Transcript+
Thank you for joining us today. We're excited to bring you a brand new show from the On Ramp Media umbrella. Wake Up Call is a weekly show that will be streamed live on LinkedIn every Monday morning. To catch the premiere of each episode, follow On Ramps LinkedIn page and add Wake Up Call events to your calendar. After the live premiere on LinkedIn, we will distribute each episode across On Ramp Media's podcast channels and YouTube page. Wake Up Call aims to educate financial professionals on the merits of the Bitcoin investment thesis, how this asset represents both a threat to legacy financial service businesses and an opportunity to differentiate oneselves and retain and attract new clients. Hosted by Mark Connors, Onramp's Head of Global Macro Strategy, and Rich Kerr, Onramp's President of Managed Wealth, this show seeks to provide financial professionals the wake up call they need, prompt them to have an open mind with respect to Bitcoin, rethink their prior assumptions, become more educated on the topic, and learn from others who are already farther down this path. Mark and Rich bring a combined 60 plus years of experience across traditional markets and financial services and will share their unique perspectives and how their peers and colleagues can approach the realm of Bitcoin. Wake Up Call will feature guests from various backgrounds and industries will also share their own journeys to Bitcoin and how others can get up to speed. Now time for the show. Good morning, everybody. I think we're live what a, what a Monday morning to kind of come together here. Mark and Jackson, maybe I'll just quick quickly kick off and introduce Jackson Mikaelic, who is on ramps national Head of Sales for for our institutional clients and, and also works pretty significantly on our strategy work at on ramp. And, you know, one of the wonderful delights of having Jackson join us is he's talked to hundreds and if not thousands of, of Bitcoin investors or people that are interested in, in, you know, accessing Bitcoin as a as a store of value for their portfolios. And, and, you know, he's largely, you know, got his real thumb, I guess his thumb on the pulse of, of what advisors are talking about, thinking about, but also ultra high net worth, family offices, foundations, endowments and otherwise. And, and so it's real privilege to have you join Mark and I today, Jackson. So thank you for coming in. It should be an interesting conversation every Monday morning over the last month since we've launched this, we've had such interesting events over the weekend. And so, you know, I, I guess maybe where we should start is, is kicking it over to Mark to talk a little bit about, you know, what's going on in the markets broadly. And obviously you had quite a Twitter or an X Spaces event last night kind of talking through some of these issues. And so maybe bring the rest of our, our, our audience up to speed on what you're seeing and, and some of your points of view and maybe Jackson and I can kind of riff off of that. Perfect. I will. Thanks for that. And Rich Jackson, thanks for joining us today. Yeah, it was it was quite the week. And I, I guess you have to start with Japan and the yen. Three things happened last week that reversed a year's long profitable trade by institutional investors and that unwinded the trade had spillover effects. So what were the events? The three events were on Wednesday, the Fed announcing more dovish rate talk, pushing September or pulling September rate cuts back into the horizon. So now there's a, you know, potential for two cuts before the elections. Then you had the Bank of Japan do a 25% rate hike. Japan has been holding rate 0. They've been living in a deflationary environment where rates are virtually zero. They raised them 25 basis points. The fact that is that caused the problem is really the crux of the global issue, which we'll touch on. The third item was an economic release by the US on jobs. Fewer jobs created higher unemployment, which means recession might be imminent. The reason that's a big deal is because, you know, when people don't have paychecks, they stop buying things. And that is going to give the Fed a lot of political room to cut rates. But what does it have to do with the yen? For three years the yen has depreciated by almost 50% against the dollar going from like 1:05 up to 160 plus, and then it reversed just last week. People would sell the yen and related assets at 0, so they would basically swap dollars that are paying 5% for yen that paid 0. Institutions can do this through a swap. They did it with much leverage. Won't go into the exact amount, but it's not two or three times more like 10 times leverage. Plus when the yen reversed because people were worried or uncertain about what a 25% rate hike meant and that maybe the yen would stop its depreciation. Why was the yen depreciating? Because people want to be in higher rate currencies and the US for the past several years had a higher rate currency. If that's going to change, this three-year tree that was profitable, it reversed trillions of dollars rich in a matter of hours if not days. A few people got tapped in their shoulder and that has knock on effects. So I'll stop