Feb 5, 2024

Bitcoin's (BTC) price has been on a roller coaster ride in 2024, even blasting above $47,000 in early January amid spot bitcoin ETF optimism.

Video transcript

This spot. Bitcoin ETF update is presented by Grayscale, the world's largest crypto asset manager. Bitcoin's price has been on a roller coaster ride in 2024. Even blasting above $47,000 in early January amid spot Bitcoin ETF optimism. The excitement since then has cooled a bit with the largest Cryptocurrency by market cap reading around $43,300 this morning. Joining us now to discuss is wisdom tree head of digital assets. Will peck will welcome to the show. Hey Jane, good morning. Let's talk about Bitcoin's uh price. What do you make of the price here to date? Uh You know, I think, you know, everyone's been kind of commenting on this by the rumors, saw the news in terms of the ETF S. Um I think for those of us in the ETF space, you know, I was seeing this as a big uh the big catalyst for kind of, you know, potential price movement for uh the Bitcoin ETF with Bitcoin would be financial advisors adopting the product. Uh as you know, I think a few articles have pointed out recently. Uh It takes a while for these advisor platforms to onboard due diligence, new products. So I think it's been interesting to see a lot of the kind of not a ton of net new inflows. A lot of reallocation from G BT C to some of the new launch products. Um And I think as advisory platforms are getting more comfortable with this going forward, especially the next 3 to 6 months, you could see some really net new demand uh into the asset class via uh a Bitcoin ETF. But again, I think it's gonna take a few more months. What needs to happen for advisor platforms to be more comfortable to uh offer the product? Does, does this show still some reluctance by these platforms when it comes to crypto and Bitcoin more specifically? I think there is a bit of reluctance. I mean, I think here there needs to be both a uh getting comfort with new asset class, right? This isn't just another new equity product that's being launched. Um So there is some level of getting comfort with the new asset class. Uh But then with any new ETF, these advisor platforms have kind of a similar threshold and standards, you know, various a um thresholds or time to market trading volume, things like that. Um So the the second is very common and there that's not a reflection on Bitcoin ETF S at all. It happens with every newly launched ETF, it's something that firms like wisdom tree have been navigating for, you know, 17 years now, to be honest. So we're not surprised by it at all. Um And I think the platforms are getting increasingly comfortable with Bitcoin as an asset class. Uh And there's some education there explaining kind of comparisons to gold, you know, where it's different things like that. Uh But I, I think that part is going very well and I think it's just a matter of time before these are, you know, more widely available on platforms, uh where there'll be a lot if you take a look at your previous experience with other ETF s, how long do you think it's going to take for the ETF product to be more widely available? Typically, it's like 3 to 6 months, I'd say, you know, six months is kind of more conservative. Uh So that would put us, you know, at this point, kind of June, July time frame based on the launches. So that, but every platform is different, you know, some of different risk thresholds. You've got places like vanguard that are saying we're not gonna allow crypto at all, which is kind of consistent with their views on markets generally and, you know, ok, but um, you know, most are not that way. So I think um they're all different, they've all got different kind of considerations, you know, maybe owned by somebody or whatnot. And um, yeah, so I think six months is probably a good time frame. I want to talk a little bit about the secret sauce, but you don't have to give away all of your secrets as we know. Wisdom tree is lagging behind some of the other fund issuers. How are you planning to remain competitive and snag up some of that market share was move into 2024. Well, that's exactly what I said. I mean, our ETF platform is really built for advisor distribution. Uh and like I said, a lot of the advisor platforms do not are not allowing any of these trades to happen today. So, um you know, we didn't have any kind of balance sheet, we didn't see with a lot of money or anything like that, like some of the other players did. So we've actually had quite strong trading the past few days if you looked at the um you know, the league tables there, uh the funds working exactly like we expected it to and we're having very good conversations in the pipeline with financial advisors and financial advisor platforms. So uh still very early for us, this is, you know, one of 30 ETF S that we launch every year. Uh and we're um we're encouraging and optimistic about where we're gonna be going forward with the advisors. I want to talk about the earnings call that took place on Friday, coo Jared Lillian said that Wisdom Trees Consumer App offers maybe a better way to hold Bitcoin than the ETF wrapper unpack this for us. Uh What do you think he meant there? Yeah, I actually we met, we do think it is better. I mean, I think leveraging kind of similar cold storage methodologies that you would with an ETF but getting the, you know, the asset more close to payments and your other assets, you know, one example would be that, you know, currently, you know, we all feel this brokerage accounts, right? It feels very separate from the rest of your financial life, not very connected with payments. Whereas Wisdom Free Prime, we're connecting Bitcoin kind of more directly with payments where it can feel just like almost a payment mechanism if you want connecting it with peer to peer as well. So leveraging kind of very similar security practices and workflows like you might see with an ETF but actually getting Bitcoin and other crypto assets like Ether closer to, you know, the rest of your financial life is what we're doing with