTINGENCY OF EDUCATING OTHERS. BUYING ETF IS NOT BUYING BITCOIN. YOU ARE NOT BUYING THE BITCOIN. WHAT WE WILL SEE IS HOW MANY

PEOPLE CARE ABOUT SELF CUSTODY. >> COINBASE FEES — IT BLOWS ME AWAY. WAIT A MINUTE. IT WAS TRADING HERE. WHY AM I GETTING — THEY ARE 5%? >> HERE IS ANOTHER INTERESTING IDEA FROM THE INVESTMENT PERSPECTIVE. THE PUBLIC MARKET MISUNDERSTANDS THE CRYPTO BUSINESS. THEY HAVE THE NEW BLOCKCHAIN

BASE AND GENERATING REVENUE THERE. MINERS REVENUE IS DRIVEN BY THE PRICE OF BITCOIN. IF THE PRICE OF BITCOIN DOUBLES, THEIR REVENUE DOUBLES BECAUSE THE REVENUE. >> THE FEE STRUCTURE? >> IT WILL COMPRESS. THEY ARE SHIFTING INTO A MORE — >> YOU ARE AN INVESTOR IN COINBASE.

ARE YOU MORE LIKELY TO SELL BASED ON THIS OR LIKELY TO ADD TO YOUR POSITION? >> I THINK ANY COMPANY IN THE PUBLIC MARKET WILL DO VERY WELL OVER THE NEXT ONE OR TWO YEARS SDPYEARS. >> YOU ARE NOT LOOKING TO SELL? >> DEFINITELY NOT.

>> YOU THINK ONE OR TWO YEARS, DO YOU THINK TEN YEARS? >> INVESTING IS HARD PREDICTING TEN YEARS OUT. I THINKTHIS IS A GENERATIONAL TREND WHERE THERE IS AN ASSET CLASS THAT DID NOT EXIST 15 YEARS AGO. NOW IT WILL NOT GO AWAY.

IF YOU LOOK AT WHERE MONEY AND TALENT, YOU SEE CRYPTO IS A BIG BENEFICIARY. THE INDIVIDUAL WINNERS WILL SHOW COMPETITION. NEW COMERS WILL SHOW UP AND TRY TO DISRUPT. YOU ALSO HAVE TO LOOK AT WHAT HAPPENS IF SOME OF THE LARGE LEGACY PLAYERS DO SOME

CONSOLIDATION WITH THE CRYPTO PLAYERS? I’M NOT SAYING THIS IS GOING TO HAPPEN. BLACKROCK SAYS LET’S GO BUY COINBASE? >> 70% OF THE HODLers WILL NEVER SELL. HOW MUCH DO THE ETF THAT WE TALK ABOUT, HOW MUCH BITCOIN DO THEY NEED PUT IN AND WHERE DO THEY GET IT?

HOW MANY BILLION DO THEY NEED TO PUT IT IN THE ETFs? WHERE WILL THEY GET IT FROM THE 70%? WILL THEY GET IT FROM THE 30% OR SELL AT 70,000? >> MY PREDICTION IS IT WILL SMASH EVERY RECORD. >> IT IS SMALL COMPARED TO THE $950 MILLION OF MARKET.

>> IT IS NOT 900. THE SECOND THING IS GRAYSCALE DOESN’T HAVE A REDEMPTION FUNCTION. THEY EVENTUALLY HAD 3.5% OF THE CIRCULATING SUPPLY THAT WENT INTO THE FUND. WE WENT FROM $$8,000 TO $64,000 IN A MATTER OF MONTHS. IF 70% OF THE SUPPLY IS LIQUID

BY THE HODLers, IT WILL BE AT A HIGHER PRICE. >> I THOUGHT ABOUT IT. I BOUGHT A TINY AMOUNT. IF IT IS GOING TO $500 MILLION, I’LL NEVER SELL. IT WOULD BE NICE TO GET 46.