At the Money: Crypto Curious
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How should retail investors responsibly think about crypto? Are you crypto curious so you interested in owning maybe some bitcoin or a serum or some other crypto points? How should ordinary investors interested in the crypto currency space get exposure to that asset? I'm barry results.

And on today's edition of at the money, we're going to discuss how retail investors can responsibly invest in cyp to to help us on packed all of this and what that means for your portfolio. Let's bring in that hogan. He is the chief investment officer, a bit wise asset management.

The firm manages over ten billion dollar in client assets. Encrypt u. Let's start with just the basics.

For the longest time, it's been chAllenging and difficult to own crypto. There were wallets and coins and crazy passwords, lots of hacks and other problems. Tell us about what's going on in the world of a actually owning crypto currencies.

Ah it's great to be here very it's getting a lot easier to own cyp to. You know in the past, this was a new disruptive market. IT was chAllenging.

You had to write down your secret password and not lose IT. They're all these terrible stories about people losing passwords that are now, you know, would have gotten them one hundred million dollars or whatever. But this is just like any other technology.

You and I remember when the internet was hard to use. I remember looking up websites in a book which I now sounds absolutely same, but technology has advanced. It's now easy to get high quality access and secure access to cypher if you use the right tools.

A really interesting. So IT sounds like the wild west of crypt to has been taken a little bit. There certainly has been a push by well known financial institutions into the space.

Um you can own crypto coins and etf. You can own them and closed and funds. What are some of the advantages and disadvantages of the various ways and methodologies of owning this?

Yeah, I have to say i'm a huge fan of the etf. Um you know obviously, we offer them, so i'm talking my book. But broadly speaking, the etf came out in january of this year and they let you own crypto at such low cost and with such institutional quality, custody and trading, retail investors today can get the same sort of set up that the largest institutions in the world are getting.

Encrypt U A year two ago. So these etf make IT easy to buy, exposure a bitcoin in a broken age account, and know that the crypto is being, or the big coin is being, held by an institutional, regularly estonian with direct in place with all the bells and whistles. But they don't have to worry about IT five years ago. You have to worry about that personally. The etf taking that complexity away and made IT cheap and safe.

And and you're really a fascinating person to talk to about this because you come from the etf side of the industry. You spend how many years twenty years working on etf? Tell us a little bit about your background and what made you into the crypto side to come up with ways to put coins in etf? Yeah, absolutely have.

Fifteen and twenty years in the etf industry, the C E O of etf dot com, they're actually so many parallels between T. S. And cyp.

Do I know etf today are the apple pie investing there, everyone's favorite tool? But twenty years ago, they were considered risky and disruptive and hard to access. The financial times called them weapons of mass destruction.

There were congressional hearings, barry, about etf destroying the american dream, if you can believe, IT. But etf had this core advantage, which were they were lower costs, there were more tax efficient, they were easier to use. And over time, the world woke up to the rap reality, the same things happening in cypher.

You can see IT before your eyes. A few years ago, Larry think called bitcoin and index of money launder ing. Today he's talking about IT transforming the world of currency, and he holds more bitcoin than almost anyone else.

So it's going in that direction. And absolutely, you're seeing these two worlds come together where this new financial innovation of cypher u is now being packaged in this beautiful package of an etf and making IT easy for every investor to access. Its its a beautiful thing.

And and I want to talk a little bit about the the safety aspect in the institutional ization. Um none of the coins are regulated IT IT very much has been the wild west. But you're not a egypto exchange. You're a uh a fun manager. You're a financial manager who is the regulatory authority that supervises .

bit wise yeah all all of them with with all the letters all the letters very um were regulated by the S C C. Because even though the crypt of assets aren't the funds that we offer, the etf that we offer are regulated and pass through the uh the S C C, of course also the C F T C for products that holds futures contracts. Fina uh which is another regulator, has oversight over broken dealers.

And so our distribution team sits under that. All our materials are reviewed by pinera, the N. F. A. It's an alphabet soup of regulators.

But I is a good thing for investors because one thing that is true about crypto is in the early wild last days, when you have offshore exchanges doing shady things, people lost money. A great thing that has happened is that, that has moved into these regulated formats like etf. So you do have some protections from S, C, C, the C, F, T, C, bin, raa, the N F A and others. And of course, bit why sits within those protections as an R A H?

