On this episode of A Wiser Retirement Podcast™, Casey Smith is joined by Robert Swarthout, Founder, CEO, and Portfolio Manager of Teton Crypto Capital, to talk about bitcoin halving, the upcoming bull run, the Bitcoin ETF, and regulatory issues.
Podcast Episodes Referenced:
- Ep 197: Will financial advisors be using Bitcoin ETFs soon?
- Ep 172: Crypto Special: Tips to Secure Your Passwords and Cryptocurrency Assets
Learn More about Wiser Wealth Management:
- Our website
- Schedule a complimentary consultation (learn more about our services)
- Click here to download one of our free guides that covers financial planning topics like retirement, investing, taxes, divorce, and more!
Connect With Wiser Wealth Management:
- YouTube Channel
- Facebook
- LinkedIn
- Instagram
- Twitter
- Casey Smith's Twitter
- Podcast
- Blog
This podcast was produced by Wiser Wealth Management. Thanks for listening!
On this episode of A Wiser Retirement Podcast™, Casey Smith is joined by Robert Swarthout, Founder, CEO, and Portfolio Manager of Teton Crypto Capital, to talk about bitcoin halving, the upcoming bull run, the Bitcoin ETF, and regulatory issues.
Podcast Episodes Referenced:
- Ep 197: Will financial advisors be using Bitcoin ETFs soon?
- Ep 172: Crypto Special: Tips to Secure Your Passwords and Cryptocurrency Assets
Learn More about Wiser Wealth Management:
- Our website
- Schedule a complimentary consultation (learn more about our services)
- Click here to download one of our free guides that covers financial planning topics like retirement, investing, taxes, divorce, and more!
Connect With Wiser Wealth Management:
- YouTube Channel
- Facebook
- LinkedIn
- Instagram
- Twitter
- Casey Smith's Twitter
- Podcast
- Blog
This podcast was produced by Wiser Wealth Management. Thanks for listening!
Welcome to a wiser retirement podcast. We believe the best financial advice should always be conflict free. I'm your host, casey Smith. Guiding you to financial freedom today is my co host, robert Schwarz, out founder and CEO portfolio manager of Teton crypto capital. Good morning, hey, robert. How you doing Good. So this is our first crypto edition of the podcast for 2024. Yeah, and man, what a recap 23.
Speaker 2:Yeah, you know it's 23 was a grind up. I think a lot of people missed the news on crypto if they weren't paying attention.
Speaker 1:What were the leading returns?
Speaker 2:Bitcoin, for sure Nobody was. Nobody was paying attention, yeah.
Speaker 1:Well, because, because in December 31st of 22, right because the world crypto had died at that point. Yes, yeah, it needed some recestration crypto winter become crypto ice age yeah.
Speaker 2:So you know it kind of. You know markets generally, you know outside of crypto, were up last year but crypto kind of just had a relatively consistent grind up last year. Obviously there was some volatility but at the end of the year I think Bitcoin was up around 100%, maybe high 80s, low 90s, something like that, and it was, you know, it was a strong year. It's a you know. And where is that in relation to?
Speaker 1:22? Or this is kind of got back to where it was 22 was certainly a down year.
Speaker 2:I forget the exact number 1231, 21.
Speaker 1:I think. I think the rate of return over the two year period is is it's not 100%. You're right, it's probably 50% something. Actually.
Speaker 2:I actually I know at the end of last year, bitcoin was 16,000. Okay, 16, 18, something like that. So oh, wow. And then we're sitting at 43 ish, so maybe a little over 100% there. Remember the exact numbers, but it's a you know, outside of Bitcoin it's still in crypto. The total market cap was up. Well, I pay attention to the one excluding Bitcoin in Ethereum, because my fund doesn't hold those two and it's kind of like those are so heavily weighted.
Speaker 3:Yeah.
Speaker 2:But the total market cap, excluding those two, is up around I think around 30%. So you know it was good year. Are you starting to see?
Speaker 1:people kind of jump on the bandwagon.
Speaker 2:You know, certainly more interest. It always seems to happen. But you're the tops, but it's not a top right now. Like I'm not nervous about it for them. You know, and I talked to them. I'm like you know, I probably will have to have that conversation with different people later on. You know, say this year or something, when the market is likely going to be higher. But it's, you know, if your view is a two to three year horizon, I mean, yeah, you're going to have a potentially a drawdown in there, but you know it's doesn't seem to be bad.
Speaker 1:It's the same. It's the same equities. We had 26% rate of return out of the S&P actually a little higher than that and then 22,. There's an 80% down here, and although all the return came out of the last quarter right for the year I mean, yeah, july we were thinking, oh, this is not looking so good.
Speaker 2:Yeah right.