that. So uh we think the Bitcoin ETF is a great product for some retail and for financial advisors. Uh but we're very excited about making Bitcoin available through um you know, our own direct retail. Wisdom Free Prime as well. Well, given that comment, I just read and what you've just said there, what, what are you focusing more on as we head into 2024? Is it Wisdom Tree prime? Is it the ETF or, or are you looking at them both in kind of a through a similar lens. Uh It's all the above. I mean, we think, uh you know, the ETF is just one part of our digital asset strategy. It's not our whole business. I spent a lot of my time on wisdom tree prime and tokenization more broadly, uh which we see being a very big opportunity. And it was interesting with uh a lot of the ETF launches, you had, you know, executives out there talking about how this is just a step in the direction of the tokenization of all financial assets. And we very much do believe that uh wire prime is our delivery mechanism of that for retail creating, we think a better financial service experience using Blockchain and crypto. Uh So that's liquidity, transparency and standardization is what we're gonna be bringing forward with that. So uh that's where I spend a ton of my time, but the Bitcoin ETF is very important as well. Unpack that a little bit more for our audience when you talk about the tokenization of all assets, practically. What does that mean? So I I think the best way to analogize it is just like an ETF is a wrapper that allows you to hold an asset like Bitcoin, but trade it on like in your brokerage account or on the New York Stock Exchange, right? Tokenization is just a wrapper for kind of another asset that allows different things like peer to peer transferability, you know, potentially like, you know, more interesting atomic settlement or trading on unis swap or different things like that, which I think a lot of people and including us see that as being a better kind of more convenient user experience for actually interacting with assets, being able to have them sit more closely with payments, for example, like I spoke about in the past. So for the three reasons I mentioned liquidity, transparency and standardization. We see that as being kind of a better way to hold assets just like ETS were a better way to hold assets than mutual funds. Um So that's very much um what we're, we think we're gonna see more and more going forward. You know, I think there's some analysts who project tokenized assets are gonna be something like five trillion in the next five years. We're not putting an exact number on it like that, but we're very encouraged by what we're seeing uh in the space so far. Now, Wisdom Tree Prime launched last year and I believe that it's available in 38 states. Now, when do you anticipate that it will be available to the whole country? Uh I'd say by the end of Q one, early Q two is when we're doing a kind of a broader national launch, you could call it, you know, we're dealing with a state by state money transmission licenses with kind of take some time, but we'll have some big announcements coming up in the next uh several weeks in terms of making it available to more and more people. And, uh we'll be doing a kind of more aggressive marketing campaign. I'd say we've been kind of in this exiting beta stage, uh where we're on boarding users, but not really marketing as we're continuing to get our state licenses. And are you able to unpack some of the hurdles you're encountering while trying to get those licenses? Is it really just, you know, regulatory hurdles making? And not even, I wouldn't say even a bad thing. I think it's just the reality of launching a, uh, a business that interacts with crypto in, uh, the year 2024. Right? So, since we started this project, we had things like FTX blow up and all this other stuff, which I think anyone who's doing regulated business in the space would comment that just means things are taking longer than they might have before. So, uh, we've been really encouraged by interaction with regulators. There's no like issues or problems or anything like that. It's just a matter of time as they've been dealing with the fallout from bankruptcies and things like that. So, um, we're, um, yeah, we're feeling like we're in a very good spot right now with it, uh, you know, been able to take the time, make, get the product right, and things like that and, uh, looking forward to getting it in more people's hands. Uh, this spring. All right, will. And just before we wrap, I wanna zoom out and look at ETF S from an international perspective for just a second. Uh The US now has a spot, Bitcoin ETF, it wasn't the first country to offer a spot Bitcoin ETF. But do you think that this, uh, is kicking off maybe a domino effect? And we might see similar regulatory approvals in different areas around the world like Asia perhaps. Oh, for sure. I mean, I think a lot of countries follow what the US, what the SEC does. Uh This has been a funny one. I mean, we launched our first Bitcoin uh exchange trade product in Switzerland in 2019. So it's taken different countries different times and things like that. This has been kind of a, a very strange novel situation in the ETF world. Um So I, I think plenty of countries will follow what the US is doing now. I don't think Bitcoin exchange traded funds, exchange traded products, especially because they're gonna be what we've seen so far is they're working like you'd expect them to work, uh are going to be such a big deal going forward. I think what you're gonna be seeing more interestingly going forward is, you know, different crypto assets and also things like staking et cetera in terms of getting that in the hands of investors, which will have lots of other considerations as well. So that's where I think the regulatory conversation will move. Uh I think uh Bitcoin ETF S are really here to stay. Well, thanks so much for joining first mover today. Great. Thanks a lot, Jim. That was Wisdom Tree head of digital assets. Will peck.

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