Breaking Down ETF’s Impact on Bitcoin Price with Cory Klippsten

Cory Klippsten, CEO of Swan Bitcoin, explains why the long-term impact of the approval of a spot Bitcoin ETF will far exceed the inflows into these financial products. He also shares his outlook on the price of Bitcoin for the next crypto bull run.

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Obviously I don’t expect $70K to  be the high of this next bull run. I think it’ll be significantly higher than that. What I’ve been talking about  is an ETF multiplier effect. Are you still feeling the heat of  Bitcoin’s latest retracement below  

$40,000? Take a breath. It looks like the  tide of the crypto markets is changing again. Billions of dollars are flowing into the new  spot Bitcoin ETFs, while capital outflows from   GBTC are finally slowing down. Does that mean  the correction is over or should we expect new  

Lows? And what may be the actual impact of the  new ETFs on the Bitcoin price in the long run?   I discuss these and more questions with  the CEO of Swan Bitcoin, Cory Klippsten. Before we dive in, I’m thrilled to announce  the upcoming Return of Blockchain show,  

The leading event in the crypto and  blockchain industry. This time it’s   teaming up with BLOCK Down a pioneer in  the Web3 Congress, and that’s ready to   join us in Hong Kong for this  crypto celebration from May 8  

To 9. Don’t miss out. Click the link in the  description to learn more about this event. And remember: early-bird tickets are  limited. And now let’s get to the interview In an interview that I saw from last year  you were recommending people not to trade  

The Bitcoin ETF approval because  of a possibility of a correction. And that’s what actually happened. So you were predicting that  Bitcoin would retrace by about 30,   40%. How much further do you think it  will correct from the point we are now?

The only signal that I’m seeing right now that  matters is the flows into the non GBTC ETFs. So the new ETF vehicles that that didn’t exist.  GBTC has had absolutely massive selling because   there are a bunch of these bankruptcy estates that  are selling BTC now that the discount to net asset  

Value has closed to near zero. There’s just a ton  of selling going on out of BTC. We we all learned   that the FTX bankruptcy sold $1,000,000,000  worth of BTC over a few days, for instance. So I think it’s just kind of inevitable  that that was going to happen.

I actually think that the amount that it’s fallen  is amazingly small, given the amount of selling   that’s been going on. And I think that is a credit  to not just the flows going into the newer ETFs,   but what I’ve been talking about is a and  ETF multiplier effect. And basically this  

Is because of the existence of the ETFs and the  credibility of these large financial firms getting   into the space and validating it in the eyes of  investors that haven’t played the game previously. A lot more Bitcoin will be purchased through  all of the other sellers around the world,  

Whether it’s Swan, whether it’s  Coinbase, whether it’s, you know,   relay over in Europe or or OTC desks or  even private funds from Morgan Stanley and   Goldman Sachs. So there’s a lot more  Bitcoin flows or money flowing into   Bitcoin incremental to what otherwise would  have because of the existence of the ETFs.

So it’s their marketing and their stamp of  approval that frankly, is much more important than   and frankly, a lot larger magnitude of flow into  Bitcoin than just what’s flowing into the ETFs A lot of people are saying that these event,  

The approval of the Bitcoin ETF is creating  even more distance from Bitcoin and the rest   of cryptocurrencies. Can you give us your  view on the impact that this is going to   have on the relationship between  Bitcoin and the rest of crypto?

Wow, it’s so funny. I have a very fresh example  of this that happened about an hour ago. I’m   actually squatting in an old office of mine.  I’ve just got caught on this side of town,   which is where I have the fancy conference. Ah,  background here. Anyway, I’m friends with one of  

The dust guys here from having spent time here  and we were in the coffee room and he struck   up a conversation with another gentleman that  was there who ended up at I didn’t know, but is   the CEO of a fairly large insurance company,  and they started talking about Bitcoin ETF.

And I got to hear this guy’s reaction because the  desk guy knows me and knows about Bitcoin from,   you know, from me and just being interested  after knowing us for a few years. So he was   making the pitch and the guy was like fully  on board. And his take basically was he’s  

More comfortable with it now that so much of the  fraud has been washed out of the crypto space. So he knew about FTX and he knew about  Binance and he basically just didn’t   trust because Bitcoin was so closely linked  with all these CeFi frauds and all the crypto  

Frauds and pump and dump schemes. It was  really hard to separate Bitcoin from non   Bitcoin crypto and from just kind of like  crypto scammers generally. And now it’s   really obvious that there’s something  there and he’s starting to look at it.