Speaker 1:So it's just more volatile than that. And then you look at the NASDAQ. Nasdaq was was up tremendously over the over 23. And you know for me when you're you know I'm a core asset holder, so I'm an old S&P and and small caps and maybe add some tech or growthy Sure, and I'm not going to add to the portfolio for the long term. But you know you take the good and the bad and I take responsibility for neither.
Speaker 1:Meaning that you know clients will say oh man, you did a great job this year. It's a 26% rate of return. And then you just like, yeah, but I don't like wave of magic wand.
Speaker 2:Right.
Speaker 1:There's no day trading here. It's just I want you to focus long term and, more importantly, I want to focus on complete fiscal health of your family, not just the right, not just your portfolio Right, and I don't know eight. Yeah, it's just, you don't. You don't have 100% of your money in investments. You got to have cash reserves. You got to focus on planning Right, absolutely. So when it comes to crypto, I feel like it's just the stock market on steroids, because if you look at there is there's correlation there.
Speaker 2:I mean it's uncorrelated.
Speaker 1:It basically has been NASDAQ, but crypto has never been up when the market's been down over a look at annual cycle Right, exactly, you know in.
Speaker 2:you know this is. You know whether we've recently gone through recession or we're about to go through one. You know I think it's up for debate, depending on who you're talking to but crypto has never gone through recession either, outside of potentially the one we've got like, because it started in 910. So it never, like, had to go through a start. I mean, we've had technical recession.
Speaker 1:You know, during that COVID year there was a three day recession, right, yes, but, but yes, I I true.
Speaker 2:sustained recession, yes.
Speaker 1:This is a whole different podcast, but I wonder, you know, even, if that's even possible anymore. There's so much like funding, government and politics involved in the monetary policy.
Speaker 2:It's all warped.
Speaker 1:Yeah, that it's not like the 19, whatever, yeah, yeah, all right. So I think, elfin, the room is Bitcoin ETF.
Speaker 2:Yeah, we are. It feels like we are so close.
Speaker 1:I know we had talked about their last podcast together with Don Friedman. Yeah, it's.
Speaker 2:I'd imagine we'll be doing another one of those soon here because, it you know, the stars seem to be aligning the fifth through the 10th and we're recording this on the fifth.
Speaker 1:So, this could become still very quickly the time you listen to this, there could be Bitcoin ETFs. I just feel like that when that happens, there's going to be a big increase in Bitcoin value.
Speaker 2:Not financial advice.
Speaker 1:No, not financial advice, you don't run out by Bitcoin, but I just think that there's a lot of pent up demand for an easy access.
Speaker 2:Right, I mean, there's so much money that function. I can't get to any crypto right now. Right, bitcoin obviously being the biggest name, biggest market cap, all that kind of stuff. It's a you know, a I see. So one of the applicants, bitwise, is one of the applicants of the ETF. There's something. There's 10 of them right now being considered. They have produced two commercials. They have put them on TV, but they're ready to go.
Speaker 2:One I find really fascinating, or, I guess, really entertaining, more so than fascinating is it's the most interesting. The do-it-yourself is the most interesting man in the world. Is that the one you text me? Yes, yeah, yeah, yeah, that's right, that's a great marketing one.
Speaker 1:Is it the same guy or something? If not, it is a really good lookalike.
Speaker 2:But he kind of just has that whole stick. He's sitting on a table with some people and he's just talking real slow. But I was like you know, I would love to see if there's a I haven't bothered to look, but if there's a Vegas line on how many Bitcoin commercials there'll be in the Super. Bowl this year, or how many Bitcoin ETF commercials there'll be in the Super.
Speaker 2:Bowl. My over-under is three on that, probably if I had to guess there's, you know, it just all seems to be aligning. So basically we got commercials ready to go.
Speaker 1:We have some companies have already sorry, maybe all of them have already have APs in place that are holding Bitcoin.
Speaker 2:Or would hold Bitcoin Right. There's no confirm that they actually are already holding it, as far as I've seen, so the AP part has been the last week or so Would you? Be able to see that If you knew their wallet address but they likely aren't publishing the wallet address as they're holding Bitcoin in.
Speaker 1:Can you not see the volume of Bitcoin?
Speaker 2:Yeah, but they're likely buying it through Coinbase, so it's already going to be mixed with all their other volume. And Coinbase has their reserve, I would assume Reserve in what?
Speaker 1:sense. Well, you got to have my understanding with an AP. You got to be able to meet the supply and demand of both sides of the transaction. Right, so you're not going out and buying instantaneously. Yeah, at least that's how I do it. In stocks, they will hold their own securities.
Speaker 2:Right. So maybe the APs have been slowly accumulating some Bitcoin. They're likely not to say publicly that they're doing that or to what volume that they're doing that. I can't imagine Coinbase is doing anything besides this being a middleman for the buy and the sell side. So, but yes, the last week has been the S1s of these applicants being updated to include the APs Jane Street, JP Morgan I forget who the third, jp Morgan, is the funny one to me.