That's really interesting. So so you're a regulated entity where the etf and various funds, uh, get custody, how they held, who does the administration of reporting I mean ah I think of these is complex questions for a coin. But really the kind of run in the mild questions for an S C C regulated entity .

like bit was IT looks exactly like or very similar to any other etf manager. So the crypto assets are held in a qualified custodian. In the case of our big point etf, it's queen base custody, which is the largest critical custodian in the world.

The funds are audited by big four auditors. In our case, it's K, P, M, G, the minister, by firms like bank of new york. If you looked at the the sort of stack of a participants, IT would look just like, know a traditional equity eight. And that's what I should do, right? These are trusted rails that have been proven over years, and we just applied them to crypto to give the similar protections to cyp to investors.

So the one thing that I find kind of amusing and ironic is the whole define nonsense that decentralized finance turns out to have been a narrative that kind of faded away, because cyp do, for all the talk about outside of the financial system, has been dragged kicking and screaming right into the heart of the financial system.

I admit that there is an irony there, but I actually think it's more of a continuing sort of the core idea of defi is that the existing financial system is too slow to intermediate to costly. And all of that is true. Defy offers the potential to improve that.

But of course, the two systems have to come together and you're seeing IT. So you're seeing, you know from the cyp side, the launch of etf, moving in to the traditional financial system, but you also have firms like blackrock and Frankly tempting issuing money market funds on public black chains like a theory. Um so you are seeing this coming together. I wouldn't write off defy one point, berry. I think they'll be a defy two point out that is much more significant.

really interesting. So so let's talk about individuals who want own crypto. What sort of strategies do they deploy?

Is IT bitcoin or bust? Or should they own bitcoin, a theoria and a bunch of other coins? Give us some investment strategies?

Yeah I mean, without telling anyone exactly what to do, i'm an index investor at heart, right? This is uh, a disruptive early market. Uh, you know my family owned a data max.

I remember using a blackberry. It's hard to know exactly how this market will turn out in the future. So I think taking a diversified approach to this market is probably a sensible approach for many investors. There certainly people who are bitcoin only, who only care about the aspects of cyp to but in any disruptive technology. My history you know having grown up through the tech bubble um tells me that a diversified approach may be a good idea for many investors.

Makes a lot of sense um whenever I talk about stocks to to an investor is warn them, hey listen, you know you get a uh ten to twenty percent pullback two out of every three years. Twenty percent comes along just about every third year with crypto. I love the expression crypto winter.

And we've had a number of them when for a year to crypto currencies can be down, you know, fifty percent or worse. We've probably had three of them over the past in ten or so years. So how should investors prepare themselves for what seems to be an inevitable draw down? Yeah.

it's a really important question. People ask me all the time. What the biggest risk in crypto to is IT regulatory is IT technical is IT quantum computing.

It's none of those things. The biggest risk is behavioral risk by investors who either chase Prices when they go up or sell when Prices go down. This is an asset that has huge voluntier ity.

You're going to get thirty, forty, fifty percent drawdowns in the future. I feel confident about that. As you mentioned, we've seen those in the past, and there is no reason to expect that will change for investors.

What that means is two things. One, you need a long term discipline. If you're buying big point for the next week, I have no idea where it's going.

I'm optimistic over the next handful of years. And the second is you need to decide your portfolio appropriately. Don't put in so much. But if IT pulls back fifty percent, you're going to panic can sell because that is the worst case scenarios. You're Better just sitting on the sidelines put in a small now if you're going to invest so you can handle that up and down and IT won't overly impact what you're doing.

Uh, really, really kind of interesting. So you mention Price, but going goes way up, IT goes way down. Is there a way of looking at these from a fundamental perspective? How do we value coins other than whatever the last trade was?

Yeah it's unfortunately a little bit complex. Big coins valuation technique is different from other crip du assets like a theory. Um when you think about bitcoin, what I think bitcoin is trying to become is a digital version of gold.

I wait to store money outside of central banks in a digital format. And we have digital versions of everything. We have digital versions.

Of newspapers. We have digital versions of ads. I think the world and Younger generations on a digital version of gold.

The reason I raised that is you can look at big point today is a little under two throwing dollars. You can look at gold is a little under twenty trillion dollars. Do you think it'll get half that market? Well, then you think big coin wl five acts from here.

