Five ways to get crypto exposure without owning crypto onchain

Transcript

GM good morning welcome to the milk Road show The Daily crypto show that's your crypto compass that points you straight to success I'm your host Jay Hamilton and today we're talking about how do you buy crypto without buying crypto and why the heck would you do that there's actually several good reasons for why you would do that here to join us today is Tyler D before we jump into Today's Show I've got really exciting news for you today we are launching a 2E raffle with amazing prizes for anyone who subscribes to our YouTube channel we are giving away uh our crypto investing Master Class worth $500 a oneyear

subscription to milro Pro a one month subscription to milro Pro and a mystery box all you have to do to participate and enter is subscribe to our YouTube channel you'll earn a bonus Point as well if you post a screenshot showing that you've subscribed on Twitter or on Instagram just make sure you tag at milro Daily the winners will be announced on September 4th you have until the end of the month August 31st to enter so make sure you subscribe now if you're not already subscribed to this YouTube channel and you could win some amazing prizes thanks for your support and good luck now Ty before we jump in let's just talk for a minute about why

you would buy crypto not on chain when I think there's going to be some Maxis out there listening to this that are going to be like what the only way to buy crypto is to buy it on chain but there is many ways and I'm sure you listening to this episode know that there's many ways but there's actually many reasons why you might invest in crypto not on chain and also there's a lot of great beta plays to crypto that we're going to talk about today and we're going to do this in a sort of a a risk Curve Way so we're going to start with the we've got about five options that we're going to go through today and we're going to start with the least risky going to the most risky so depending upon where you

fall on the risk curve you can think about these yourselves and I want to be clear that this those listening to the show might say oh well like is this show for my mom or for the person who like doesn't know how to use a wallet and doesn't want to buy crypto on chain it's like no no this show is actually for everybody because as I said there's a lot of reasons and advantages to buying crypto through the trafi system or to just diversifying your Investments and not having all your bags in one place we talked a lot about diversification we've talked about memecoins in the past with you Tyler we've talked about altcoins last week and this week we're going a little bit more trafi we're going a little bit more traditional so first I just want to talk about the advantages

what are the advantages in buying crypto not on chain I'd say there's three main advantages one is there's massive tax advantages depending upon what country you're in but mostly there's tax advantages there's regulatory advantages just because of the regulatory safety and there's also convenience it is Let's Be straight it's way easier to do this than it is to do the onchain way yeah convenience is probably the biggest one for me and you you talked about products for your mom and like to be honest I don't want to set my up with a ledger and you know have her write down her her seed phrase on two different not cards and keep them in two different spots of

her house or keep one like in a PO box at the bank right just in case like your house gets invaded uh you know invades theong but like it gets robbed or whatever U but like this is where their advantages to custody dop products and self custody is great like it is a core fundamental use case of crypto definitely not denying that but when you think about crypto from investment lens which I think we're doing on this show there certainly are advantages to going through custody market makers and institutions to help you along with that and I think a big one for me is like a state planning like so I'm I have a wife and two kids I I keep pretty good records of

all of my crypto but to be honest something happened to me like my wife probably couldn't recover 100% she could probably recover 90 to 95% she's not recovering at all and I think as you look to build bigger investments in these assets you have to think about things like that and there are advantages just to holding it uh you know your Bitcoin with ETFs and you can give access to your financial advisor and then you can get to the to a place where you have a One-Stop shop where like your stocks your your crypto is all in one place so I'm a realist like I I see the world like realistically like I see the advantages of that and and why people would do it this a good point on the estate planning I hadn't really thought about

that like you're totally right if I got hit by a bus my wife would she would be able to get some of it but she would not be able to get all of it and I certainly have not explained to her I I feel like I need to write a document of how just in case how she could get it all and where all seed phases are hidden how she can use them um the tax the tax reason is the main reason for me I'm in Canada and we have what's called a taxfree savings account I think there is similar versions of this in most countries around the world where you can invest in tax-free ways and you can't in you can't buy crypto on chain in a tax-free savings account whereas you can