Speaker 2:So I put this in my newsletter to my investors. So, jamie Dimond, let me pull this up real quick. Jamie Dimond has been always negative against crypto. Like I couldn't find a single pause of comment. He said, and then, over the course of from 2014 until literally this last December so a week ago, for that matter, I don't know if that's eight times. He's been said publicly, probably at a conference or something, or maybe CNBC, something Bitcoin will not survive, it's not going anywhere. It's a fraud, a major skeptic. If I was the government, I would shut it down, which is not possible. You may be able to shut the on and off ramps, but you're not shutting that.
Speaker 2:Bitcoin, so he gets all these negative things. And then on the 29th, blackrock and Valkyrie update their S1s to include the authorized participants, and JP Morgan is one of the, so he just slid into the last moment. He's like I'll make money right here, so moral. The story is watch what they do, not what they say, so it's. When I started, I saw that online. I go this is too good. I got to share this, so yeah.
Speaker 1:But then, to be fair to him, there's been a lot of other people.
Speaker 2:I mean Warren Buffett, charlie Munger. Well, Warren Buffett still doesn't have Bitcoin.
Speaker 1:I promise you that.
Speaker 2:I not directly, but he owns companies that work in the crypto space. So it is like he has a very mixed if you look at the true record on it versus what he says, and I would assume that he knows he owns some of that.
Speaker 1:But I'd like to say it probably wasn't his decision yeah. It was probably at one of his managers managers or companies within his portfolio.
Speaker 2:That's true. So yeah, to his, I guess, to his defense, it's probably a little bit more of a difficult situation there, but yeah, so it feels close. There's rumors that potentially it gets announced today, the fifth, in preparation for, like, a Monday or Tuesday launch. It's up to, as we talked about in the last podcast, it's up to the, I guess, the sponsor to decide when they're going to launch it. They all have tickers. They all, at this point I believe, have talked about their fees. I want to say it's the BlackRock iShares One is giving free trading of the ETF for six months.
Speaker 1:So you know this is going to be on everybody's free platform.
Speaker 2:I would think you know it's certainly an arms. You know, yeah, an arm very slash. You know an absolute sprint to figure out who can get market share.
Speaker 1:Schwab and fidelity ought to be able to offer that pretty quickly. I would think that brokers may may be restricted. Yeah, it could be a thing.
Speaker 2:Yeah, you know, I've heard some.
Speaker 1:I don't mean like Schwab and TD, I'm gonna say broker. So in my world there's there's independent, there's institutional sides of these big firms. So our firm is at Schwab institutional, schwab retail. So Schwab retail and Schwab institutional, we would have full access to that. But there are brokers like securities America and these are guys attached, or these are firms attached to advisors like myself. They're really just selling things, they're not really doing advising, they're just making transactions right, and there's a they have a really tight compliance department that I could see that could potentially block something like that. You know, but you never know.
Speaker 2:Yeah, I've seen.
Speaker 1:There's gonna be an ETF. There's gonna be a Bitcoin ETF. We know this. It's a question is which day this month Is it gonna be? It seems to be, but but there is no crypto regulation in place. There is no single governance of crypto by any any Department of the government.
Speaker 2:Multiple people correct. Yeah, there's no regulation. I mean, they've made, they've done some things right, there's only court rulings and no judgments against correct, so?
Speaker 1:the only thing that's different when I eat when the ETF launches is that you can wrap this sucker up into an ETF and you can trade it well, because I said to somebody the other day the only reason why there's a Bitcoin ETF is because there's no group to argue that it shouldn't be a security. So it's getting wrapped up in the ETF as a security?
Speaker 2:Yes, and all the Bitcoiners that started that wanted the government to go away, not have money all center, happy with Wall Street money, it's just yeah highly ironic, right.
Speaker 1:Well, they ran, yes, like people off right to get to that point. But but the Bitcoin is at an ETF, you're less likely to have it stolen.
Speaker 2:Well, you can't have it stolen. What I mean, how it would be stolen at the point. I mean I guess they're high, it would be stolen to be a high, be a major hack. Events like yes, yeah.
Speaker 1:So you're, it's much more secure for an individual person to buy through the ETF, then trying to create their own wallet, and then there's a key to the wallet and you know if you're trying to buy $10,000 worth, right? Yeah? So so there's, there's a lot of validity that comes with ETF, but it's still an industry. It's not regulated, right? Yes, so yeah so an SBF which has been cleaned up, sort of I guess.
Speaker 2:Yeah, well, did you see they dropped his charges recently.
Speaker 1:Oh, that's only because they got him convicted for the rest of his life on the on the first, well, he hasn't been sentenced, but yes, he was convicted.
Speaker 2:But all the campaign finance charges, yeah, dropped, of course they did. I was like how many? Doj be like this needs to go away every Democrat in California and Republican like he gave money to like 80% of Congress.