there and see if you guys have questions. If I explain that well enough about one of the bigger assets in the world, global currencies, dollars and yen, had a major multi year reversal last week because of three separate events, quasi related but separate. Wow, yeah, I mean, where, where do we go with that, Mark? Holy cow. I mean, it's a it's a fascinating period of time. And, and, you know, we're watching, you know, all of the markets are, are responding, you know, now and, and watching what's going on in the United States. And so obviously these are, you know, percentage drops, right? But you also have, you know, the psyche that gets affected during these periods of time. And I think that, you know, the, the thing that really sticks out to me and, and, and, and the reason why we're here is, you know, to talk and educate around Bitcoin. And you look at what's happening in, in the world today, whether it be geopolitical or, or potential, you know, kinetic wars and in Iran, Israel, what's going on over in, in Russia and Ukraine, and, you know, you name it, right? So you got a lot of you've got a lot of people that are feeling, I guess, a degree of, of emotional stress, you know, from what's going on in, in the broader political scenes scenes. But you also now have, you know, these the unwind of the Japanese carry trade to an extent that's causing some, you know, some pressure in the marketplaces. And and so ultimately this, you know, weighs on people. And what I find most interesting is, is how does Bitcoin fit into this? Obviously, Bitcoin has retraced as well, right? I mean, this morning, I think, you know, when I woke up, Bitcoin was trading at around 50,000. Right now it's about 54. So it's demonstrating quite a bit of volatility, but bouncing back off of the lows. And so the question I have is, you know, what's changed for Bitcoin, and in my mind, you know, not a whole lot, right? The thesis for Bitcoin actually is bolstered during periods of time like this, right? Because the monetary policy of Bitcoin is such that it is very transparent, it's understandable, it's immutable. And ultimately people, you know, will be drawn to assets like Bitcoin that show, you know, I think what I would consider, you know, tremendous character in its monetary policy. And part of the problem of why we are where we are today is, is, you know, some of the currency manipulation and things on that nature from central planning. And so in my mind, the Bitcoin thesis is well in place. And and the other piece around what I was thinking about in reaction to, you know, market sell offs is behavioral finance. I spend a lot of time thinking about, you know, one of the beautiful attributes of of Bitcoin is, is you know, bitcoiners develop a low time preference. They recognize that it's important to have that long term perspective. And, you know, largely, you know, I, I kind of laughed this morning. But if you were to look at, you know, on ramp employee banter, everybody's looking to, you know, scrape up dollars and, and, and buy Bitcoin during these periods of time. And that from an investor behavior standpoint, is the right thinking, you know when the market gives you these opportunities. It is and you'll and you'll hear that like you hear people say that you're like, that's silly. It's like, no, because as you said, bitcoins printed every 10 minutes it was open when other markets were closed. It it's like an animal that doesn't hold stress, but it just releases it immediately and it works it through the system versus what the yen and dollar do is they hold on to it and they press and they press and they press until something pops. They try to suppress market dynamics through essentially planned dynamic, and that's what we've grown and known all our lives. So we don't think anything of it except when you look at some of the results of that behavior, like a deficit. We've had, you know, bull run in equities. We've had low unemployment. How do we get it? Because everyone's a hunky Dory? No, we got it because we've been spending more money than we have in a bull run and so much so that and I'll say this until, you know, as they say, the beings will continue until morale improves until until people come back and say otherwise. Why Jerome Powell got on 60 minutes in a non-emergency time period to say we're in an unsustainable path fiscally unsustainable Congress and Treasury. And he pointed the finger because he sees it and he knows what the next answer is. And that's more printing, which is going to cause assets to go higher and it's not very good for wage earners. So to your point about when we're when we're talking about the central planning of the US and about Bitcoin, Yeah, I understand now that Bitcoin sort of works out all of the weak hands or uncertainty in real time so that you don't have to live a moment a month later like what the what the Japanese equity holders are doing now, the chances of topics for the Nikkei to go higher, you know, the next couple days probably not that great. Yeah, Mark, I have some thoughts on that as well. Certainly I think the three of us agree that the thesis for Bitcoin it remains unchanged and this the environment that we are in today and the global macro lens that