Do you think you will get you know that full market you're more optimistic? Or do you think you will be less successful? That's actually the best way to the value bit point.

These other crypto assets like a thereon are different. They actually have cash for like characteristics so they behave a little bit more like stocks that more sort of fundamentally valued than bitcoin, which is this monetary asset. Um and so you have to think of the two different sets of assets a little differently.

So you know your both index guys, that's that's our background. If i'm an investor and I want to put two with three percent of my portfolio into coins, what do I do? Why tell us about some of the options that you guys have? Is IT, you know, should I be going through two x levered between? Or am I Better off with, hey here, the five biggest coins or ten biggest coins and on and all yeah.

I wouldn't go to lever big coin. Uh you know big coin is valid enough. Um I big investors can make a choice within the etf space, the only coins that we have access to our big coin in a theoria.

And the good news is the two largest assets there are leaders in their spaces so you can do worse than go two parts big coin in one part east and have at least broad based exposure if you want to be more diversified and taking index based approach. You know, we a bit wise of the largest critical index fun. It's available in a rapper, but that rapper is more like a close than fund.

So I can trade premiums and discounts. And you have to be aware that you have that extra layer volatility. So either approach can make sense for the right investor as long as you understand what you're getting into.

So I I want to not get too lost in the weeds on the technical issues, but I keep hearing about the having that's coming up. And what does that mean to to what should lay people understand about this?

Yeah so if you think about bitcoin in when I was created way back in two thousand and eight, two thousand and nine, there were no big point in existence. And we all know or many of us know that eventually it'll be twenty one million bitcoin in the way we get from zero to twenty one million is every day a little bit more big coin is issued.

What the having refers to bury is that every four years, the amount of bitcoin that issued falls and half and the last having was earlier this year, right? IT dropped in half. What that means is there is less new supply coming into the market.

In the end, bitcoins Prices set by supply and demand. You have all these people buying bitcoin through the etf and other means, and then you have supply. And supply is either this newly developed big coin or existing people selling IT.

So what the having does is that reduces the amount of supply in the market. If I told you the amount of oil coming out of the ground would fall a half tomorrow, you might be polished on oil. The same sort of narrative is true in bitcoin. The amount of bitcoin coming out of the ground, if you will, falls in half every four years, and we're just starting to feel the impact of the most reason having now.

So all of these chAllenges, whether it's the limit amount of supply that having should be fairly well known by investors. None of these are surprised. Not like an earning surprise. Hey, everybody who's a bit coin investor understands.

So the question becomes, what are gonna the future drivers of bitcoin return? Should we be thinking about bitcoin like a commodity, like a currency? You know you mentioned, uh, you know, just under two billion dollars, two trillion dollars in market cap for for bitcoin that puts IT somewhere between meta and alphabet, facebook and google. Do we think about this like a large tech company? How should we context ize the points themselves?

Yeah I I mean, I think a bit point specifically as a commodity. It's a commodity with care supply and its Prices set by supply in the man. One of the reasons i'm so optimistic about bitcoin right now is we have major new sources of the main institutional investors are just now buying big coin.

There's talk of the U. S. Government acquiring one million big coin. Corporations are acquiring bitcoin. None of that was true in a major way a year ago or two years ago. And so you have all this new demand.

But unlike other commodities, unlike gold, unlike oil, unlike copper, you can have all the demand in the world. You don't get any more supply. The supplies is literally fixed.

Its preprogrammed. So when you think about are you optimistic or pessimistic on bitcoin? I like to think about that supply demand dynamic.

And from what I see, there's a lot more demand coming online and limited new supply coming online. That makes me optimistic. It's not a guarantee we can see some of those things not materialized. We can see investors scared off. But I like the long term framing of that from that simple supply demand perspective.

So to wrap up, investors who are crypto curious can buy various kinds today much more easily than I used to A B. If you want to to own any sort of coin, you could buy IT in a close, then fund, or even easier in a etf. Be very aware that you have to position size appropriately, have if you want to own a person three in your um portfolio when you're liquid network.

Uh the responsible way to do this is not through a leverage product, not anything that reflective of the old wild west ethos of crypto, but a traditionally tf. You have a small position, as you would for any particular company and be aware of your own behavior when IT comes to managing yourself around the volatility of bit point. I am barry reports. You are listening to bloom burbs at the money.

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