Speaker 1:Yeah like like he had bought the government. Well, I guess. I guess that's why he got those dropped, but he couldn't get him out of the first set. Right, gonna put him by bars.
Speaker 2:Yeah, for a long time Spared him sometime, I guess that's great.
Speaker 1:Well, even the latest thing in the journal was talking about who's the guy over it? Other competing firm for oh um.
Speaker 2:I've a CZ finance.
Speaker 1:Yes, so evidently his girlfriend Fia is like the number two person there. Oh, I did not hear this, it was in yesterday's paper and, oh my gosh, they're basically. They're like well, yeah, they got rid of him, but she's still there. She's a mother of three of his children. They're not married, but she's like the number two there, wow, so is he really just doing all his stuff through her now? Oh, she was. She was left untouched in all this. Well, which is crazy.
Speaker 2:They did up his fine. I saw that originally it was reported at 50 million. It went to 150 million, so maybe that was the the negotiation.
Speaker 1:I'll give you some more money like he has.
Speaker 2:He's a billionaire, so it kind of doesn't matter but, like I have. I'll have to look that up.
Speaker 1:That was, I guess, for listeners. He was basically I don't know if we ever talked about on a podcast, but money laundering is one of the things.
Speaker 2:Money to Iran and Precious places they had AML, but only for select customers and KYC. Other customers they didn't care. So child sex trafficking, hezbollah Iran a lot, a lot of bad.
Speaker 1:The accusation was that US money would end up in these, in these countries, and then it would end up in their system as they were moving it throughout the rest of the world, right, so yeah, yeah, it's um, that was you know. In hindsight that was a ironically, he's the one that called out SPF.
Speaker 2:Yeah well, A kettle knows each other right, Like the criminal.
Speaker 1:Yeah, the criminal got. The other is like no, no, go, look at that guy, right.
Speaker 2:Yeah, but you know, in in hindsight I think, that the Binance thing had to be taken care of, cleaned up, for an ETF to happen. So, because they had so much control over the, the Bitcoin price?
Speaker 1:Oh, absolutely, yeah, absolutely. All this is created by rogue people. Maybe a few with good intentions, but many without right intentions.
Speaker 2:Yeah, but yeah, so it's. The ETF is Coming soon. You know, I described it to somebody recently and I post on LinkedIn about how I view this whole event. If you look at it, I guess zoomed out a little bit, is a bit of a how a tsunami works. Right, you have that initial burst and then you know that the tide recedes and then you have the big wave. I think the tide receiving will be shortly after, within weeks of the ETF launching. There will be some volume, but then the critics will come out and say, look, there's not as much interest in this. And then the big wave comes over time, when people actually because I can't imagine there's that many people waiting in their Schwab or whatever account waiting to buy an ETF tomorrow If it launched today- there's some not yeah, probably not on the institutional side, but because because most people aren't actively trading, or shouldn't be actively trading, their retirement account.
Speaker 1:Yeah, I would never put it in a retirement account, but but certainly a brokerage account.
Speaker 2:Yeah, brokerage, but yeah, most people are busy with their job, right? I mean, like you have to keep perspective.
Speaker 1:But? But if you're, you know your net worth is over 10 million, you're constantly looking for alternative assets to invest in, you know, and for traditionally for us that's always been real estate, not not like do a fund necessarily, but Second home, a third home, land, right, you know, commercial, commercial, buildings, whatever. I think that this is making a case that you could say, okay, I'll take 1% and I'm gonna drop money into a fund like yours, or or maybe just straight up into the ETF and see what happens and I'll lose 200 grand. It's less than one tenth of a percent of my right now my net worth, you know but, I don't know.
Speaker 1:I I'm not talking to any advisors right now that tell me oh yeah, the man, the Bitcoin ETFs coming out now. They all own Bitcoin personally, but the risk of taking a client down something that is volatile, who doesn't understand it, is a problem. You have the same issue. You know people come to you wanting to do that, but you also have a lot of questions.
Speaker 2:I have a question you have to set expectations on how volatile this asset class and you know, in my fund they have to be a Accredited investors, so there's in some sense some protection there for me as long as I make them sign the right papers right. But for the average Joe in the street coming to talk to an advisor, obviously, I think in some ways the risk is higher there.
Speaker 1:No, very true, Very true. I, but I honestly, I'd rather see someone buy a Bitcoin ETF. He has no idea exactly what's happening there.
Speaker 2:then buy one of these Leveraged inverse yes, oh for sure, because they don't understand the product.
Speaker 1:No, they don't understand the product. They're gonna understand. I said if the market went up, I would gain, or a market went down, I would go up to X. I'm like, doesn't work that way. It works that way in the day by day, so that works. Yeah, that's frustrating. And then there's a whole new other ETF that I didn't know existed. That, basically, is like an annuity it guarantees you You'll never lose, but you can cap on the game you can gain and then when you read the fine print, it like captured gain at like 5%.