you've brought to the conversation today, Mark reminds me of March of 2020. And at that time I was sitting in on a due diligence desk. So we would review me specifically, I was on the alternatives desk and we would diligence hedge fund managers and then private asset managers. So private equity, credit, real estate, etcetera. And naturally on the hedge fund side, they're trading in public markets, they're trading very liquid securities and instruments. And in March, in 2020, all hell was breaking loose. There was the treasury market dysfunction, you know, equities, I think the S&P 500 was down about 20%, I believe in that first quarter of 2020. And most of that happened in a matter of a couple of days or a week toward the end of the quarter. And this really reminds me of that period in the sense that we all understand how interconnected markets are globally and the, you know, the remedy or not even the remedy, rather the, the approach to resolving the issues here, given that the interconnectedness of the global markets, it, it, it really drives across the board, meaning there's no way to fix the issue of what's happening overseas without it impacting the global financial market. So I feel like right now we're in a period of mass panic and uncertainty, but you can kind of see the writing on the wall similar to March 2020, where if you look out just a couple of days, weeks or months ahead, it seems that there's going to be pretty considerable easing of fiscal policy, monetary policy. And ultimately the conclusion that I came to in 2020 and how I got to this place that I'm at today now four years later, is that I really do think that all assets, whether it's equities, Bitcoin, real estate, what have you, I think that they are driven largely by liquidity and the levers are fiscal and monetary policy. There was a world 20 or 30 years ago where value investing played a massive role, right? Fundamentals were incredibly important in selecting specific securities and outperforming your peers. But now it seems that while that still does play a role and there's still an importance to that type of investing, really the macro and the liquidity landscape, whether it's contracting or expanding seems to play and only greater and greater role in markets today. So that's all to say that in 2020 when we saw Bitcoin crashing from I think it was 8 or $9000 to almost $3000, that was a fantastic time to buy because what ended up happening was the liquidity bazooka. You know what was was brought out. We saw rates get slashed 0% globally. We saw trillions of dollars of, you know, trillions of dollars enter the market. We saw a global coordination of easing and Bitcoin ended up providing the safe haven against that currency debasement and ensuing inflation that showed up in the official government metrics only months and years later. So now I feel like four years from that event, we're kind of living in similar times where it feels very uncertain today. But we ultimately know that there's kind of, you know, the lever only goes two ways, right? It's either liquidity is expanding or it's contracting. And I think we're getting close to the conclusion of the contraction period and entering a global liquidity expansion. Yep. And Jackson, I'm, I'm looking at my, at our note that we put out this morning to clients. And when you talked about that 89000 down to three, our deficit was less than 5%. So we've gone through COVID, Phew, it's over. Our deficit went from being potentially 1.6 trillion in June to now over 2 trillion per the CBO sent the Congressional Budget Office. So now we're, you know, our, it's up, it's up almost 50 percent, 40% since that time. So the case for Bitcoin about being outside the system, immutable and as rich you were saying, not centrally planned is absolutely being validated for two reasons. And this we'll be clear in this because then and then we'll go on to what we really, really want to do here is talk about what clients are doing and how they're reacting to it as opposed to just us talking about the current events and and why the Bitcoin thesis is there. There's a problem in traditional finance and it's terminal. As Lynn Alden says, you can't stop this train. We have jumped the fiscal shark as far as more debt is going to be needed to satisfy the increased interest expense as growth slows. That's the thesis. We have links to it. We'll let you read about it later for more support. Bitcoin's a remedy because it is outside the system. It doesn't let folks, political players mess with the supply in order to deal with, as Rich said, people who will have long time preference, meaning can't deal with pain and just need to get over the hump at any cost by issuing trillions of dollars like we saw in March of 23 and like we saw in COVID. Bitcoin doesn't do that. That's why there's a good chance Bitcoin might end up above 60,000 today by the end of the day, because it is able, it is outside the system. So that's the that's the crux of it in my opinion, you guys. But the reason we have three of us here is because one guy always misses something. So as we lay out one of the bigger moves in the Nikkei ever down 12 1/2 percent on Monday and 10% decline in in NASDAQ, have we positioned the