Bitwise: why Bitcoin may be following gold's path

Transcript

And what that tells me is that Bitcoin is going to follow gold to Valhalla. GMGM. Good morning and welcome to the Milk Road Show, the daily crypto show where we try to predict the future using vibes, charts, and billionaires. I'm your host, LG Ducet, joined by my co-host and the taller and more handsomemer version of me, Jay Hamilton. It is Thursday, October 23rd, but we did record this yesterday. Just a little caveat. Today we are joined by Ryan Rasmmanson, head of research at Bitwise, a leading crypto fund, and Matt Hogan, CIO at Bitwise. We are going to chat about why is gold outperforming Bitcoin so much, and will that continue after its red candle the other day. Why is Bitcoin flat when there's so much buying from ETFs and other corporations, these are two things in his fantastic memo

that came out just a few days ago. Uh, and also, is Bitcoin going to have this breakout moment? And is that going to be next month, which is coming very soon? And if we have a little bit of time, we're going to chat some poly market and look, you know, look ahead to 2026 and 2027 cuz we got to zoom out in weeks of chop like this. Before we start, um, in case you guys missed it, we actually just put out a really cool update to the Milk Road portfolio. If you're a Pro All Access member, you've been using this portfolio for a while. It's faster, smarter, way easier to navigate. Now, you can track uh the moves that our team has been making. You can interact with the charts. You can see basically everything that's going down. I I I think this update is awesome. So, all

access members, go and check out that site right now. If you're not an All Access member, well, this you're going to get a lot of FOMO because there's a full portfolio what the team is holding here and that's something you I think you want to be holding in the next couple months. Today's episode is brought to you by Figure Markets. Grow your cash like a bank. No lockups, just real returns and Gemini credit card. Stack Bitcoin every time you swipe. No fees, no fluff, just crypto rewards. Gentlemen, let's get them in here. What is going on midweek? Uh [laughter] we we talked about so much in the preamble that I don't even know where to start, but um I'm just going to go right into since I want to cover so much. Matt, let's just get right into your memo about uh gold versus Bitcoin. Tell us

give us a quick TLDDR there on what's covered in your in your report. >> Yeah, first of all, it's great to be here. This is always fun. Uh you know, I write this weekly memo called the CIO memo for Bitwise. I try to make it short and there it is. Uh the way I write it is I think about what I should write about. The obvious thing to write about this week was gold and specifically why gold was going to the moon while Bitcoin was flat. It was all everyone could talk about. Uh and so I started to research it and unfortunately it took me like 12 seconds to figure out the answer which is uh the reason gold is skyrocketing.

Everyone says Morgan Stanley says JP Morgan says everyone else says is central bank buying. Central banks went from buying about 500 tons to a,000 tons in 2022. And that persistent bid from central banks uh after the US seized Russia's assets has just transformed the asset and sent it up. And that was disappointing because if it takes me 12 seconds to answer my question, that's not much of a memo. But then what hit me is this central bank uptick actually happened three years ago. So if you look at the data, the buying went skyrocketed in 2022 when the US seized Russia's assets and central banks were likely have to buy something else and then it

stayed flat from 2022 to 2023 to 202 to 2025. But no one talking about the fact that central banks are driving the price up says that it's been happening for four years and we've only gone rocket ship in the last four months. And then it clicked for me that the thing I should actually point out is that's what's happening in Bitcoin because every the other thing people are worried about is ETFs have been buying 2, three, 4x the net new supply of Bitcoin. Why hasn't the price gone to the moon? And the answer is it's just doing the same thing, which is when you have these big new buyers, they have to buy the asset from every short-term seller. And for

gold, that took four years. For Bitcoin with ETFs, we're in year two. And what that tells me is that Bitcoin is going to follow gold to Valhalla. It's just a matter of time. As long as we have uh ETF investors continuing to allocate, they will wear down the sellers eventually. And then there'll be headlines like what's driving the price of Bitcoin to 500K? And the answer will be ETF purchases. But it will actually be a four-year story, not what's happening right then. >> Matt, are you worried about who are the sellers? Because I've read that it's it's Bitcoin OGs who hold like an enormous amount of supply. Is that is like how long can that price suppression actually last?

>> Yeah, I think we'll see. I mean, I think that's a big part of it. Uh just like who are the sellers of gold? It's actually retail investors who own gold jewelry. That's like who's been selling gold into this share. But they've probably had it for, you know, 50 or 100 years in the family and the price is up so they're selling it. You see the lines of people selling it at stores. So it is existing holders. But I think the lesson from gold is just it'll it'll exhaust like it's not infinite. Uh at some point that supply constricts and the and the price goes up. Bitcoin's done pretty well since ETF launch. It's up about 160 170%. Um, but we haven't yet reached that exhaustion. So, when will we? I

don't know. But I do know it's coming. And that makes me want to buy every dip and uh and hold forever. >> So, you're saying So, you're saying scrunch up all the gold in the house, engagement rings included, swap it for Bitcoin, and then just buy back later. >> I think that's exactly right. I mean, [laughter] >> should we ask our wives about that first? >> No, they can't. Listen. No, no, no. That's not >> No. Well, I mean, but it but it's it's it's worth noting. The other obvious thing is gold is telling you that the store value market is bigger. If you continue to think Bitcoin will get a larger share of that market, that's bullish. When I started at Bitwise, if Bitcoin matched gold, uh you know, it was getting to like 700,000. Now, if