buy the ETFs and I'll be straight for me I have bought more of the ETFs over the last year than I've bought other crypto assets mainly because I Consolidated most of my assets into the majors uh Canada also has had an ethereum ETF for longer so we've been able to buy that much longer than the rest of the world but you know if you can avoid capital gains tax that's a pretty big deal if uh if you have that option so uh definitely a good option there it also keeps you from spending your crypto on chain which is something I was very guilty of during the nft Run uh I bought all this eth and then I end up spending it all on on nfts right so this is a way to potentially

like even like uh divide up your portfolio like this is the funds I'm definitely not going to touch because I can't touch them and like you mentioned the regulatory thing that that also is big like we we love coinbase big coinbase fans but you still see the stories of folks who their Banks deny them or their coinbase accounts get locked for a month and it's just there's L spread tape and buying some of these other products that we're g to talk about on today's show okay so let me run through the products that we're going to talk about and then we'll dive into each one we're going to talk about the ETFs obviously no surprise there those are the least risky and the most accessible uh then we're going to talk about a few uh beta plays with coinbase and circle going public at some point soon uh we're

going to talk about micro strategy and then we're going to finish with a more risky opportunity which is a new micro strategy levered ETF that actually just launched uh yesterday I believe and is already doing very well and breaking records apparently will dive into that at the end so make sure you stick around all the way to the end to learn about that opportunity to get some more risky Investments but do it in a trafy way let's start with the ETFs uh probably the least exciting but the most accessible uh what are your thoughts on uh the ETFs that are available right now the ETFs are great you know you already

talked about some of the reasons why someone would get involved in these and effectively what they are if folks aren't familiar is these different institutions like Black Rock like Fidelity like Arc they they've stood up these uh ETF products which effectively track the price of Bitcoin but they sell shares and they have their own share prices that are unique and not tied specifically to you know the $583 price tag of Bitcoin on Friday August 16th so uh that's a little bit of level setting we've seen the Bitcoin ETF have some tremendous success they launched in mid January 2024 17 billion in inflows already in what eight months

I think that has greatly surpassed anyone's expectations for for where these would go I think again Black Rock has been leading the way the institutions are are piling these up and this is before you know we really have even seen the ETF exposure to individuals 401ks and I think that's going to be the next big arm uh that is going to drive this all forward and the ETFs are making that type of investment more possible and we talked about Bitcoin it seems like all the crypto majors are going to get them so we just had the E ETFs launch what less than a month ago and we can we can show the inflows the inflows aren't quite as

great so we're still at a net negative 400 million in outflows that's largely because this great scale e e trade is converging that's a story for it's a longer story for a different show um but graci they're running out of eth but I think the Highlight here is Black Rock is almost at a billion in in buy action so they're at 967 million of the eth ETF that they've already accumulated and like the word on the street is the salon ETF is probably going to be next it's not coming anytime soon I wouldn't Bank on it happening in 2024 think perhaps early 2025 at the earliest and again this isn't concrete but it seems like where we're going is

we're going to have ETFs for all the major cryptocurrencies I think perhaps even more interesting is we may start seeing baskets where you know you could get that Diversified basket of 60% Bitcoin 30% e 10% Salon or whatever the that that balance may be and I think we're just gonna have more and more options here in the near future yeah I think the the other exciting things about these ETFs right now is the fees on them are so low because everybody's competing and everybody wants to get the biggest slice of the pie right now so not only are these ETFs very easy to buy through any of your typical banking um systems but also your fees are so low on

them right now that it actually makes it very attractive to buy there as well and as you said we're most likely getting I'm going to bet we're going to get a salon ETF in 2025 especially if uh we have a change in uh in political party and Gary gendler is out of the SEC then I think it probably could come earlier in 2025 if we don't get the change then maybe it comes like mid to late 2025 but it's it's an it's a when not an if at this point I think the the first date that they it's in early February is when they have to make a decision on there's one or two salana ETFs applications that have been filed

and that's the final date that they have to make their decision so we will have some sort of a decision by them but they don't just because they don't approve it then doesn't mean they can never approve it um so yeah definitely that is coming as well okay let's keep going down uh the risk curve a little bit more what are the other ways that you can invest in crypto without buying crypto on chain we already named Dr but coinbase coinbase stock Jay we've talked about coinbase stock on on this pod I think maybe a few weeks back but when I think about coinbase stock I kind of think about it as a slightly leverag bet on crypto and you get that extra leverage because of the additional income upside of coinbase so coinbase generates income

