Bitcoin retreats from $50,000 after hotter-than-expected inflation data: CNBC Crypto World

CNBC Crypto World features the latest news and daily trading updates from the digital currency markets and provides viewers with a look at what’s ahead with high-profile interviews, explainers, and unique stories from the ever-changing crypto industry. On today’s show, Matt Hougan, CIO at Bitwise Asset Management, and Ric Edelman, founder of the Digital Assets Council of Financial Professionals, discuss the growing adoption of spot bitcoin ETFs among investment advisors.

Chapters:
00:00 – CNBC Crypto World, Feb 13, 2024
0:31 – Bitcoin falls
1:24 – The headlines
3:48 – Matt Hougan and Ric Edelman

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Bitcoin retreats from $50,000 after hotter-than-expected inflation data: CNBC Crypto World

Today Bitcoin retreats to the $488,000 level a day after Crossing $50,000 for the first time in more than two years Franklin Templeton enters the ethereum ETF race and bit yci IO Matt Hogan joins Rick Edelman of the digital assets Council of financial professionals to discuss the popularity of Bitcoin ETFs

From The Exchange ETF conference in Miami Beach welcome to cnbc’s crypto world I’m TAA mckel Bitcoin falling below $50,000 after breaking through that key psychological level yesterday at one point reaching its highest level in more than two years as of noon Eastern Bitcoin traded around $48,500 after hitting more than

$50,00 at one point yesterday that’s the highest level since December 2021 that move pulled most of the market lower including polygon’s madic token which dropped more than 1% to 85 ether outperforming however Rising nearly 2% today to the $2,600 Mark a hotter than expected January inflation report really

Driving things today that came out early this morning sending the Benchmark 10-year US Treasury yields higher and pressuring risk assets meanwhile eth price getting a lift from further developments in a potential eth ETF which we’ll discuss later as well as its upcoming Tech upgrade and renewed interest in

Nfts okay let’s talk about the top stories Michael sailor micro strategies co-founder and executive chairman G bitcoin’s moves higher on cnbc’s closing bell overtime yesterday when the cryptocurrency was trading above $50,000 he argued that the recent rally is indicative of the popularity of Bitcoin as an asset class there’s 10

Years of pent up demand people have been waiting for these ETFs and and finally uh mainstream investors are able to access Bitcoin and I think that’s what’s driving The Surge of capital in the asset class and initially there was a rebalancing as people were moving Capital between the Futures market and

The min and micro strategy and the ETFs but following that rebalancing I think uh the uh the assets found its footing and now people are beginning to realize that there’s 10 times as much demand for Bitcoin coming in through these ETFs as there is Supply coming from the natural

Sellers who are the miners next the sentencing of Chang Pang Xiao also known as CZ has been postponed until the end of April that’s according to a notice in Seattle federal court which didn’t explain what caused the two-month delay the former Bing CEO is a resident of the

United Arab Emirates and has been ordered to stay in the US after pleading guilty on November 21st to a charge of violating anti-money laundering rules he is currently free on a $175 million Bond Federal sentencing guidelines suggest a maximum sentence of 18 months in prison for chiao but prosecutors have

Reportedly considered asking for a harsher sentence cz’s lawyers declined to comment when asked about the postponement finally Franklin Templeton has joined the race to launch an ETF tracking the price of spot eth according to an SEC filing from yesterday the asset manager applied for a spot ether

ETF joining Black Rock Arc 21 shares and vanc as well as grayscale which is seeking to convert its existing eth trust into an ETF the SEC is due to give decisions on those applications in May the development comes about four weeks after Franklin Templeton and nine other

Issuers launch spot Bitcoin ETFs in the US all right sticking with ETFs for our main story cnbc’s Bob Pani is is at the exchange ETF conference in Miami Beach and he sat down with Matt Hogan the CIO of bitwise asset management along with Rick Edelman founder of the digital assets Council of financial

Professionals a two weighed in on how regulators and investment advisers are thinking about the new investment products we’re here at the exchange ETF conference what’s that 2200 Financial professionals all trying to figure out where’s the ETF business going good news business is growing $8 trillion in ETFs

