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there's joy in every journey. It's

1:11

exciting to see another cryptoasset

1:15

be applied for on an ETF

1:17

format it shows that there is

1:20

Desire for more crypto assets to become

1:22

institutionalized via the ETFs I think it's

1:24

a little premature to say that even

1:26

a Trump win would mean an approval

1:29

for a sole ETF Solana

1:31

is very different than Bitcoin and

1:34

aetherium in many regards It's

1:42

Wednesday July 3rd and this is market

1:44

Staley a show where we get into

1:46

the minds of some of the most

1:48

experienced and smartest investors CEOs analysts strategists

1:51

researchers Anyone with a hot or smart take

1:53

on the crypto markets before we get into

1:55

today's discussion though Let's take a look at

1:57

what's going on in the news this morning

2:00

Bitcoin and major cryptocurrencies experienced a

2:02

sharp decline during Asian trading hours,

2:05

reversing gains made earlier this week.

2:07

The price drop was attributed partly

2:09

to concerns of large Bitcoin sales

2:11

from the defunct Mt. Gox exchange,

2:14

which is set to distribute assets

2:16

later this month. Now, US-listed ETFs

2:18

tracking Bitcoin also recorded outflows of

2:20

$13 million, breaking a

2:23

five-day streak of inflows. This

2:25

while architect partner says that the industry is

2:28

beginning a major growth phase, some positive news

2:30

this morning. The advisory firm said that the

2:32

industry added more than $750 billion in value

2:34

in the first half

2:38

of the year. Now, joining us now to

2:40

unpack what's going on in the crypto markets

2:42

and help us make sense of all of

2:44

this is Bitwise Senior Investment Strategist, Juan Leon.

2:46

Juan, welcome to the show. Hey,

2:49

Jen, great to be with you. Great

2:51

to be with you too. Now, the markets are looking a

2:55

little more depressing than they were looking

2:57

probably a week ago.

2:59

Talk to me about what you're looking at this

3:01

morning. And if you were to allocate a portfolio,

3:04

where would you be starting? If I

3:06

was looking at a portfolio with these markets

3:08

being down over the past day and month,

3:11

I think it's a great time to allocate

3:13

in crypto. I'm excited about

3:15

what I'm seeing in traction in both

3:17

Bitcoin and Ethereum and companies

3:19

like Coinbase as well. So I would

3:21

allocate to those three assets for

3:24

sure. So Bitcoin,

3:26

Ethereum and Coinbase? Yes.

3:29

Talk to me a little bit about Coinbase. We

3:33

have a lot of stocks

3:35

that are, I guess,

3:38

crypto-related stocks, crypto-adjacent stocks.

3:40

Why Coinbase? Well,

3:42

Coinbase is primed for growth in many

3:45

of its areas. We're seeing

3:47

we're in a bull market even with this

3:49

volatility of prices. We're in a crypto bull

3:51

market. That is great

3:54

traditionally for its trading volumes.

3:56

So we think trading volumes will continue to

3:58

go higher over the next year. for Coinbase.

4:01

And that has been historically a big

4:04

driver of its revenues, but it's also

4:06

been diversifying its revenues over the past

4:08

couple of years and now has great

4:10

growth coming from its subscription and services

4:13

area. And

4:16

in that area, we are very excited

4:18

by the prospects of base, for example,

4:20

it's layer two solution that

4:22

is now the fastest growing layer two

4:24

on Ethereum. And we're

4:26

seeing significant traction there. And

4:29

we're seeing things like partnerships recently

4:31

last week they announced Coinbase announced

4:33

a partnership with Stripe. Stripe

4:35

has 20% of the global

4:38

payment processing market share. And

4:41

with the partnership now USDC

4:44

settled on base will be available

4:46

to customers from Stripe. So

4:48

you'll be able to spend USDC on

4:50

your credit card on Apple Pay that

4:52

is settled on base, which

4:55

brings fees to Coinbase. And so that's

4:57

bullish for Coinbase. Ultimately, it settles on

4:59

Ethereum basis built on Ethereum

5:01

as a layer two. So it's bullish

5:03

for Ethereum as well. So I think

5:05

things like that are great avenues for

5:07

growth for Coinbase. And we're seeing its

5:09

international expansion as well. And that is

5:11

showing great traction. So we're very

5:13

excited about what's going on with Coinbase. Now,

5:16

on the topic of stocks that allow investors

5:18

to make a bet on crypto markets, I

5:21

got to ask you about Bitcoin miners.