Speaker 1:So last year we're really sucked.
Speaker 2:Thank you, go buy a treasury.
Speaker 1:Yeah Right, go buy a 5% CD at this point and just skip the anguish of all that. But I can't remember the name of those ETFs. That escaped me. Someone just commented on our podcast one time, so when are you going to talk about these?
Speaker 2:And I responded back.
Speaker 1:It was like actually never, Right yeah.
Speaker 2:Thanks for the reminder.
Speaker 1:This should never be in someone's portfolio, right? Anything that's produced by, like, allianz. I'm just like yeah, I know that's funny. So let's talk about Bitcoin having, or, I would say, splitting.
Speaker 2:Yeah, so in the crypto world it was called the having. Roughly every four years, bitcoin goes through this having event, where the number of Bitcoins mined on a per block basis so roughly every 10 minutes gets cut in half. It's been part of the math ever since the beginning and it will be part of the math all the way until the last Bitcoin is mined in the year 2140. So well passed when we're here.
Speaker 1:So that means you double the number of coin, no cutting them in half.
Speaker 2:So I figure what the exact number is now to say. It's currently 900.
Speaker 1:Yeah.
Speaker 2:Bitcoin every 10 minutes, it would be 450.
Speaker 1:Oh, so promote, promote, promote price appreciation yeah.
Speaker 2:Yeah, because the miners get it and it there functionally have to work twice as hard to get the same amount of Bitcoin.
Speaker 1:Yeah. And so they want to be paid more for that.
Speaker 2:Who sets these rules and who. That's literally part of the code. And when Bitcoin was created, oh wow, it's just part of the formula. That's, if you believe the story, Satoshi Nakamoto whoever he, she, they are is the one that created it, and that's part of you know the code and it's written in stone. Effectively. So every four years in the market, as the Bitcoin price appreciates, typically into that kind of event, and this year it's going to be April, last time 2020. It was roughly in May. Roughly it was in May. So you know it appreciates the market kind of falls along and you know, just generally in crypto, outside of even a having event, Bitcoin increases in price. The alt coins and Ethereum kind of lag behind a little bit. As money flows out of Bitcoin, People see it. They kind of flows in other coins. People try to, in a sense, double dip on a market rally and you know some are successful, Others are not, but it's a this kind of generally have the market flows.
Speaker 1:Interesting.
Speaker 4:All right.
Speaker 1:Yep, where do you think we're going to be at the end of 2024 in crypto? Give me your 2024 prediction. Will we play this in a few months? Yeah, yeah.
Speaker 2:I, you know, I think it is super high level. We're higher, right. You have this ETF event early in the year, obviously in January likely happening. You have the having in April and just generally we're on the cycle of not just a having year but also it's a. If crypto continues to follow the cycle it has in the past, this should be a bull market year, kind of ending in late 24, early 25. And so you know, I don't necessarily can't tell you what I think Bitcoin will be at the end of the year. You know, I think that we will see an all time high this year for Bitcoin. So I think the last time it was 68,000 and change something like that 65, 68. I think, you know, does it get to over a hundred thousand? That's where the Bitcoiners with the laser eyes and all the other craziness think we're. You know we're going higher. You know I've seen 250,000. Some are crazy numbers. Kathy would have a million. I think hers is more long term. It's not this initially this year, right, but it's.
Speaker 1:Oh, if it went a million this year, you'd have just people. I mean, they would be sold out of Lamborghinis and yes, yes, absolutely Every beach property would be, yes, miami would be taken over.
Speaker 2:Big, big, big coincide. But yes, I you know, I think that you know, if 22 was sort of, you know it was certainly a down year, 23 was a grind up. We may have started technically a bull market in Q4 of 23. We'll see as it plays out here in early 24. I believe that we have, Because we will probably do for a bit of a small correction. I think that comes after the ETF thing, like I think that's the tide going away moment. There was a chance two days ago that I thought we were getting that we. There was a 10 or 15% correction in like 10 minutes. A lot of liquidations. There was just the greed scale from, you know, fear to greed was approaching Pegline greed. A lot of anticipation of this ETF.
Speaker 1:Yeah.
Speaker 2:And then boom, there was an article posted in one of the crypto rags about how the SEC plans not to approve the ETF in the market. Corrected, I'm like this is just such rudimentary and, like you know, the cynic and me was like oh, that means that one of these authorized participants needed to discount on Bitcoin.
Speaker 1:So they got an article published which is not against regulations. Yeah, that would not be against regulations which, to my point earlier, yes, they can still be priced, can still be manipulated by people with enough money.