Assets under management was 7 trillion a year ago keeps growing here’s the tough news the industry is maturing a little bit so we’ve got to figure out new ways to get things going in this business one of the big ways Bitcoin ETFs we want to welcome all the viewers for cnbc’s

Crypto world I have two big stars here two old friends of mine who know a lot about this business Matt Hogan had a bitwise uh Bitcoin ETF he runs that of course with bitwise as well and Rick Adelman head of the digital asset Council of financial professionals Dak

FP is Insider say said a minute ago guys welcome first off um we want to know the viewers want to know there’s 10 Bitcoin ETFs that are out there are they tracking right is the we all want to know is this tracking Bitcoin properly it’s been five weeks now what’s what’s

The story ab and not just yours I mean of course of course yeah I’d love to talk about the bitwise product but more broadly all of these ETFs launched all of them are tracking properly all of them are giving investors peace of mind they’re the simplest and most secure way

Most investors have to access this space the fees are incredibly low it’s been a huge win for crypto Bob but it’s also been a huge win for the ETF industry these have done a great job it’s been amazing watching the price Wars that happened literally over the weekend I

Actually had to do stories like on my Trader talk where okay here’s the new pricing and between the time I had the story out in the morning and wrote it the night before the prices had changed I got emails saying Bob we changed the price it’s not 19 16 now basis points so

There actually is the second lowest with only a one basis point difference which is immaterial and you’re waving the fees for months and donating 10% of the uh profits that they generate to charity so cost is not an issue here what are you charging right now we’re charging just

20 basis points so that’s to put that in perspective that’s half the fee of the largest gold ETF uh it’s an extraordinarily low fee and it’s waved for the first 6 months up to a billion dollars this is bit bitb is our fund yeah it’s one of the more liquid funds

On the market one of the largest since launch now tell me about the inflows it from my perspective I I’ve seen I think uh grayscale had 26 billion I think they’re down to 20 billion so there’s been 6 billion in outflows which makes some sense going into the other ones

That are out there but are you attracting more money independent of that are there other people inves net inflows at this point of uh pushing $3 billion so the gray outflows have been more than offset from new money fresh money coming in from Individual investors investment advisers and

Institutional investors yeah and I just build on that I actually think it’s bigger than that 3 billion because some of the money that came out of the grayscale product was the FTX bankruptcy it was hedge funds that were playing a premium ARB if you’re thinking about how

Much new investors are coming into this Market I think the number is closer to five or 6 billion it’s the largest ETF launch in history I think it’s a huge success and this is really only just the beginning I’m anticipating that by the time we get to the end of 2025 we’re

Talking 2 years we’re going to see total inflows of more than $150 billion we’re only at five right now and what is what is going to propel that’s a big claim that’s a big number what’s going to propel that it really isn’t all that big when you do the simple arithmetic

Individual investment advisers Independents those that are operating their own firms collectively manage around $8 trillion in assets and 3/4 of them in every industry survey done by Dak FP as well as by bitwise all show that three4 of advisers say that they’re going to allocate to these ETFs and that

Their average allocation is going to be about 2 and a half% of assets do the arithmetic $8 trillion times 77% time 2.5% is $150 billion worth of flows and that’s just in independent advisors it excludes the wirehouses it excludes the regional broker dealers it excludes the institutional investors but what’s

Driving people into it I mean look we know we know people watch Bitcoin primarily because the volatility and a lot of it just hope to make some money very very fast here you have a very aggressive price on bitcoin I think you have 150,000 right within two years on

Bitcoin we’re 50 now we just crossed 50 today so that’s a pretty aggressive number it’s not nearly what going to drive it I mean if it’s $50,000 two years from now those inflows are not going to be nearly well just just do the math Bob because bitcoin’s Quant is

Fixed the supply is fixed all of those tens of billions of dollars of inflows it’s a supply demand issue classic so clearly as the increased demand occurs in a limited Supply environment it can only translate into a rid rapidly and uh exponentially higher price I would just