5:23

I know that Bitwise recently said that

5:25

crypto and AI could have a very

5:28

bright future ahead. I think

5:30

they said that it could be a $20 trillion

5:34

industry in the future. We can get

5:37

to that a little bit later. But

5:39

given the fact that Bitcoin miners are

5:41

now diversifying their business models, looking at

5:43

how to incorporate AI into their business,

5:45

are you watching any Bitcoin mining stocks?

5:48

Absolutely. I'm watching all of them. And these

5:50

developments are very exciting. I mean, a year

5:53

or two years ago, no one would have

5:55

thought that Bitcoin miners would now be sitting

5:57

on the opportunity to be square and center

5:59

in Bitcoin. in the infrastructure build up for

6:01

the AI boom, but they are. They

6:04

found themselves in that position. And we've

6:06

seen this year recently the 3.5 billion

6:08

deal between Core Scientific

6:11

and Core Weave. We've

6:13

seen more recently the $150 million

6:15

investment from Code

6:17

2 Management in HUT 8 to

6:19

continue to build out their expansion. And

6:22

just this week, we saw the

6:25

announcement from Northern Data, who

6:27

said they're prepping an IPO for both

6:29

their AI and Bitcoin mining data center

6:32

units. So they're right in the middle

6:34

of the opportunity. And that's creating

6:37

excitement from investors and bringing in capital

6:39

for further growth. Let's

6:41

talk about that a little bit more. I do have

6:43

the number in front of me now. So what was

6:45

said by Bitwise is that AI and crypto combined could

6:47

add a total of $20 trillion to the global economy

6:49

by 2030. What

6:52

goes into a prediction like this? Yeah,

6:55

well, there's been studies made. PwC

6:57

made some studies about the

6:59

potential for crypto and AI to contribute

7:02

to the global economy looking out to

7:04

2030. They estimated the

7:06

two industries combined could add an additional $17

7:09

billion to the global economy. We looked

7:11

at that. And given

7:13

the synergies that we see emerging

7:16

between crypto and AI, we mentioned the

7:18

Bitcoin miners, but there's more opportunities

7:20

as well. We think it could have a

7:22

compounding effect. And so that $17 trillion could

7:25

be higher, much closer

7:27

to a $20 trillion or even above that.

7:30

So we're very excited about the opportunity, the

7:33

long-term opportunity for these two high-growth

7:35

technologies to work together to

7:37

enhance the economic growth

7:40

prospects of the world economy, productivity

7:42

for individuals and businesses, and

7:45

new applications for

7:48

consumers. And when we talk about

7:50

crypto and AI, are

7:52

we talking about the two industries kind of

7:54

growing together? Or are we talking about the

7:57

two industries coming together and there being some

7:59

sort of... of convergence that gets us to

8:01

this number? Both. Each

8:03

industry has its idiosyncratic

8:06

growth factors, and so

8:09

there's wide adoption for these technologies individually,

8:11

but we see many opportunities for them

8:13

to intersect and collaborate together

8:15

and for synergies to happen between the two.

8:17

And so we think it's a mix of

8:20

both that is going to be driving them.

8:23

Now, I got to ask you your

8:25

opinion on the AI tokens. I believe

8:27

that on the show yesterday we spoke

8:29

about in Q2, there was a little

8:31

bit of a surge in AI tokens

8:33

along with some other tokens

8:36

that kind of went against what the rest

8:38

of the crypto market was doing. Are you

8:40

watching any of the AI tokens as a

8:42

bet on AI? Yeah,

8:45

I'm excited by the decentralized

8:47

AI tokens and the prospect

8:50

there. There's the centralized

8:52

companies like OpenAI, Meta, Google that

8:54

are building out their AI capabilities,

8:57

and they have lots of resources.

8:59

But there's fears there

9:01

and concerns with the centralization of

9:03

who's building out AI, who controls

9:05

that, and the biases that go

9:07

into that. And so there's a

9:10

big push for decentralized AI, and

9:13

that's where the opportunity comes for some of

9:15

these projects, projects that I'm

9:17

excited about. We're seeing the merger

9:19

happen between SingularityNet and

9:21

FetchAI and Ocean Protocol. That is going

9:23

to allow them to pool the resources

9:25

of the three nets

9:28

and be able to enhance what

9:31

they're doing. And so I think projects

9:33

like that and combinations like that are very

9:35

important for this space to

9:38

be able to evolve from a decentralized point

9:40

of view and bring that transparency that

9:42

blockchain technology does in

9:44

the pooling of resources to the AI

9:46

movement. Tell me a

9:48

little bit more about that. I know the

9:50

convergence of those three projects was big news

9:53

this week or big news in the last

9:55

few days. Why is that

9:57

so important? It is

9:59

really important. because it

10:01

allows the expertise of

10:04

those projects to come together. Each of those

10:06

projects is tackling slightly different areas of

10:08

AI. Fetch

10:10

AI is tackling more of a

10:12

marketplace for consumer services.