problem of traditional finance and printing and debt and the remedy of Bitcoin well enough? Is there anything else you guys want to bring in before we go into the meat and potatoes of policy and and clients? Well, I'll kick it over Jackson when you got you got any thoughts there? Mark, I think you hit the nail on the head in terms of just the environment that we're in today. I think it does tie into maybe now behavioral finance trends, right? And how to how do people think about what's happening in Bitcoin, but also the broader markets today. And really what I'm reminded of is, you know, if we take a look back, Bitcoin is about is drawn down about 20% in the past week, right? So it's a pretty considerable correction. Think we've already talked a bit about why that's happened from the global macro lens and the fact that Bitcoin is traded 24/7 around the world. There's no, you know, there's no impediment to that protocol. There's no Bitcoin is not down. You can always access liquidity globally. So it does kind of act As for markets globally, it does act as a way to get liquidity, especially over the weekends when markets are closed. So we saw a pretty considerable drawdown Sunday into today, maybe people shoring up some cash to deploy into other areas of the market or maybe people just kind of want to be in cash and wait to see what happens. But what I what I think about was it relates to Bitcoin is it really isn't all that different investing in Bitcoin. Is not all that different than what people have done over the past 40 years in the US at least, where the S&P 500, especially in the past 20 to 30 years, is low cost. Index funds have really proliferated, but people have used equities as their de facto savings account, right? And what are your financial advisors tell you during times like this when you know, all the brought indices are down 3 or 4% today? There's a lot of uncertainty. There's concerns about geopolitical conflict. There's concerns about all the macro headwinds that we've just just discussed. And if you call up your financial advisor today, I think a lot of them would tell their clients to stay invested, to not panic sell out of the market. And really the same thesis or mindset needs to be applied to Bitcoin. It's not different in any way. If you're saving for your children's college education 20 years from now and you're using the S&P 500 to do so, you're not going to sell your position because the market is volatile in any given day or week, right? You're going to stay invested and perhaps if anything, you might add to your position if it makes sense with your financial plan. And I really do view Bitcoin as a very similar way to allocate my capital personally. And really when we think about behavioral finance, it really there's just been over, over decades and over centuries, people have used different vehicles to preserve their wealth over time. And the S&P 500 was not the vehicle that people would choose to invest their life savings 100 years ago, right? The folks who came out of the Great Depression, they were typically using bonds, precious metals, maybe some real estate to preserve their wealth over time. And you have to kind of what I see is there's an adaptation in in investment vehicles that are available and you need to be able to kind of change and skate to where the puck is headed. And that's where I see Bitcoin really playing a massive role going forward for advisors who are continuing to get more educated on this and their clients are asking the right questions about it too. So I do kind of see there are similar lines between the mindset that's been used in the traditional finance base called the last 40 years and how I think Bitcoin kind of fits into that framework as well. At Onramp, we believe that Bitcoin is the most important asset of the 21st century. The hard part is securing it right There are shortcomings with keeping your coins on an exchange, but also with setting up your own self custody arrangement. Onramp solves for these concerns. Our multi institution custody solution maximizes security and minimizes counterparty risk, ensuring that your Bitcoin remains securely in your possession and provides built in inheritance planning to ensure your family is protected as well. On Ramp provides Peace of Mind for your Bitcoin journey, whether for your whole stack or for part of it as a compliment to your existing self custody setup. For more information, check us out at on rampbitcoin.com. Let's let's stay right there. So you said something kind of interesting right at the very end, Jackson, that struck me, you know, which is, you know, the questions that advisors are receiving from their own clients. And you know, it's interesting to me whenever I'm speaking with an advisor, you know, I always ask them what's top of mind for, for your client, right? And that's a general, a general question. But if you ask it enough and you go from firm to firm and you're talking to different, different companies, Rias that you're meeting with overwhelmingly, you know, when I ask that question, what's, what's top of mind with your, your clients? It is the impacts of inflation on their discretionary spending or their investable savings and things on that