Speaker 2:Right, and I can't imagine it's expensive to buy off one of these crypto racks, especially since they run outside the US. So right you know again. I think 2024 is generally going to be a good year. Most people will be happy if they've made crypto investments in 24.
Speaker 1:I pulled this out of your newsletter. Who's the FASB and why are they confirming a very fair value approach? What does all this?
Speaker 2:mean yes. So FASB, I believe, is the Financial Accounting Stability Board, standards board yeah, okay. So they basically help create rules that accounting or the way the books should be kept for companies like public companies I mean, I think it applies to private companies as well at some extent. Up until or even till today. You know, if you wanted to hold crypto and generally just been Bitcoin for companies holding it like Tesla, or a mass micro strategy holding it, publicly trade companies holding Bitcoin on their balance sheet, the standards only allow them, or require them to mark down the Bitcoin price as it depreciates Okay, but never allowed them to mark it up as it went up. It seems a little odd. Yeah, mark the market on the way down and then it's stuck. So, starting in January 1st of 2025, if I'm not mistaken, I think we have to wait a whole year for this to kind of come through You're allowed to market where it is. At that point, you'll be able to do true market up and down. This seems like housekeeping-type item here.
Speaker 1:It seems common sense but, what that tells me is at least one government board is seeing as a legitimate asset.
Speaker 2:Yeah, Do you know if FASP is actually government run or is that a true third, almost oversight body?
Speaker 1:I thought that it was kind of like FINRA, where it's run by the government, but run by the industry.
Speaker 2:I can't say I didn't have homework on that to know. That's how I've always seen it?
Speaker 1:I don't know.
Speaker 2:In some ways it would make sense. It would be almost IRS related, so anyways, but yeah, I think that's just cleaning up of some of the rough edges around crypto to make it a little more friendly for companies. Microstrategy I mentioned is interesting. They're a technology company that Michael Saylor, the founder and I don't think he's a majority owner anymore, but CEO of it's almost like a Bitcoin holding company. They've accumulated so much Bitcoin I think he holds like 5% of the total supply thereabout so a lot. They've bought $3 billion worth of Bitcoin. That is worth $4 billion. So they're up on their investment at this point. But my understanding is they've had to mark it on the down but they couldn't mark it up. The market knows how much he holds because he publishes each time they buy.
Speaker 2:But it's just kind of fascinating to kind of see, Since there hasn't been an ETF. If you wanted exposure to Bitcoin, you could have been buying my MicroStrategy.
Speaker 1:Right, that's true, but weren't some people doing that though?
Speaker 2:Some people were for sure.
Speaker 1:I remember that in the paper.
Speaker 2:Like. I have no idea how that's performed for people Because obviously there's other influencers and other business there it's attached to but it's.
Speaker 1:I know they were saying that you would buy that because you were getting the deep discount. The valuation was so low. Oh, because they could mark it up. There's an arbitrage and then, if they ever separated it out.
Speaker 2:In some sense it's like the grayscale trust Bitcoin trust where there was a deep discount. Now, that is, I think, within 6%, now I remember staring at that deep discount going uh it's just a little outside my wrist tolerance.
Speaker 1:But, I'm like uh.
Speaker 2:Yeah, you know, grayscale potentially is getting a conversion into ETF. That one is fascinating because they already had an existing business with it. It fees around 2%, so their fees are going to get squashed with this ETF flinching.
Speaker 1:Probably what they're hoping is they get volume.
Speaker 2:Volume.
Speaker 1:Yeah, it's like the S&P 500 ETF used to be like what? 20 bibs, and then now it's like three, right, but they still make more money. Yeah, right, so it's volume. Yeah, let's talk about tokenization of real-world assets. You linked to an article you sent me for our show notes, which I read through, which is very fascinating.
Speaker 2:I had to read it twice, though, because I'm like OK, this is like a whole different language. Yeah, you know, and the reason why I included this in this particular podcast is we're talking about 2024 projections of sorts, with the upcoming bull run in crypto. Each bull run seems to have a theme or maybe two themes around it. The last theme was NFTs. Everyone was buying stuff.
Speaker 1:I totally forgot about NFTs. Yeah, in the vast majority of those were zero. Remember someone buying a $500,000 thick house?
Speaker 2:Right, I think the famous one that at least I remember seeing recently talked about was Justin Bieber bought like a million and a half dollar NFT of some kind and it literally the other ones that were very similar to that are being traded for $1,300 now.
Speaker 1:So anyways, this next two loops.
Speaker 2:Yeah, two loops. That was two loops for sure, but the technology will morph itself into something real in the future, in my opinion, but in that iteration it was two loops. This upcoming bull run, I believe the narrative around it is going to be around tokenization of real world assets.
Speaker 1:Explain.
Speaker 2:Yeah. So we've talked a lot in previous episodes about what is an NFT. What could it be down the road, like I've talked about. It could be a car, a title, a house, deed, all those things. I think that I've probably refined that. All stuff will happen eventually.