10:15

SingularityNet is tackling more of

10:18

the backbone building of

10:20

LLMs in a decentralized

10:22

manner and creating a marketplace for compute.

10:25

And so these projects coming together really

10:28

solidifies the offering and allows

10:30

them to verticalize their AI

10:32

capabilities to integrate and be

10:35

more effective in the marketplace together.

10:38

Juan, let's talk about Bitcoin now. I mentioned at the top

10:41

of the show Bitcoin sunk more than 4% in the last

10:43

24 hours. What

10:45

are you watching when it comes to

10:48

the largest crypto by market cap? Yes.

10:51

Well, we saw Bitcoin, as you mentioned, down 3% over

10:53

the past day. It's down 12% over

10:55

the past month. But

10:59

it's important to keep in mind that it's up 36% year to date

11:02

and up 93% over the past year. So

11:04

I think it's important to zoom out a bit

11:07

and contextualize the market moves that have happened. Looking

11:10

at this year, we saw the run up to

11:12

the all-time highs near 74,000 in mid-March on

11:15

the back of the debut of the Bitcoin ETFs. Now,

11:18

the ETFs have been the best performing category

11:20

of all ETFs of all time and

11:22

have seen 14.5 billion in

11:24

inflows since the launch. That

11:26

surpassed everyone's expectations. But of those

11:29

14.5 billion, 12 billion of

11:31

that came in through,

11:33

it was gathered through March. So

11:35

what we've seen is that since the all-time high,

11:37

the last three months, ETFs

11:39

have gathered an additional 2.5 billion,

11:42

which is great, but the flows have

11:44

slowed down, which is natural to expect

11:47

that as the first wave of investors

11:49

deploying capital into the ETFs runs its

11:51

course. And so then we've had additional

11:53

selling pressure from Bitcoin miners post-halving to

11:55

cover higher costs, more recently

11:57

from government entities. selling

12:00

out some of their seized Bitcoin. And so

12:03

that's putting pressure on the market. And

12:05

what we've seen now is since mid-March,

12:07

Bitcoin has been wedged in a consolidation

12:09

channel between 60 and 70,000. And

12:13

investors seem to be in a holding pattern until

12:15

the next catalyst emerges. What

12:17

is the next catalyst? I

12:20

think that could be a couple of things. It

12:22

could be the second wave of

12:24

inflows into Bitcoin ETFs, which we

12:26

at Bitwise expect to come from

12:28

platform approvals of wire houses,

12:30

the likes of Morgan Stanley in the second half

12:32

of the year. We

12:34

think that'll be a big wave of

12:36

capital that reignite the momentum in Bitcoin

12:39

ETF inflows. We're also in

12:41

an election year, as we all know,

12:43

and we've seen a pro-crypto bipartisan coalition

12:45

begin to form in Congress. That has

12:47

been encouraging, but of course, investors are

12:50

waiting for the outcome of the election

12:52

given the current SEC and the current

12:55

administration's unfavorable stance toward crypto so they

12:57

can better gauge the potential for political

12:59

and regulatory progress over the next four

13:01

years. Well, I

13:03

gotta ask you about the elections, right?

13:06

Trump has come out as this, I

13:08

think he's called himself the pro-crypto candidate.

13:10

There have been industry leaders who have

13:13

come out in support of Trump by

13:15

donating to the campaign or just voicing

13:17

their political opinions online. And now some

13:19

are saying that if Biden is not

13:22

the Democratic nominee after poor performance at

13:24

the last debate, the crypto markets might

13:27

react negatively. Do you have a thought or opinion

13:29

there? Yeah, let's

13:31

wait to see what happens. Trump

13:34

has certainly categorized himself

13:37

as very pro-crypto leaning.