nature. And you know, it, it's a pretty powerful pain point when you think about it, right? When somebody's saying, hey, look, I, you know, what are the impacts of inflation against my financial plan? And, and you know, am, you know, am I going to be able to stay comfortably within, you know, my retirement years, blah, blah, blah, whatever it might be, right? Or what are the implications to my savings in real, real terms, right, because of the inflation? The, the follow up question obviously becomes, well, geez, what's the solution? What are you doing as a financial advisor that's helping the, the end client solve against the problem that's stated? And so I'm, I'm curious in your conversations, you have even more conversations than I probably do on with the advisor community. And I'm, I'm fascinated to hear, is that what you're finding in your conversations as well? Or do you find something slightly different? Yeah, Rich, I think those are great questions and certainly the types of conversations that we see top of funnel. You know, there are a lot of clients out there trying to understand how their portfolio will adapt to a changing, you know, global macro regimen, right. Mark writes a lot about this and how do people preserve their wealth over the coming 510 or 20 years in a world where inflation is far above the 2% CPI metric, right. I know now it's it's getting closer to that level. There's a lot of nuance that we could talk about as it relates to that metric in particular. But I think what people really need to pay attention to is the rate at which the money supply is growing. And it's a little bit, it's almost something that people don't fully pay attention to. We think of inflation, we think of CPI, but really since the 2008 financial crisis and then even more so since 2020, asset, asset prices are really a reflection now of how quickly the Federal Reserve and other central banks are growing their balance sheet. How quickly are they creating new money and how quickly is that money entering the financial markets and inflating the value of asset prices. And one thing that advisors ties into your question that need to pay attention to and their clients are asking about is how does the 6040 portfolio actually preserve someone's wealth over the next decade? The answer is it it won't, right, Because we're in a situation now where in the US the debt to GDP is and market check me on, I think it's about 120% or so. And really the only there's, there's really only two options at this point as it relates to how do we handle that debt. It's either do we either print more money and we'll use that printed currency to pay for that debt. Or. There will be some sort of default on on the debt and typically what happens is governments will print the money to pay for that debt. Which means then, and this ties back into the question, which means that that 40% bond allocation needs to be reassessed because it's guaranteed now going forward that that is going to be paying a negative real return. So how does someone who's 40506070 years old think about their wealth over the next decade? If it's 40% of it, plus or minus is allocated to an investment that is losing purchasing power year over year. And this is where I think something like Bitcoin needs to be considered, whether it's taken out of a sleeve of an equity portfolio or taken out of a bond portfolio. I really do think that the case is here now for advisors to be making small allocations across the board for most of their clients and then depending on that individual client circumstance, maybe adding to that position. Because if you think about Bitcoin, what is it providing? It's providing, it's providing a mechanism for growing purchasing power over time. It's a play on scarcity, namely digital scarcity, right? This is a digitally scarce commodity that cannot be altered in any way. And when all the currencies around the world are being manipulated in the sense of more and more are being created at a kind of an exponential rate going forward, you need something that is scarce, that can hedge your purchasing power over time. And then not only that, it kind of ties into what Mark mentioned earlier, Bitcoin, it doesn't have any sort of issue. There's no issue or to Bitcoin, right, that's centralized. So there's no government or corporation that stands behind it and stands ready to alter the monetary policy to change to, to meet the changing macro tides, right? This is something that's static. It's an inelastic supply. So the supply is already predetermined and the demand and it, it, it decreases every four years with the halving, right? But then the demand is really what's playing a large part in the Bitcoin price appreciation over time. And my final thought on this, Rich, is now we're starting to see the spigot open up for a lot of advisors that work at some of the larger firms. Just last week, Morgan Stanley announced that some of the Bitcoin ETFs in the US will be available now to advisors to solicit to their client if it meets their, you know, their, their investment suitability, right? So these are new. While the the Bitcoin ETFs were launched back in January, now over six months ago, we're still only seeing the start of what I think