Bitcoin matches gold, it's getting to like 1.4 uh million, right? That's that's positive as well. So, I see only good stories um out of this gold bull run. I think we should all be happy about it and and cheer the boomers and and wait our turn. If you look, I find this interesting too and this is something like the gold bitcoin trade is still like kind of like a relatively new concept to me and even you know I I I personally being like a cryptojen kind of person. I find it funny to compare them because to me they're they're drastically different assets but inevitably everywhere you turn that's what people are saying and we're talking about how um Bitcoin is going to drastically catch up uh to gold and it's kind of lagging behind. I'm just pulling

up for those those that are viewing on YouTube. I'm just pulling up the uh I guess side by side kind of percentage uh gain here uh from the last couple years where Bitcoin is actually up uh dramatically much more percentage-wise since kind of the doldrums of the bear versus gold. Uh but naturally people still comparing saying that the gold money is going to trickle down into Bitcoin. Um, Matt, the question for you that I have is, you know, we're seeing we're seeing the DATs, the ETFs, those, you know, that's where Bitcoin is going. Are are the banks buying that? Is this something the central banks would ever get into for Bitcoin? And have they already?

>> Well, I So, we know at Bitwise that they're studying it, right? Because we field phone calls from central banks, not every day. I don't want to overstate it, but we've fielded a few this year, and I do suspect they will end up buying it. So yeah, that is painting a picture of our future. Look, uh, Bitcoin is slowly marching up the institutional stack. If we were here five years ago, you'd be asking me like, will family offices buy Bitcoin? Now they're all buying Bitcoin, right? And there are few endowments and maybe there's one or two sovereign wealth funds and then traditional central banks are zero. But we've been marching up this institutional stack for the last 10 years. I see no reason why we won't get all the way to the top, which is central

banks buying it. I think it'll happen. It's just a It's just a matter of time for me. >> Not fast enough. Not fast enough. That's what it is. Everybody listening, it's not fast because you're right. It is a matter of time. But no matter what, in the in between, especially at moments like this week right now, everyone's going to trip out and start to convince themselves otherwise because fear settles in and fear is so strong. It's so crazy. I mean, Bitcoin has outperformed gold over the last year, and we're all freaking out, right? I know it's underperformed year to date, but you just zoom out a little bit, but I agree. People people freak out. That's your opportunity.

>> You guys have put out this fantastic report. I'm going to segue into this and and and Ryan, feel free to airdrop into this conversation here because I've just been grilling Matt with hard questions. Um [laughter] >> that's okay. I appreciate I appreciate watching that. So, I'm happy [laughter] Uh let's just pull up this thing. So you guys put out uh your Q3 report I think just came out uh yesterday or the day before. Um taking a look through this is a massive report by the way. Anybody listening uh it's 76 pages of fantastic charts and data uh and a lot of kind of oversight over what these guys think uh is going to happen and the major catalyst to come and and the big themes.

Um but page 14, we've got this seasonality thing, right? And I see this every quarter, every month. uh especially in the fall you see this on X of people like September is the worst month October's coming and now but based on your research here and we're looking this goes back to 2010 right since since the start of Bitcoin November is the highest monthly performance for Bitcoin 38 and a half% u the next closest is April and then October after that is that going to happen this year >> it's a great it's a great question and I actually love this chart because this is one of those one of those instances where crypto markets aren't that different from equity markets which investors are very familiar with.

There's this saying in equity markets sell in May and go away. And you can see here on the chart that if investors had done that, if they had sold in May after the Bitcoin was up on average 23% uh every year in the month of May and came back in September, bought the dip, they would have been extraordinarily well over that cycle. So far, it's seemingly working out that way as well. Price action has been positive so far to the end of Q3 and I do think that we're going to have a very strong Q4. I mainly this is going to be led by two things. There's going to be continued easing of macro conditions. I think more interest rate cuts are coming. We're more likely to see lower rates than higher rates which will be a positive tailwind for assets like Bitcoin and other risk

assets. But then also you just have the seasonality impact no longer playing a role. Like if you think about who's buying the ETPs, it's financial advisors and institutional investors and CIOS and folks like Matt who who go to Maine for the summer and are off on their boat and golfing and like not working and uh and and that's why the seasonality saying is true is that you just have a low liquidity environment that leads to choppiness and you don't have as much interest. And at Bitwise interfacing with financial advisors, wealth managers every single day. The the amount of inbound requests we get starting at the very end of September is so noticeable and it really does accelerate through the end of the year and I think that's going to lead to more ETF flows. I think

easing macro conditions are going to help as a tailwind and anything on top of that will just continue to push us higher. So I'm very optimistic on October, November, and December of this year and into 2026. >> Why do people invest in real estate? because it spits off cash flow. But I'm not here to manage rental properties. That's why I'm looking at Figure Markets. Their new democratized prime product backs your money with real cash flowing assets and returns up to 9% APY. It's the first real world asset borrow lend pool built for everyone, not just institutions. Ready to lend like a bank and get more than the 5% A is offering you? Download the Figure Markets app today and get 9% on your idol funds. Go to milkroad.com/figuremarkets.