Speaker 2:Whether they actually call it an NFT or not I think it will be decided later but I think what you first see from a tokenized standpoint of real world assets, you start to see you know Franklin Timberton's already doing it they have a bond fund that's tokenized. You start to see in stuff that Wall Street touches every day getting tokenized, because I think that they start to find cost efficiencies in running stuff on a blockchain. Obviously, regulations and a lot of accounting stuff needs to be figured out, but there's a good chance that that accounting thing got figured out because Wall Street wants to do something. So tokenization can mean a lot of things. It could mean it could be a house, like we've talked about with an NFT. It could be bonds and it can be things that are. You know, I recently made an investment in a token. I'm not going to give the name, but it's a platform that helps company tokenize the rewards programs.
Speaker 2:So you know Coke points, pepsi points, that kind of thing, but tokenized in a blockchain. So then if somebody accumulates points, what if they want to cash out? They don't really want all this stuff. So they're starting that's happening outside the US because I think that's, if I'm not mistaken, australia, because they have regulations but it allows it's starting to create economies around things that really didn't have markets before. Like you were in these dead-end silos. Like your Pepsi points were not good for anything, but they had a Pepsi logo on it or whatever. I mean like whatever they decided they wanted to be good for. Well, what if somebody wants more Pepsi points? Shouldn't they just be able to buy them from you?
Speaker 1:Who would ever want more Pepsi points? I don't know I mean, but like it's a silly example.
Speaker 2:But like or airline miles.
Speaker 1:I'd say I'd say, apply that to airline miles, maybe that makes there's market play.
Speaker 2:Heck, I've sold SkyMiles before, but like it's or SkyPaysos be very clear about that but the you know it just. In a lot of ways, I think this technology is and I've said this in the past is so young. We don't really understand the use cases for yet, like we're fumbling through silly things to figure out like, oh, this actually might be, this is like web 1.0. We haven't got the web 2.0.
Speaker 1:You know the social media age in that sense, yeah, I Just go back to like it's all like for night money in the end, like that's how it could be used. So it already exists, all these games.
Speaker 2:I mean for tonight's, a great example. I mean you could. I never played the game, but you may collect things. I don't know if you get a shield or whatever's in that game. Well, you spend half.
Speaker 1:You know, I don't have to do this. A Kate and we we have one child that is playing this game regularly and Every time you're at Kroger or somewhere public say okay, I get a fortnight gift card. No, because you have to take dollars and you convert it into the fortnight right, it's a one, it's a one-way thing. Exactly. Well and it's Extract that right you could never.
Speaker 2:You're not right, but there may be you know.
Speaker 1:So they're buying skins or buying how you look in the game, right, and all that right, right.
Speaker 2:So then once you buy, it's just money spent, it goes to the to the game developer yeah, then if you start trading, it trade amongst yourself right, go to market and like, I think that that kind of stuff happens. I know there's some crypto companies that are trying to get their blockchains enabled in that kind of environment again. I think, at least in the US, it's it's regulation I like are those securities is a skin security? The SEC would say yes, as you see, would say yes, but it's another big one after eight year olds playing right.
Speaker 2:I'm playing for. I mean, all sudden there's a lawsuit, shows up the door and the parents like what's going on? Like, oh, you're kid bought a skin, yeah, yeah, and sold it, yeah, and your that it would make the other right like it's just insanity.
Speaker 2:So I'm sure. But yeah, real world assets, I think bonds in other things that Wall Street you know Cares about, I think is where we're gonna see the push come from and I think that's potentially where we get the regulations from. Is this Wall Street wants them in, we'll get the reach you know, get some examples of how it's being used inside.
Speaker 1:Inside that article, I mean, there were, there were several cases when you're like, huh, I don't think people really understand that. I Reference one was the bond funds, right? So basically you're taking a bond fund, you're, you're able to. I guess this is the trading efficiency of it. Well, you know, cuz basically you're just wrapping it up and you're just passing this wrapper around as opposed to having to liquidate the basket and that and you know just generally like block hands are gonna be more efficient than all the other.
Speaker 2:You know, I guess, old technology that yeah, the current financial system runs on like oh right it can be run 24 7365 and you know, the challenge with tokenization of real world assets, though, in my opinion, is gonna be like all this stuff around KYC Right knowing your customer and like who's buying what. There's not great identity solutions on the blockchain right now. So, like, I still think that like there's a chance that you're buying a tokenized thing through a brokerage account, but you're, but you have no idea you're it's tokenized. I think that it's. It's gonna start as a an efficient efficiency mechanism for for the back office.
Speaker 2:Yeah, and then maybe over time it morphs into realize oh, this is the tokenized version, or or. I can't imagine they run two of them side by side but like it's Again, it's this. They're trying to find the least amount of ways or the least difficulty of Getting to the other side without having to in many ways educate the public on what's going on. Yeah, because the public shouldn't care that it's tokenized, right? They just care what the price is and can they make money on. True?