is a very large secular wave of adoption of Bitcoin as an emerging asset class in the financial advisor space. Yeah, no doubt. And if Morgan Stanley is just gone ahead and and made that approval, you know, inevitably you're going to fall, see other wire houses follow suit and that obviously is going to be another driver for demand. Yeah, that that's fascinating. And I love how you touched on the scarcity and the known and, and the known scheduled inflation rate of Bitcoin, right? The the supply that comes into it. And I think that that's a really, really valuable thought for all advisors to be thinking about. And that's the monetary policy in many respects, right, you know, in action. And so when you look at, you know, some of the challenges that we're all talking about, if you distill them down to base factor, it's all comes down to central planning. And, and you know, all of the manipulation that happens in various currencies that cause some of the pain and, and troubles that we've seen. And, you know, that was one of the most profound pieces in my Bitcoin journey, to be perfectly honest, is when I was reading the Bitcoin standard and, and, you know, and safety and Moose was talking about looking back at historical records, right? You know, going all the way back into, you know, the early 1900s and prior to the, you know, the problems of the Great Depression. I mean, I thought, Oh my gosh, she really kind of nailed it. It was all brought on by central planning and, and the course of action that central planners have taken. So in many respects, you know, we 'cause our own pain and you know, so the fact that Bitcoin doesn't have an issue or doesn't have ACEO doesn't have a management team, you know, it has a set schedule, a set supply schedule that that you know, decreases over a period of time is is pretty phenomenal. And it and it takes that human instinct out of the play. That's a good call out. So focused on, on clients because we, you know, we all three obviously are, are the converted. We, we understand Bitcoin, we know its purpose in a portfolio. I'm not going to speak for everyone to call, but you know I own Bitcoin and Jackson when you talked about the 6040 and and I have an opinion on this and we talked a little bit about this. How many advisors know the conclusion that we've drawn from our assessment that adding a little bit of Bitcoin during any rolling four year period has added to return absolutely and reduced not just risk adjusted returns as measured by Sharp and Sortino, but also has reduced downside volatility. I know it's a nuance, but you know I've shown it to you. Is that message out there? Appreciate. Understood. Mark, I think we have our work cut out for us. I think that that that message and yeah, I think that message is not well understood at this point across the board. I think a lot of advisors are still trying to grapple with what is Bitcoin and the challenge with it right is that it's such a, we haven't seen anything like it before as a technology or an asset class. So it really does become challenging to describe that and find the right, find the right way to characterize Bitcoin because it could be done several different ways. So, Mark, I think a lot of people are even at the very top of the funnel as it relates to their understanding of Bitcoin. And what I'm finding now is a lot of these conversations are driven by the end clients. So clients are going to their advisors rather than the advisors going to their clients. The clients are asking the questions and saying, you know, they're, they're paying attention to Bitcoin some way or another. Some of them own it already. I mean, we we talked to advisors where some of their clients have very sizeable allocations to Bitcoin already and they may already be doing self custody or maybe they have it on Coinbase account. And now advisors are trying to grapple with how does Bitcoin fit into my financial planning? How does it fit into portfolio construction? How do I take these assets that live outside of my purview and how do I incorporate them into the rest of the assets that my clients own? So these are some of the questions and considerations that advisors have today. And I think at least from from what I've seen is it's A, a lot client driven and B, there's tends to be some sort of Bitcoin known Bitcoin expert, if you will, within a lot of these firms that advisors that are less educated on the topic are still coming up the curve. Know that there's one person within their company who knows it very well. And that person becomes the de facto resource for the firm as it relates to thinking about the strategy. And quite frankly, they those people end up being an advocate for for Bitcoin and for on ramp in a lot of ways because they start to understand our products and our solutions. And then they want to help their firm adopt A strategy as it relates to Bitcoin. And how do they actually have product offer to their clients that don't introduce some of these other risks that we're aware of as it relates to some other, you know, some other products, one being that the ETFs in the US? So Jackson, as you know, I was head of research at a digital asset manager in Canada, 3 IQ prior join on ramp and the founder