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Spend as usual, earn Bitcoin instead at milkroad.com/gemini. Is there any truth since you guys speak to these institutions too, this balancing of order books narrative I've seen a few times because I always see if ever there's a dump of of of crypto in the last couple days of the month. I go on X and people are like, well, you know what it is. So all those traders, they got to balance their books. And I'm like, I don't even I don't even know what you mean by that. Like, why would they just offload stuff to just what to make the P&L look better? Cut the losses from the month. Can you guys speak to that a bit? Is that is that true? Are we going to see a balancing of books at the end of October? A pump? Uh what what happens there for institutions?

>> Uh go ahead. You know, I think I I think there's a lot of um like conspiracy theorizing that happens around market movements that can just be explained away around there's a lot of interest and participants in the Bitcoin market and that can lead to to funkiness in price action. You know, an additional element to that is that people who want to trade uh assets 24/7 365 can't do that in traditional markets. Can't do that with traditional assets. Can't do that with things like hedge funds and other alts. You can do that with Bitcoin and with crypto and that just leads to some of these scenarios that I think people create conspiracy theories around but ultimately uh you know I think that natural forces are driving the market

rather than uh you know coordinated forces. >> Yeah, I I couldn't agree more. Everyone wants to believe in this great you like hidden oz controlling all sorts of markets but all the explanations of it happen postf fact. uh very few will predict it, you know, pre-event and that's cuz it's mostly nonsense. Um obviously there are traders who need to match their option strategies against the physical and that may impact books. They're traders who don't want to go into weekends long or short an asset. So you can see reversions or you can see serial correlation if they want to position so they look like they were smart because they have their end of quarter reports. All of that happens on the margin, but it's it's not the tail

wagging the dog, right? These are uh these these are the imaginations of this this magical Oz. Uh they're traders. They they have an impact, but it's not they're not dictating what's going on in the market. >> The Dens need a story, man. We need a story to tell ourselves. At every at every 1K that Bitcoin moves, there's got to be a reason. There's got to be somebody pulling the strings. >> It's totally right. Yeah. I mean you my wife comes in and asks me how it's going. I say it goes up and down which I think is a detailed technical description of what happens.

>> The only two guarantees the price will go up and the price will go down without a doubt. Um but I don't know if I I don't know if I got a clear answer from you guys on the November thesis, right? because that's um you know everything in this report everything from you know really intelligent people from like you guys points like Ryan you're saying Q4 still super bullish all our guys on the pro team all our analysts everybody feels the same way um and yet the sentiment doesn't feel that way you guys I don't want to talk about the sentiment because I think we just did that uh people just kind of making up stories for slow price action or or different price action but is like a very clear question for you guys will Bitcoin and he reached an all-time high in November.

>> I'll I'll go, Ryan. You're just waiting for me to jump in. I look, I think it will. I think there's a chance it goes lower. I think there's a chance it wicks below 100K. I don't think that's impossible. You see, Standard Chartered put out a note uh a day ago saying below 100K is inevitable, but I think the long-term thesis is still intact. I think crypto is not driving the bus. And I think that's why sort of crypton natives are so depressed because they're depressed. There's been no real alt season. It's been sort of a a disappointing cycle. Uh they're used to the 4-year turning over right about now.

But I think what they miss is that Tradfi is driving the bus here. Tradfi is the marginal buyer of the large cap crypto assets. And I think they're going to paint their portfolios into the end of the year to show that they have allocations to gold to show that they have allocations to Bitcoin. And so we could well dip, but I do suspect we set a new all-time high before the end of the year. >> Yeah, I would just second that. I think that we will set a new all-time high before the end of the year. November seems like a prime candidate for that. I think last time that we recorded it was Friday of the flash crash October 10th and we like recorded >> in the morning. So we had had the initial statements but we you know

recorded hours before the chaos that ensued and I think had that not happened we would already be at new all-time highs. I think that was of course a minor setback but that flushed a lot of leverage out of the system. Most institutional investors have no idea what even happened that Friday because they were more concerned with the statements that were being made and how markets were going to move and how futures opened over the weekend and what happened on Monday. So I think that ultimately that just reset the market and will will allow us to push higher as more flows come in. And I also think that you have these uncertainty shocks from things that are tweeted out by Trump and then they end up not being as big of a factor. And I think without those tweets we'd be at alltime highs. I think as we get desensitized to these

types of events over and over again and the recovery becomes quicker and quicker that we're going to continue to push higher and those forces that Matt mentioned which is professional investors and institutions are going to ultimately push us higher and we're going to churn through all of that seller exhaustion that we ultimately will see. I mean, I I'll just point out that that I I agree with you guys and I'm I'm I'm down at the all-time high this year, but you know, the Trump the Trump tweets are are are the most unpredictable part unpredictable part of the whole market. >> So, you never know. You just never know, right? [laughter and gasps] There's anything could happen from here. Um, but I do want to ask you in your in your Q3 report, you've got um you've got a lot of big catalysts coming up. One of which