from its base operations as well as its core coinbase operation they make money on transaction fees as a central exchange they make money on their premium services like coinbase Pro and their institutional custody Services they are the institutional custodian of a lot of the ETFs that we just talked about and they make a fee on all of those transactions as well and those Partnerships that's the coinbase side now on base their new L2 which the the milk row team has been talking about quite a bit especially on X and rightfully so like they're growing tremendously in popularity we take a look at the fees I mean they're they're chugging along in fees uh they're still making a 100,000 to 150,000 some days in

in Daily fees off of their L2 um and you know all all signs point to them continuing along that trajectory and that's what three million bucks four million bucks a month now generated from from base so they're going to continue to find ways to bet on that and drive more action to to base and then of course they also hold crypto on their balance sheet so that's where this also kind of comes back to being a slightly levered bet on uh on crypto I think you showed the chart of how coinbase compares to to bitcoin and and it is the data has shown that right it is a slightly it is outperforming Bitcoin in the last 12

months it's uh it's been on qu quite a rip I think if if you're listening to this and you believe in the future of crypto you got to have coinbase in your portfolio like this is not Financial advice you know do your own research and all that but uh the nice thing about owning coinbase is you don't have to know which blockchain is going to win in the end and that is the big challenge that we all have right now is you know is ethereum gonna win is salana gonna win I think if you've listened to us you know that we believe that there's enough space for both of them to win and they will both do well in the long term but it is difficult when there is tens of thousands of tokens I mean there's millions of tokens if you include all

the shitty ones but like tens of thousands of like legitimate ones like how do you know which of those you're going to invest in right it's so important to actually keep your Investments rather narrow and have a pretty small basket so that you can manage it and coinbase is just one that is so attractive because you don't need to know which one's going to win you just need to believe that crypto is going to win H and obviously as you said coinbase is so attracted because of Base too like it's just incredible what they're doing over there uh speaking of coinbase they also are owners of circle which is currently still a private company but is likely going public I don't know if you know when they're

going public Tyler but that's another one of our plays here what's what are your thoughts on Circle as an investment yeah so if folks aren't familiar with circle they make the usdc stable coin which is the second largest stable coin by market cap it's at a 34 billion market cap here in August 2024 uh that is second behind tether tether runs usdt which is 116 billion so they're about what that's 30% roughly of tether's market cap uh where this is interesting is tether the market leader has made5 billion dollar in Revenue in 2024 so far Circle the rumors are they're gonna IPO at five billion um and right now

certainly they are behind tether and tether invests their reserves a little bit differently than Circle does Circle more regulated which actually gives Circle perhaps some upside in those regulated markets because tether uh a lot of folks don't think they could they could pass an audit again a story for a longer pod but Circle looking at IPO this year we see the upside in these stable coin providers and they are some of the best businesses in crypto I think tether has less than 100 employees and they're making five billion in six months this crazy crazy in the world is the most is it the most profitable company in the world probably per per employee yes I think it has to be like that is just insane and

and to think that you can get a piece of that when cirle goes public as we said we don't know when that's going to happen they've been teasing it for a while likely this year so yeah I think I'm definitely gonna be getting on that train for sure uh because yeah it seems like a no-brainer and as as we said everybody it's like everybody is so obsessed with crypto changing the world in like new ways that were all Fading the most obvious use case which is stable coins like it's right in front of us it's working it's growing tremendously uh if you're in a developing country I we've done multiple podcasts about stablecoin use use about

the increase in in use around the world and it's not going to slow down it is only going to increase like I I think legitim our kids Tyler like both you and I have young kids and there's a good chance that they grow up in a world where they're like all they know is stable coins they don't even know cash or know typical currencies the way that we grew up with that I think that they will be so native to it and it'll be so easy for them to just send money to anybody or pay for anything at any store around the world just using stable coins so yeah it's it's so obvious usdc coming to iPhones in the near future with this new Apple iOS 18 release uh we saw Circle CEO Jeremy aair