there, Fred Pie punched through with his team the first Bitcoin spot Bitcoin fund in North America. And you know, for various reasons, people want to have spot funds better performing and then the futures. But the story I joined there in 22 and the firm started that product in 2020. But in speaking with clients that I got to know there, I'd go in and the first people we we'd meet were your age, not my age, because they were the first people in 20 to be like this is I think I understand this. And they got their small clients. They were almost the people who made the cold calls in the firm's. They were low on the, they were the dung beetles. They were low in the food chain. But they understood it and they got people in and they end up being higher in the firm by the time I start talking to them, to them in 2000, twenty 22 and 24 because they understood and they got their their folks in. So those this is a great way, at least if history is passes prologue for an advisor to make a an improvement for their clients and their own status and and ranking within the firm. I totally agree, Mark. I think kind of ties into what we talked about a little earlier on this call as it relates to just kind of generational thinking for wealth preservation. There's no rule of thumb as relates to investing one's savings over hundreds or thousands of years, right? Like these things are emergent, they change, they adapt, they evolve over time. And I think where advisors should be paying attention to Bitcoin is is twofold. They should pay attention it pay attention to it to the extent that it can help some of their older clients actually retire comfortably and maintain purchasing power over the next 123 decades because we just talked about the problem that exists in fixed income markets. And then two, there's a huge opportunity for them to be educated and ahead of the curve as it relates to their younger clients because people who are more my age, millennials by volume, not necessarily by dollar amount, but by volume by a crazy more amount of Bitcoin than Gen. X or Boomers, right? Like in terms of volume of purchases, millennials and Gen. Z are much more Bitcoin and crypto native people. So to the effect that I know the average age of an advisor is about 55 or so, a lot of them think about succession planning within the firm and positioning themselves for the next generation. The real area to win and the real area to preserve and grow a business is thinking about the next 20 years. And Bitcoin, you know, for people my age, Bitcoin is going to play a very large role in people's thinking about savings and retirement and providing for family. So to the extent that firms can get educated on and now it'll do them a great favor as they start to do succession planning, as they start to see their clients, You know, some clients unfortunately starting to pass away and their heirs who are younger maybe are more familiar and more interested in Bitcoin than, you know, their their father or their mother. So I think that there is an opportunity now to get ahead of the curve because like I said, most of the conversations that are happening with with advisors and clients are still pretty, you know, they're still pretty more high level at the moment. So there's really an opportunity to get ahead and and be a differentiator in the market these days. And, and, and as we're talking like what Rich said about waking up at, at 50K Bitcoin, you know, we're now approaching 55,000. And, and even though equity markets are off the bottom as well, the move is much greater. And I bring that up not to say rah rah, but to. To under score the data and the stats that we've shown that Bitcoins correlation by the end of last week to NASDAQ was 0 on a 21 day basis 0 even though NASDAQ was off almost I think 8 or 9% potentially 10 from its peak and that it's 63 day correlation was closer to 30% still below a, you know, a highly correlated market. And the other data that we have you know just shows that it's volatility is is very different than makeup. It has more upside than downside. If if nothing else, we invite people in the advisor space to call us. Jackson, please set up a meeting with any of the three of us to go over what that means. Because it's it's happening live and in color right now in 10 minute increments, it's behaving differently. Yes, it's down 20% from the peak. That hurts. But if you are, if you have it mixed in with your portfolio and you quarterly rebalance or just hold it again over any period of time, you have benefited by reallocating when Bitcoin is lower, taking some off when it's higher over any quarterly or annual period, over any four year period since Bitcoin's been around. So since we have the lab in front of us unfolding, we thought it was worthwhile bringing that one back up. And as Jackson said, that's still kind of a a story, Jackson, that may be only a few of the ETF holders that you've highlighted through the filings have really realized. Yeah, that's right. That'll be something to pay attention to as well as it relates to the 13 F filings, because we are approaching 45 days after quarter end. So August 15th will be the big day to to pay attention to where all the institutional owners, institutional