is the Clarity Act. Government's still shut down right now. Uh, I think I haven't checked the poly market odds, but they're not they're they're I don't think they're great for I think they're maybe end of October looking like that might end, but that's still just poly market. Um, uh, Ryan or Matt, how how big of an impact would the Clarity Act passing have on crypto and let's say the government opens reopens at the end of the month? How soon would something like that happen? I think the long-term impact of the Clarity Act is tremendous and greatly mispriced by investors. I think that we have this regulatory flywheel that's already in motion. And it's easy to forget all of the regulatory advancements that we've made since the election last year because there was a

period where every single week some new regulatory or legislative win was up on the leaderboard and you were like, "Oh, awesome, great. Oh, awesome. Great." And you kind of got used to it. But if you think back at like the 10 biggest wins that we've had, they are massive. And the Clarity Act would be right up there with those wins. And so I think over the long term, this pushes crypto significantly higher. And I think shortterm, you'll have some price action. But I view the Clarity Act passing as more of a multi-year tailwind to crypto that continues to to fuel this regulatory flywheel, which is certainly helping push markets higher. It's helping institutional investors come into the market and allocate to crypto.

It's helping institutions and corporations come into the market and build crypto services which drives investment in the space which ultimately drives prices higher. So I think that it will have a major impact but it'll be a longer term one than people are thinking and people are mispricing it. >> Yeah, I think that's right. For what it's worth, Poly Market is not optimistic. It thinks we're going to be shut down until at least like mid November if I'm looking at the right Poly market. They're they're probably multiple, but the one I'm looking at puts a 50% plus odds on after November 12th, which is a while, which is crazy. [laughter] Yeah, it's it's such a commentary on what's going on now. Um my my view of the Clarity Act is that the market has priced in it not happening.

>> And uh the reason for that is that you have the government shutdown and you have the Democrats pushing against the Republican version and a big conflict there. And I actually I suspect there's a chance it won't happen. Um but I think if it does happen, it's a major positive catalyst. So I think it's important to think about where the market is versus the probability. If it if it truly fails, there's probably a little bit of downside, but if it does happen, I think it's a huge catalyst, particularly for ETH Salana on down more so than Bitcoin. But generally speaking, it's one of the things that could drive us to new all-time highs. It it feels to me like people are also you can get very focused on the legislation side and say okay we

have two legislations we have Genius Act passed we have Clarity Act coming and you think okay well we might shoot 50% which feels like crap right okay that's bad right that's you know that is a very easy story to tell but people aren't focusing enough on what's happened on the regulatory side as a result of the Genius Act we have had so many wins that you guys mentioned and the report goes goes into detail on that. That is there's wins every week, every month there that like nobody reads those documents or really pays attention and it's difficult to really feel the impact of that because that's also the the impact is never felt immediately. But to me, you can't look past, you know, the SEC crypto framework, all the things

that have happened. You know, Matt, you've been calling for ET Paloo ETP Palooa for a while, uh, as a result of everything that's happened with the SEC and the listing standards. And so, it feels to me even if we don't get Clarity Act, like that regulatory tailwind is still there. >> Yeah, I agree with that. It's absolutely >> Oh, go ahead, Ryan. I I was just going to say there's a there's a page in this report uh it's page 72 which highlights just the regulatory developments in the US only over Q3 right so it's a three-month period in the US and yeah I think you you brought it up right there thank you you have project crypto launched by the SEC which was basically a road map by the highest ranks of the

SEC on where markets are headed with tokenization and the integration of crypto into traditional financial markets and a generational opportunity to improve the way that finance is conducted and investing is conducted in the United States. You had Trump signing the Genius Act. You had generic listing standards which is going to lead to the ET Palooa that Matt mentioned. We had green lights on crypto staking on spot trading from the CFTC. We had a fair banking order. We had a reverse on crypto 401ks uh by the Department of Labor and by Trump. Like those are all individually huge developments and things that two years ago everyone would have been doing like back flips and shooting confetti and cartwheels over. if one of those happened over a given 12-month period

and yet all seven of these happened in the last three months and this ignores the things that happened in three months preceding that and the three months preceding that. I think that's part of this flywheel that people are just getting wrong and I think that the you know clarity act going back to where we started on this is going to be massive. it's going to be as massive if not more than project crypto and the Genius Act and other elements that we've we've seen fuel markets higher and it gives comfortability to traditional investors that this is a market that's here to stay. It reduces risk of them allocating. It reduces you know all kinds of other market risks for participants in the market. I think that is a huge catalyst.

>> Okay. So you guys are saying that I shouldn't take this 19% chance on poly market of the clarity act being signed into law in 2025. Could it not would could this not just double when the government shutdown ends though? Even even like it doesn't have to be it doesn't have to resolve to 100%. But it could just go back up to 40 or 50%. Right? That's all you need. That's that's the beauty of these prediction markets. You just need the trend to change a little bit. >> It was worth in July. It was at 87% on July 17th that that this would pass in 2025. Now it's at 19.