talking about that again we don't need to go down that rabbit hole but stable coins they are coming this is going to be an IPO to watch I'll be definitely taking a serious look at it when we get more information about when that's coming out okay as we go further down the risk curve uh we got to talk about our boy Michael sailor and micro strategy uh how do you feel about micro strategy well I'm wearing my Bitcoin propaganda was any tell I love Michael say I've been calling him Big Mike I'm just gonna stick with that Big Mike so his company micro strategy and it's a business intelligence platform that uses aite Tech to help users find information quickly and easily all right that that's the that's what the company like used to do but now they're they've effectively

become known as the largest publicly traded company which holds Bitcoin uh they're made famous when when Michael sailor started aggressively putting Bitcoin on their balance sheet I believe back in 2020 and they have a lot they've got roughly 2265 Bitcoin worth 13.2 billion in their their latest report the company itself only made about 111 million in Revenue in this last quarter 80 million gross profit it actually operated at a slight loss um but the the reason uh of the stocks micro strategy stock success has certainly been tied to bitcoin and how they accumulate it so not only do they buy it they effectively lever up on

bitcoin by using convertible debt in the company to continue buying more so whenever you see the headlines Michael sailor wants to buy another 250 million or 500 million they're doing it by issuing this convertible debt and I actually took a look at their the recent performance of micro strategy stock compared to bitcoin so year-to date bitcoin's up 32% micro strategy is up 92% on the onee time Horizon bitcoin's up 100% on the year tremendous micr is up 250% then on the two-year bitcoin's up 180% micro strateg is up 360% U so it's doubling or tripling the performance of Bitcoin so I think by all definitions it has been a high performing beta at least over the the

last few years and I I gave the recap from Nashville there are no reasons to think he this man is gonna slow down in his accumulation of Bitcoin he he he gave us his price targets his base case is 280 trillion by 2045 and and uh one quadrillion is his bull Case by 2045 so I don't think he's gonna slow down anytime soon it's a very interesting beta play and if we really want to get out there Jay we can go into the next play even further out on the on the risk curve and that is the news out of defiance so Defiance launched a new ETF it's called mstx it gives investors access to leveraged micro strategy stocks so this

ETF it tracks the stock price of uh micro strategy then they use debt to amplify the position they aim for 175% exposure to the stock so you're getting about 1.75x micro strategy stock um you know we we just talked through I just gave the returns of micro strategy compared to bitcoin and now you're getting a new product that's going to multiply those potentially by 1.75x this just launched yesterday we've already seen some pretty strong demand for it in the market $22 million in volume in the first day I believe that is a record a day one record for a leveraged ETF product and we saw some impact on the micr strategy stock as

well tied to that launch um this is one that very interested I I live a little further out in the RIS curve uh so this is what I'm taking a hard look at the thing that really stands out to me about all of these options that I think that a lot of us in this space Miss is just how many products are being developed right now in trafi to get exposure to crypto and what that means is that there is hundreds of thousands of financial advisors around the world who are currently learning about how to sell these products to their clients and

they're learning about ethereum and they probably never heard about ethereum before for three you know few months ago and then the ETF got approved and their boss was like yeah I think we might actually start to sell this like let's go figure it out and that is that is the Tipping Point of Education to the masses but the thing is I think everybody here needs to don't fade all these products like go take a look at them yourself as well and take advantage as we said of the access you have to these in a non- crypto way and you know don't hate on your buddy who maybe is buying crypto through tradire rails hey guys it's okay to do that too we all need diversification and we need to be smart with how we manage this yeah think spot

on I think that's a great way to to sum it up everyone has their own reasons everyone's in their own different familial situations and now we just have more products than ever to to make it happen so it's exciting times and we're just going to have more this time next year and we always have Tyler D our Bitcoin propagandist to come on the show and tell to buy more Bitcoin however you want to buy it just make sure you're buying it thanks so much everybody for listening in today if you like this show if you like the content please do me a favor give us a like give us a review and make sure you subscribe because as I said early on the show right now we are doing a raffle if you subscribe by the end of

the month you'll be entered in the raffle with so many prizes that you could win and of course if you subscribe you're going to stay up to date on crypto and the latest news remember none of this is financial advice investing in crypto investing in trafi investing period is risky and you should only invest what you can afford to lose thanks for listening in everybody have a wicked awesome day