Add that the people who are buying Bitcoin now in ETF the financial advisers that Rick is talking about they’re making allocations for the long-term financial advisers as you know are not short-term Traders they’re not speculating on where Bitcoin will be next week they’re making an allocation

That they plan to hold for a year 3 years 5 years 10 years that they plan to rebalance like they would stocks and bonds who is buying Bitcoin ETFs right now I mean you seem to be assuming it’s we’re seeing a lot I mean I can talk it

Bitwise we’re seeing a lot of flows from raas we’re seeing flows from family offices and of course we’re seeing some flows from people rotating out of high fee products into our products but I think the Natural Market the big unlock for Bitcoin ETFs is the financial advisor Market first raas who are

Independent and then wirehouses who work for big firms they need to approve these ETFs but even that process is going faster than I anticipated we thought it would be a year before the wirehouses are there any wirehouses who who’s schab isab allows it Wells Fargo on a limited basis um uh

Morgan Stanley on a limited basis and this is only going to expand as they grow more comfortable with the product as asset flows are there as they become more comfortable with the trading spreads uh and the accuracy to bitcoin’s price and as they continue to see client

Demand I mean if they’re all they’re they’re in the business of collecting assets under management and if they’ve got a big pool of investors who want to buy the product they’re going to provide it to them and yet I talk to raas here and I hear some of them say okay this is

The first real product uh a spot Bitcoin ETF that’s a true digital a true bridge between crypto and the profession Financial community so there’s the plus but then I hear guys saying Bob I’m not sure how I can legally recommend this you know Gary Gensler took a shot across

The bow the whole industry when he conceded he lost the grayscale case but said may I remind everyone as a financial adviser you have regulation bi reg best interest which has suitability requirements those are legal terms basically saying you guys buy Bitcoin for Grandma potentially the the the the

Investment Community you can get sued by the legal Community how do you protect yourself there’s no standard here we’re in a new business and finra has also come out with a similar statement cautioning advisers and their firms to behave properly and that’s what regbi is all about you shouldn’t be afraid as an

Adviser from recommending to a client something that is in their best interest and the SEC and fer are both making it clear do your job and if you do that correctly if you document your recommendation and you ascertain which client it’s suitable for and appropriate and in their best interest and the

Amount of allocation to the portfolio and you have the proper disclosures and disclaimers so that the client is making an informed decision there is really nothing to fear any more than you would any other investment allocation so you run the digital asset Council of financial professionals this is

Essentially your job right are you doing seminars for raas about this is what you need to do to recommend Bitcoin for Grandma I’m being a little fous but extensively a big part of our uh cbda designation certified in blockchain and digital assets has extensive coursework on regulation and compliance we do a lot

Of Consulting to brokerage firms and independent Raa firms teaching their compliance officers how to write the rules and the internal policies how to train their advisor so that they are compliant safe and they don’t have to worry about a regulator coming in asking difficult questions it is relatively

Easy and the new Bitcoin ETFs have made it easier than ever to safely from a compliance perspective allocate to this without worrying you’re going to run them up or run off the rails for fear of regulatory intervention are you confident that we’ll we’ll have some path that makes this EAS that there’ll

Be a legal standard that’ll evolve here where raas aren going to be terrified they’re going to get to get sued by the legal Community absolutely as Rick mentioned they’re already educating themselves they’re already doing the work and many of them are already allocating on behalf of clients a lot of

It comes down to rightsizing the portfolio allocation making sure it’s available to the proper set of clients but you can absolutely do it you’re going to see it from the largest institutions to the smallest they’re going to find a way Edelman and Hogan also discussed where Bitcoin ETFs fit

Into a diversified portfolio and much more you can find the full conversation over at cnbc.com cryptoworld also Bob still at the exchange conference and we’ll have more conversations about what’s next for Bitcoin ETFs over on cnbc.com as well that’s all for crypto world today we’ll be back again tomorrow and we’ll see you Then