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Speaker 2:So another example of you know, a use of tokenization that is just beyond plumbing, or something that that is just plumbing, is, you know, jp Morgan, or assuming Goldman Sachs was doing something to save 15 basis points for them on doing so, it's again cost savings or time savings. There's another example of a you distributed ledger using security solutions that Saved a hundred hours of people time in a week because they could talk nice stuff. You know, you know, I think that the you know, it's kind of like the AI revolution is gonna take everybody's job, like we'll crypto do it. No, I think that there's plenty of work to do, yeah, and humans tend to have more and be more ambitious than they are lazy, so they know all the savings will get consumed in other ways.
Speaker 1:I Guess it's like you talk to these people and they're like Based on what the government has spent during COVID and now, and they say you know tax rates are to be at 50 70% on the high end, am I? You know, we was not the case 30 years ago if you looked at what we were spending right going forward that people are discounting Technology and and our ability to work more efficiently, and so I was trying to explain to someone earlier it's like well, I need to convert all my money to a raw battery right now because I mean huge tax bracket when I retire. So I do all the math and I'm like actually You're gonna be in the 24% bracket which you know.
Speaker 1:Good for you if you're retirement 24% bracket yeah, in the 37 now, but you're, would you see a bit, it'll be 37, will be 24, be 37 in the future. I said you're you're not taking into account what AI can do for efficiency, but blockchain can do for efficiency. And if companies are making more money with less people, right, then there's more taxes to be paid, right, right, I mean, even if people are making more money because there's less people needed to do the job, there'll be jobs for everybody. But the point is is that the revenue will be higher in the future because we'll be more efficient workers.
Speaker 1:And therefore, you won't have to have a 70% tax rate. Now, there's always going to be politicians. They're going to spend that excess. Oh, there's an extra dollar. Maybe we should start borrowing less. That's a real problem. You should probably vote those people out, Right, Right, but I think people are just discounting that in the future. Again. It's like I go back to Tang and Velcro. We got Tang and Velcro because of the space revenue. Now, the government spent billions of dollars on those shuttles. But things don't slip now, right, yeah, that's funny.
Speaker 2:And people can drink something other than the water?
Speaker 1:Yeah, but yeah, it's not. I just feel like when you talk about AI and blockchain or even just crypto in general, people just get cross-eyed and are like I don't understand it. It's all. They do Make an effort to understand this stuff. Yes, it's something that is going to be important going forward.
Speaker 2:Yeah, I think that if it's something that you just spend 15 minutes a week, or go take Don's class.
Speaker 1:Right, it's like 400 bucks. If you take Don's class, you'll be a certified crypto person, and if you just want to feel like you're staying up on the news at some level.
Speaker 2:The Wall Street Journal has got a weekly newsletter that comes out in email. That's right, you could read the headlines and if one of the things catches your attention, read it and hopefully you learned something that week.
Speaker 1:Yeah, that's right. I just described that as well. We also have a couple of episodes you guys might be interested in. Episode 197 talks about well-financial advisors be using a Bitcoin ETF soon. That was our last crypto one. Episode 172, our crypto special tips to secure your passwords and crypto assets that was another good one. I think that applies to almost anything these days. I just got my Venmo account shut down because someone's trying to play their bills with my Venmo account. Just kept getting emails that said you've reset your password. You've reset your password.
Speaker 2:You've reset your password.
Speaker 1:I'm like, holy crap, yeah, I'm not resetting my password. And then eventually got an email that said we have locked you out of your account. Now, I don't know, I still can't use Venmo, but they can either.
Speaker 2:You're really good. I didn't want to use it anyways.
Speaker 1:Now I'm like do you take PayPal, right, yeah, but yes, that's very important. This is episode 202. Robert, thanks for doing this. I can't believe we've been doing this a while now and our crypto episodes are always highly listened to. Thanks for listening Today's episode. If you're interested in learning more about Wiser Wealth Management or Teton Crypto, you can reach out in our respective websites. Google us. We're sitting out there waiting to talk to you, sounds good.
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Speaker 3:This episode was produced and edited by Ken Houtley. This podcast is strictly for informational purposes only and is not to be considered as investment advice or a solicitation to buy or sell any financial products, securities, digital assets or any other investment vehicles, or a basis to make any financial decisions. Wiser Wealth Management Incorporated is a registered investment advisor with SEC. The host and or guest may personally own securities, digital assets or other investment vehicles mentioned on this podcast. Neither the host nor guest of the show are compensated for their participation and no referral fees are paid to or received by any host or guest for clients, listeners or similar interests. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor, tax professional, insurance professional and or legal professional before implementing any strategy discussed herein. Test performance is not indicative of future performance.