being $100 million or more will have to have their 13 F filed with the SEC. So that'll be something to pay attention to. As it relates to ownership of the Bitcoin ETFs, the first quarter of this year, so it's the first quarter of ETFs in the US, we saw 80% ownership by retail. And what I'm paying attention to now is I would like to see that number trend lower over time for many reasons. But if we see 80% maybe go to 78 or 75%, it'll be an indication to us that now institutional investors after seeing one or two full quarters really of Bitcoin trading publicly with ETFs, after seeing some of their peers, right? Wisconsin, I think is the 8th or 9th largest state pension making an allocation in the first quarter this year. We've had several conversations with endowments and foundations over 2024 and a lot of them are investing into Bitcoin and the broader space as well. So this will certainly be something to pay attention for to not only next week on the 15th, but on a go forward basis to see how the ownership changes over time. Is this being, is this asset being more adopted by institutional investors quarter over quarter? And my gut instinct is yes, because a lot of times these institutional investors will start with a smaller allocation and then they grow that over time if the conviction grows right and they and the thesis and the understanding grows with it. So we're really only at the start of the institutional adoption of Bitcoin. I think people have said now for at least two cycles, maybe 3 cycles that the institutions are here. But clearly, I would, I would say that they're not even here yet, right? Like we're only seeing the first inning as it relates to Bitcoin kind of emerging as an asset class within endowments, foundations, pensions, sovereign wealth funds. So it'll certainly be an exciting trend to follow, especially as we kind of get into the six to 12 months post having with which is typically been quite an exciting time in the Bitcoin space as relates to price performance and the cyclicality of how the asset trade. So a lot of things to watch in the next call it, you know, call through the end of the year and into 2025 to pay attention to. Standing Hey Jackson, that might be a great place for us to kind of close off the wake up call this morning. I really what struck me is you said 80% of the flows into the ETETFS indicate being retail. And to me, I find that absolutely fascinating, right, that the general unadvised client is gravitating so strongly to Bitcoin And, and if you think about the origins of Bitcoin, right, it was very grassroots. It was individuals that were finding their way to Bitcoin. They were developing their own thesis. They were thinking independently. They were applying critical thinking to the world around them and they were recognizing a problem. This is why advisors need to be paying attention, in my opinion, because they have a very, very critical function of, of pulling all of the pieces of a financial plan together for people. And if they're not paying attention to where the, where the mindset of the psyche of the individual investor is, you know, that's a potential risk. And it's a it's a tremendous opportunity to those firms that are embracing it. You touched on it, you know, with the demographic piece that you just tied into it, right, which is, you know, you have a very large segment of, of society, right, that next generation, the millennials and the Gen. Z's. And you know that that need a different approach. They require and demand a different approach. And if you aren't speaking to that as an advisor, you know, there's a real missed opportunity and a, and a potential risk or a threat to your business. And so, you know, look at look at Bitcoin, do the work, but but recognize that it's speaking very loudly to the general population. And you know, what's your role, You know, do you have a voice? Do you have a point of view and an opinion, whatever it is, you know, But that being said, our belief is that, you know, this is a unique asset that has tremendous capabilities for, for any investor of any age. So that being said, Jackson, Mark, thank you both for the tremendous thoughts that she shared with our audience this morning. It was really insightful. Appreciate it. And Jackson, we look forward to having you back on the show. I mean, your insights are really, really tremendous in terms of where everybody is AT and how they're viewing the assets. So thank you so much. Thank you, Rich and Mark, really appreciate the time. You bet, James. Thanks. Take care. Thanks for listening to this week's episode of the show. If you found the information valuable, please share the episode with a friend or leave a rating on your favorite podcast app. All the links we discussed in today's show will be in the show notes inside your podcast app. Before we finish, a quick reminder that On Ramp Media is for informational and entertainment purposes only, and nothing should be construed as investment or legal advice. Regardless of where you are on your Bitcoin journey, we'd love to hear from you. Visit on rampbitcoin.com/contact to schedule a consultation with one of our private Client advisors.
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