13:40

In contrast to the Biden administration, I

13:42

think that's helped him garner support and

13:44

votes from the crypto

13:47

voting bloc. So that's voting

13:49

well for Trump. He's

13:51

played that very aptly. We'll

13:54

see what happens with Biden. If

13:56

he remains a candidate, well,

13:59

he's all right. already feeling pressure

14:02

from Democratic senators and congressmen who

14:04

are realizing from their constituents that

14:06

crypto is an important technology. And

14:09

they've started to switch their views. We saw

14:12

that in the bipartisan coalition that helped pass

14:14

the 21 that repealed the SAB

14:17

121 measure in Congress. And

14:20

so there's an emerging voting bloc of both sides

14:22

of the aisle in Congress that is putting pressure

14:24

on the current administration to change their stance. And

14:27

it's favored well for Trump to

14:30

take the lead in really advocating for the

14:32

industry. Now there's a change in

14:34

the candidate from Biden. We'll have to see

14:37

who comes in and what their stance on

14:39

crypto is. So that is at

14:41

an unknown at this point. I

14:45

have to ask you on the topic

14:47

of the upcoming elections. Van Eck and

14:49

21 Share has recently filed for a

14:51

spot. So ETF and some analysts are

14:53

saying this is maybe a bet on

14:55

Trump or Republican win at the election

14:57

since these would come up for approval

15:00

in the new year. What do you think? What

15:03

do you think is driving these sole ETF

15:05

applications? I think

15:07

it's exciting to see another crypto

15:09

asset be applied for

15:12

on an ETF format. It

15:14

shows that there is a

15:16

desire for more crypto assets to

15:18

become institutionalized via the ETFs. I

15:21

think it's a little premature to say that even

15:23

a Trump win would mean an approval for a

15:25

sole ETF. Solana

15:27

is very different than Bitcoin and

15:30

Ethereum in many regards. And

15:32

some of the measures that the

15:34

SEC has used to approve

15:37

the Bitcoin and Ethereum ETFs, it's

15:39

unclear that Solana would pass those

15:41

measures. For example,

15:44

Solana is much more centralized than

15:46

Bitcoin or Ethereum are also

15:48

to approve the

15:51

ETFs. The SEC has relied on

15:53

regulated CME futures in order to be able

15:55

to keep

15:57

track of the underlying price movements.

16:00

in order to monitor the market. And

16:02

Solana doesn't have regulated CME futures, at

16:04

least not yet. So those are things

16:06

that stand in the way of

16:09

potentially an approval. But I think it's

16:11

exciting nonetheless, and we do hope

16:14

that an ETF for Solana

16:16

happens in the future. And

16:18

Juan, we can't talk about ETFs without talking

16:20

about the ETH ETF, which could be trading

16:23

any day now. We are, it's July 3rd

16:25

today, so it really could be any day.

16:27

What do you think is gonna happen to

16:29

the price of Ether once these products start

16:31

trading? It's a great question.

16:34

And we've seen ETH also down

16:36

12% over the past month, but it's actually up

16:38

40% year to date. So it's

16:40

slightly ahead of Bitcoin on a year to date

16:42

basis, which many people don't realize.

16:44

So it's up more than Bitcoin year to

16:46

date, and the ETF hasn't even launched. So

16:49

we at Bitwise think we

16:51

put out a piece recently, where

16:53

we think that there could be 15 billion

16:56

in inflows into the ETFs when

16:58

they launch over the coming 18

17:00

months or the coming 18 months

17:02

after launch, based

17:04

on allocations between Bitcoin and ETH

17:06

in markets like Europe and Canada

17:09

that already have spot products for

17:11

both, and also based on our

17:13

expectations for flows into Bitcoin and ETH ETFs

17:15

in the US going forward,

17:17

given their relative market caps. And

17:20

to prepare investors for the ETH ETF

17:22

opportunity, we're educating them on how to

17:24

differentiate between Bitcoin and Ethereum. Many

17:27

investors new to the asset class lump them

17:29

together, which is understandable since they're the two

17:32

largest crypto assets, but of course they're very

17:34

different. So we're helping investors understand

17:36

that Bitcoin is structured as a new monetary

17:38

asset that aims to compete with gold as

17:40

a store of value, while

17:42

Ethereum is structured as a technology

17:45

platform, as a fully programmable blockchain

17:47

that serves as a backbone for

17:49

new crypto-based applications like tokenization, stablecoins,

17:51

and decentralized finance. And so

17:54

investors love tech, we know that,

17:57

and that framing is getting investors really excited

17:59

about ETH. given the innovation happening on its

18:01

platform. Just to touch

18:04

on that, we saw the Denkin upgrade on

18:06

Ethereum earlier this year. That has brought down

18:08

transaction fees on L2s by an order of

18:10

magnitude, and that's helping the applications built on

18:13

L2s gain traction, such as base, which I

18:15

mentioned earlier. Juan, thanks so

18:18

much for joining the show. Thank

18:20

you very much, Jen. Driving

18:25

plays a big part in driving the

18:27

local economy.