>> Yeah. Yeah. I I would add there there's been two things to do with the Trump administration that consistently have worked. And the first is to fade his tweets, right? Because it doesn't end up being as bad as the initial tweet happens. That that's what happened uh a few Fridays ago. And the second is to count on them delivering on their core promises on crypto. They've actually done that pretty consistently. And so I suspect that 19% bid on Poly Market is a good bid to hit. Like that's my guess. My guess is that will go up by the end of the year. Uh, I could be wrong, but I think there's my personal read of the probability there is that it's higher than one out of five.

>> Matt with the Matt with the rare short-term advice. Just kidding. It's not financial, but Matt with the rare shortterm [laughter] >> with the very rare short frame. Getting back into my DGEN head, I'm like, that's perfect. That's that's that's what I need. Um, gentlemen, I wanted to ask you while we're still just talking larger trends, uh, what's what's been the role of retail in this entire cycle? I feel like something that maybe we've covered on other shows, um, and I haven't seen too much of in in your reports. Uh, is retail here? Is it coming? Is it waiting for these, uh, uh, this legislation to go through? What's it doing in the cycle?

>> That's a great question. You know, I think that some retail participants are here and perhaps these days show up in things like ETF flows rather than Coinbase trading volume or Coinbase uh platform outages or something like that. But I do think that the retail participants are somewhat here. I fully also believe that retail frenzy has not arrived and it's not even closed. And that would just be based on, you know, my interactions daytoday with people. I haven't really been uh receiving those text messages that I'm sure we all get since Bitcoin was, you know, clearing 75K and like going towards 80K. Like that was the last time that I really saw a bunch of people being like, "Ah, well, once it drops below 70, I'm buying." And

you know, what is what should I buy XRP or should I buy Cardono? Like I haven't gotten those text messages since maybe January, which is really surprising to me given where markets have gone. And I think perhaps that's a sign that there's just fewer retail participants right now than there will be later in this cycle. And that will certainly help fuel the the the rally if they do come. But I agree with what Matt's been saying, which is that this is an institution-driven market. And I think that's why we'll have less of those boom bust cycles going forward is because institutions are much larger participants today than they were before. And they're ultimately long-term holders for the most part.

Yeah, this chart. >> Go ahead. Go ahead, Matt. >> I was just gonna add on the retail stuff. I I think they got they got double crushed. They got crushed by FTX and they got crushed by the memecoin collapse. And maybe they just folded it in after Milani coin jumped. >> And [snorts] NFTs. Don't forget NFTs. NFTs. The big one. >> And NFTs. I mean, like, you know, that's three strikes. You can only get wrecked so many times before you fold up your head tent. I think the retail that's been here is tradi retail, right? The retail that's been here has been in ETFs. The retail that's been here has been in Micro Strategy and other DATs. I think it's been a different retail. I do think that retail demand is robust and continuing, but I think cryptonative uh

retail just got, as you said, or as we just covered, triple wrecked by FTX, memecoins, and NFTTS. And uh maybe just isn't that robust in this cycle. But I that doesn't mean retail's not here. It's just a different retail. >> I would agree there. I think I think the the the definition of retail has just changed dramatically. It's not like people don't know what Bitcoin is. I think last cycle people are like, okay, finally I'm finally getting into this and people a lot of boredom then too is pandemic. And we've told that story a thousand times, but I think this time it's not. You don't have people being like, well, maybe it is finally time for me to buy Bitcoin. I think they they've made that decision or wrestled with it a few times uh in the last couple years since that last cycle. I but I would say

that today I did see a catalyst for retail returning and it is the beyond meat short squeeze uh in the stock market that's happening if you guys have followed that is they're calling it GME 2.0 know uh as a lot of short sellers including uh Martin Scraley is getting squeezed out of his Beyond Meat short uh as just hey who know Jay is laughing but this is this is the you know I I'll say when I see something all over Reddit that's when I know that there's going to be retail interest in something I'm just that's when I know I'm going to get texts about it uh a couple days later. So I'm just going to point that out. U anyway >> so true Matt and I for what it's worth just talking about this Beyond Meat thing like an hour ago. [laughter] So >> doesn't have a poly market for Beyond

Meat. We'll check we could we could check that in a minute, but but I want to I want to wrap up this um just this retail conversation in Bitcoin. We have this other chart in your report page 18. Uh Bitcoin ownership by type still shows 66% as individuals uh followed by 7.8% of of of funds, ETPs and uh businesses at 6% 7.6% estimated loss. So that's those are the ledgers in the landfills that have like 2,000 BTC on each one. Uh that'll never be found again, I'm assuming. Um [laughter] so to you guys, is this 66% of individuals? What is that? Is that is that is that a mix of retail or those OGs? Who are those people?