He doesn’t own it personally, but then when  Jeremiah the the desk guy said, by the way,   where he runs a big Bitcoin company, we were  right into a conversation about how it fits into   insurance company portfolios. I started talking  about how I know the CIO at MassMutual and made it  

$100 million by and they love it because it’s non  correlated and because it matches with, you know,   extreme tail risks that may happen and it’s the  kind of asset that can go up a lot over time. And then actually, you know, so dramatically  improves the Sharpe Ratio of an insurance  

Company portfolio. So yeah right into a  conversation like that. Totally impossible,   I guarantee you, impossible three months ago On the other hand, we have a lot of rumors,  a lot of talking about the possibility of an   imminent spot Ethereum ETF being approved as  well. In the U.S. we saw that BlackRock filed  

An application for it and Bloomberg analyst, I  believe, Eric Balchunas, not long ago said that there is a 70% chance that a spot  Ethereum ETF will be approved this year. If that happens, it means that Ethereum  will also have the same status of   Bitcoin in terms of institutional  acknowledgment. Don’t you think?

That’s always been the play, right? And the  Ethereum foundation and Lubin and Consensys   have spent billions of dollars to  try to make that a reality and try   to confuse regulators to thinking that  this was somehow somewhat like Bitcoin  

And they may pull it off. I mean, the  Church of Scientology did It used to be   a church and they ran a massive letter  writing campaign and choked the courts. And they get to have tax free real estate all  over Los Angeles. So it’s not like things always  

Work out as they’re supposed to. A lot of times,  concentrated interests can influence policy. This   is why we have a crappy food pyramid stuffed with  snacks from General Mills and Kellogg’s. Right. So   I suspect that, you know, there’s a pretty good  likelihood that Ethereum will get away with that  

As a team and as a tech company with their  sort of pseudo company stock that they have   massive influence over and in massive piles of and  continue to rake the rewards up through staking. So they’ll probably get away with it.  I just don’t think it’ll matter though,  

Because people who actually look into  the stuff, the deeper you go into it,   the less you understand Ethereum as  being money of any kind. I think that   I mean, it’s obviously pretty frickin dead.  And we have proof points of this right? Like, there are a lot of crypto  industry requests, for instance,  

For Blockfi to add Ethereum and altcoins  to the card rewards at Blockfi. And they   argued that all these people wanted a theory  of rewards. They don’t. They actually don’t.   They want to use it to launch grifting scams and  pump and dumps and, you know, to trade basically.

And the only people that really hold,  if they’re in it for the long term,   are pretty much the insiders, because they’re  just getting the staking income. And so after   a year of marketing, Ethereum and six  or seven other cryptos versus Bitcoin,  

It only amounted to 3% of rewards. 97% of  the awards are still taken in Bitcoin because   Bitcoin is something that people actually  want to hold, and that won’t ever change. Regardless of whether there’s an Ethereum ETF,   It will just trade like a  tech stock basically, at best.

You said that in this specific market  cycle, Bitcoin is likely to break the   pattern of diminishing returns that we  have been seeing throughout the latest   few cycles. So why exactly do you think  that this pattern will be broken this time?

Yeah. So I think it’s inevitable and I apologize  if I did this math live last time. I can’t   remember if I did, but we beat the trough to  peak up to the top of 2013 was $2 to $1100.

So it was 550X. The trough to pick up  to 2017 was 180 bucks up to $19,700,   which interestingly was exactly 20% of that. It  was 110 bucks. So from 550 to 110X, amazingly,   it continued to be geometric into 2021. So  trough the peak in 2021 was from 3150 to 68,  

800 or 69,000 or whatever. It was literally  22X, another 80% reduction in the rise. So from 550 to 110 to 22. When I say that  we’re going to break that cycle of sort of   these geometric returns, it’s because from the  bottom of around 16 K, if you went to 4.4, that  

Would only be 70 K. And I obviously don’t expect  70 K to be the the high of this next bull run. I think it’ll be significantly higher than that.  So I think that cycle of sort of geometrically   diminishing returns is going to break, you  know, this year and next year for sure.

Thanks a lot for coming on our  show. It’s always a pleasure. And you as well.