>> Yeah, both both. I I think you know, of course, large OG holders are going to start making up a larger percentage of this number certainly. Uh but it's it's retail investors for the most part. We we actually get this data from River who does a really great job of exhaustively examining uh different addresses and ownerships and clusters to pull this data together and it you know it's definitely retail investors for the most part. One thing that sticks out to me about this graphic here is that I went back and looked at what this breakdown was a year ago and the biggest jump that I can see here is in funds and ETPs which was 5.2%. 2% and is now 7.8%. So, it's something like a 50% increase from

where it was a year ago. And I think that speaks to the retail or I'm sorry, the institutional driven market nature of where we are at today. What's driven the market for the past year and where we're headed over the next couple of years. >> Awesome. Thank you for explaining that. All right. Go ahead, Jay. You got to go to the next slide quickly because there's just this the story of supply versus demand with Bitcoin and even actually we should look at the Ethereum slide too which is a few lower like and this is why it goes back to your memo Matt of what the heck why is the price not going up if this story but just walk us through the the supply verse demand on Bitcoin. Let's talk Bitcoin first and then Ethereum.

>> Yeah, sure. I mean, so what we look at here is the most basic drivers of Bitcoin's price, which is you have the new supply issued every year from the blockchain. It's 164,000 Bitcoin um per year. And you can see it from the time ETF launched to uh the time we wrapped this report on the right. And then you have the number of Bitcoin being purchased by public companies and spot ETFs who have been the marginal buyers of Bitcoin. This is why I said that this is not a cryptonative driven market right now. that uh other entities are involved and as CIO I can tell you the complex math says that the numbers on the left are bigger than the numbers on the right and um that's why the price of

Bitcoin went up and the point I was making in the memo is this will persist ETF purchases are going to scale over time every ETF in history scales over time so we're going to have this persistent supply demand imbalance in Bitcoin that means that existing holders have to sell to make those two columns the same and they'll only do that if the price goes up. Um, and eventually those sellers will be unwilling to and I think the price will will skyrocket. Another way to conceptualize what's going to happen if you go back to that last chart uh that in every other asset the columns on the right are bigger than the ones on the left. So in stocks that's like you know 60 40 7525

in bonds it's like 9010 right so eventually those those things on the right have to take over from the things on the left uh and I think the price will go up substantially as they do that and then on the ETH slide the story is actually even more pronounced on ETH I know I know the the issuance of ETH is a little bit different but if you look here you know a million new ETH uh what 8 million uh purchases by spot ETFs and public companies. Again, these may be the only slides you need to look at to understand the long-term outlook for Bitcoin and Ethereum.

>> Yeah, just to just to put that into perspective, there's been something like seven times the new supply of Ethereum being bought by corporations and ETP since the Ethereum ETFs launched. And for Bitcoin, that number is closer to uh to 4x. And so this that there's no surprise, particularly because the ETF flows for Ethereum and corporate purchases happened in Q2 and Q3 of this year. There's no surprise that Ethereum outperformed Bitcoin in Q3. When you just think about it from a demand versus supply perspective for both of these assets, of course, there's other market forces, but when you just think about those things, it really comes down to simple economics of what drove the prices higher and why Ethereum outperformed Bitcoin in Q3. sometimes so

obvious. The complex math is so obvious. Matt, thank you for being the CIO and joining us today to break this complex math down for us. >> That's our quant. [laughter] >> Guys, guys, listen. I hate I hate to to to rain on this like smart big brain zoomout party, but we need to have a little bit of fun and we promised we would talk about Poly Market. Okay. So, and I want to hear about you guys had some kind of bet or like some kind of battle about poly market a year ago. I want to know I want to know what that was and who won the argument in the end.

>> Yeah. I will walk into the public uh circle of shame with this one because [laughter] I felt very strongly that post the election poly market volumes and open interest were going to fall off a cliff and just continue to be there until the next election cycle. The reason I thought that was because sports were somewhat of a big piece of the volume and the open interest back in Q3 and Q4 of last year, but it was predominantly politics, particularly in Q1, Q2, Q3, uh, and then of course some some in Q4.

And I just felt very strongly that that was the case. And Matt and I were debating this. And I actually as we crafted our 2025 predictions, I wanted to make that prediction publicly that Poly Market was not doomed because I think Poly Market's an amazing product, won't be here for many, many decades to come and will continue to grow in usage, but that we were going to see a big drop in usage post uh post election cycle. And Matt took the other side of that argument and thought I was wrong. And I of course was incorrect. We've seen a lot. Uh, y'all say it louder for those that didn't hear me. Throw my hands up.

I was wrong. Matt was right. Volume has maintained. It's continually, you know, it fell of course a little bit, but it's continued to grow actually in 2025 quarter over quarter. Open interest remains at decent levels across all of the markets. Sports is becoming an increasingly piece uh an increasing piece of poly markets volume and oi uh which I think is very very fascinating. Of course, not super surprising when you think about how big sports betting's become. Uh but you also have other big markets in poly market in Q3 uh in terms of volume were around uh Fed interest rate changes in September and July and then a few around Bitcoin price targets which are kind of like call options uh but p priced using prediction markets which I think is interesting. Uh I don't

know Matt is there any gloating that you want to do on this topic beyond that? >> No, that sounds right. I mean, I make about 90% of my income from Bitwise and 10% from winning bets with Ryan. So, that's the the [clears throat] home economics here. Um, look, I mean, I think Poly Market is obviously here to stay. It's going to be giant. I still think it's probably a bigger deal than most people give it credit for and uh, yeah, it's been it's been wonderful to see. >> Let me ask you guys a question. Uh, how do you invest in prediction markets? Because I think we all agree in this statement, right? Prediction markets are here to stay and they're going to be big. How do you invest in them though?

>> It's a great question. I mean, you know, Robin Hood has prediction markets. Uh I don't think that's exactly what they call them event markets perhaps, but you know, Robin Hood is publicly traded company. They have this small part of what they do, but they're obviously trying to get into the game. You also have the infrastructure layer for prediction markets. So if you think about where value will acrue for some of these crypto use cases and if you think about prediction markets being one of the most successful crypto use cases naturally the the two places value could acrew are the underlying blockchain for which these uh bets or prediction markets settle which of course is polygon and then by way ethereum and then you also have perhaps the information providers and uh chain link and um are two of the information providers to poly market right because

if you want to know who's going to win the world series or who wins the world series, you need some piece of technology to relay that information back to Poly Market and of course that is the Oracle uh network that's doing that or the information provider. So I think there's different ways to get exposure to the growth of Poly Market. There may even be a Poly Market about Poly Market. I mean I I'm not sure. [laughter] >> I think that's right. I really like the chain link example. I think the mistake people make when they look at something like Poly Market is thinking it could be five times as big. I think it probably could be a thousand times as big. Um, right. I think that's the scale you're talking about. I think you could find retail investors allocating as much to

poly market as they do to traditional stocks and bonds. I think you could see it tackle huge chunks of the options infrastructure and the futures infrastructure. Uh there's no guarantee it will do that, but I think it could do those things. And so infrastructure plays like chain link, you know, if they have a thousandx increase in demand, um I think that's where it gets uh interesting. I like the Robin Hood. That was a good another good idea. Rob, >> I'll just add that there's also the native tokens of these platforms that they've relaunched them as well. Um that's the big rumor that Polyar and Kelshi are racing towards the TGE uh with their massive raises lately. Uh so that's also I'll just add that that's something I personally have my eye on.

Uh and also a big driver of me wanting to participate in prediction markets. Uh we're going we're going airdrop stuff. We're going DGEN stuff Ryan and I right now. But uh we're talking more that side. >> What a shame for uh US users who are restricted from using Poly Market for so long. Right. >> Yeah. >> Terrible. I just checked to see if I can use it and I get a message that says you appear to be located in the US and I'm not available to use it. So, uh, you know just >> well, let's let's let's look at some of we, you know, you you can come through our our our side and we'll show you some of the markets. And to wrap out the episode, I want to know what you guys are picking in a few markets that I have chosen. All right. So, here we go.

Presidential election winner 2028. Leading candidate is JD Vance at 29%. Gavin Newsome 23%. AOC at 9%. Dwayne the Rock Johnson 4%. [laughter] Ivanka Trump 2%. Kla Harris 2. Tucker Carlson 2%. The two and 1%s are hilarious. These are Elon is in there. LeBron James. LeBron 1% man. $15 million of volume on the LeBron 1%. >> This is incredible. [laughter] >> Wow.

>> Kim Kardashian. And they used her break the internet picture as the icon for that one. [laughter] >> Incredible. >> Wait, wait. Before you guys say though, LG, you got to explain your take on that you don't need to the bet to go to 100%. You do not. That's and that's what people are doing here, right? They're not betting on LeBron James actually winning president. They're betting on the fact that the public could think that it's more likely than it is right now because some tweet that he does or something happens in social media that leads sentiment to change very quickly, which we keep seeing this occurring more and more often.

>> That's right. So, that's that's my conservative and more um the kind of secret of of uh these markets to me is that these outcomes trade like stock, right? So, there's equal sides almost to a yes and a no equation. And as a result um all you all you would need for uh to make profit on say like uh the rock in this outcome is like you don't need him to win in 2028. You don't need to wait three or four years for that to happen. Um all you need is for that percentage to go from 4% which you can buy it at. So it's cost 4 cents to buy the yes. You just need that if it goes to eight you've doubled your money. You've doubled the value of your share of yes.

So all you need is the rock to tweet. Uh, I'd like to be president one day. And that's and that that'll go to 20%. Just on the FOMO of people buying that. And then you can just sell you can set limit you limit orders on this. So you can just set that a limit at 8 or 12 or 16%. You don't need it to resolve. So that's that to me is how you actually can make money on these as opposed to sports betting. Although some sporting some sports bet sites will give you uh allow you to cash out your bet as that outcome gets more likely at like a a discount for them. Um, but this in this case you you don't need that, right?

It's not an all or nothing outcome. So that's that's all I was just going to point out is that's how I like to play them. >> Anyways, gentlemen, presidential election winner 2028. Which of these are which of these is the right buy or the good buy? And you can buy multiple, right? Again, you can buy each one and just wait a couple years. >> Let's hear it. Ryan, I got my picks, but you go first. You say Kim. If you say Kim, that may be I may lose it. [laughter] >> Uh, look, I am a I am a reality TV fan. Uh, I do keep up and I also love Jumanji and The Rock. So, I'm torn, but I I guess we'll be back here in four years or three years. And uh, and I think it'll be I think it'll be JD Vance.

That's my I know that that aligns with this market here, but I actually think it'll be JD uh, Vance. And my backup call would be Pete. >> Wow. I would take the other side of those trades. So, we have a liquid market on both of those, Ryan. We can we can go to town. I I think there's value in the outliers here. So, uh I would I would take Josh Shapiro at 2%. I would take anyone with the last name Trump at two or 3%. Both Ivanka and Donald J. >> Yeah, >> those seem those seem undervalued. Uh and then yeah, on the Democratic side, I think I think Shapiro and maybe maybe like a a young or something. Um, I would fade the leaders in this market. I don't

I don't think either of those are going to are going to be >> uh be it. >> Okay, I like that. Those are good, dude. >> Four cents on on The Rock. Why not? [laughter] >> Yeah. Come on. >> Come on. >> Oh, [snorts] that's great. Okay, we're going to rifle through the other one so we could wrap out. Highest grossing movie 2025. Mainly because we talked about this. The current leader is Wicked for Good at 41%. Anybody who has children uh will know why Zootopia and Minecraft movie are up there and Avatar 3, which has not been released, is the only other serious one at 7%. Guys, what's it going to be? Highest grossing film.

>> I think there's 59 free cents on Wicked for Good. That seems like an easy one to me. [laughter] >> I agree. I agree. You got a Thanksgiving opening weekend for a sequel or part two of what was likely, I imagine, the highest grossing movie last year. It seems given. >> Yeah, that might be the best trade in finance right now. [laughter] >> That's a two and a halfx by the end of year, right? That's all you need, right? It's at 41% that you're cashing out at 100, right? So, you're making two and a half two and a half times your money.

Can't do that. You probably can't do that on >> Bitcoin. 250. >> Yeah, that's Yeah, that's what you would need. Yeah. Yeah. That I need a poly market for that. Yeah. What's What's going to What's going to happen first? Wicked highest grossing film or Bitcoin 250 by end of year? I can't wait to to clip Matt saying that might be the best trade in finance right now [laughter] and and for people to have to listen to this entire episode to find out that they got to wait 25 minutes. [laughter] >> That's right. That's [snorts] right. >> Uh a couple couple last ones. >> We'll send it to our compliance team just to mess with them. [laughter] >> Yes.

>> Okay. ETFs launching in 2025. Uh I noticed in in the Q3 report you guys have Litecoin and Cardono in there as as Bitwise uh like investment tens or or 30s as as part of the portfolio, but the Pepe ETF in 2025 7% chance any chance that goes higher for the Pepe coin. >> Yeah. Yeah. Um try speaking of compliance can't speak to any active filing that that >> but not filing but >> we do not have an active type filing and [laughter] I think that uh I think that this one's going to uh zero. I would be shocked to see first of all for any ETP to launch the government has to reopen.

So you kind of have you could parlay this with the government >> uh opening market and see kind of you then you start to really >> you know >> have some nice odds in your favor. >> Awesome. >> It's hard to do better than a Pepe parlay. Uh I'm not going to try Ryan on >> Pepe [laughter] Ivanka Wicked Parlay out 100 to one ratio [laughter] >> that you have to wait four years for. >> You get the first two at the end of the year but then you got to wait three years. Got to hope the Rock or Eva code just just locks in there.

>> Uh Joe, this has been awesome. >> OG, I love that we we we we shut down the DJM podcast, which I don't know if you guys know, but OG was running a DJ podcast twice a week, and we brought him over to this show, and that's why he's more involved in this show. And now all of a sudden, [laughter] this show is turning into the DJ show. And I just love it. It's so fun. >> We talked so much smart gold stuff. I we talked about bills passing a Congress. Jay, how could how could you accuse this of being DJ? [laughter] Listen, the listen a thousandx could be a poly market, right? Matt, you said that that this could grow >> so much. So, who know who know for all we know in in two years every every finance podcast will be about uh

prediction markets. That's for all we know that's what's going to happen, right? >> Sure. >> All the way down for sure. [laughter] >> All right, guys. You heard you heard it here first. Wait, what was it? What was the what was the best? Oh, yeah. Wicked. Wicked for good is the best best trade [laughter] possible right now. Uh gentlemen, thank you so much for coming back on the show. We'll talk again very soon and excited for for that next episode. We'll see where we're at in the market. Uh you guys and anybody uh who's still listening, pro members, go check out that new portfolio. Non-pro members, go try and look at it. Have some FOMO.

It's really worth a lot. Uh and gentlemen, uh we'll talk to you again very soon. Onchain betting only lets you bet on one event. Boring. SX bet changes that. Parlay bets boost payouts, no fees, straight from your wallet. Go to sx.bet now to get your slice of the $50,000 parlay launch term. Want insights on what's moving crypto markets and how [music] we're trading each event? Subscribe to our channel and join the Milkro Daily and Pro Newsletters and start [music] investing like the top 1%. This show is for educational purposes only. Nothing we say is financial advice. Investing is risky.