David Micley, head of Americas at Wintermute, one of the largest crypto market makers and providers of liquidity in the general space. Nice to see you here. Thanks for taking the time.
Thanks for having me. It's great to be here.
All right. So you and I were just taking a quick look here at the Bitcoin chart. What are you seeing in terms of this pullback? Is this kind of garden variety or is this one feel a little bit different to you?
You know, it happens all the time, but every time it happens, it feels like it's worse than the times before. And there's a lot of things that go into this short term pullback. For long term, there's still a lot of reasons to be bullish. So am I worried? No. Is this part of being exposed to a volatile emerging asset class?
Yes. What are those reasons to be bullish? What is your bull case right now?
Absolutely. There's a lot of things going for the crypto industry in general and the Bitcoin asset in particular. So first of all, the amount of ways that distribution is being unlocked every single day is expanding. Just recently, Morgan Stanley issued a new ETP. 16,000 financial advisors that can distribute Bitcoin to Morgan Stanley clients. In the future, Charles Schwab is looking to expand their offering as well. The Clarity Act. That will be the big unlock. A lot of uncertainty on how that's going to go, but a lot of institutions are still on the sideline waiting for the Clarity Act to pass.
So why have we seen the separation between... I love this question. I think it's really important for context when people see the headlines. Why do we have the separation between institutional adoption on the one hand, falling price of the asset on the other, or does that not even matter?
You know, it does matter in the short term, but in the long term, I think it doesn't. If you're investing in Bitcoin, you have to be willing to ride the highs and lows and not sell when it goes up and not sell when it goes down. Just hold for the long term. Why the decoupling now? There's a few things. First of all, the equity story has been strong and it's tied to an AI boom that is boosting earnings. Crypto doesn't have that advantage. Bitcoin doesn't have that advantage. So there's all sorts of macro headwinds that Bitcoin is exposed to, which other assets aren't isolated to in the same way that crypto is. That's one factor. Another factor is simply the leverages in the system. It just makes moves in bigger directions. And the down days feel more painful than the up days feel good. And that's what people are feeling right now.
I also love the conversation and NTF inflows and ETF outflows. What have you seen in that space as of late you think is worth it for the rest of us to pay a bit more attention to?
Oh, absolutely. I mean, ETF outflows have been record breaking in a bad way, right? You look at the 7-day, 10-day, 20-day outflows, record breaking. Over $4 billion in outflows over the past few weeks. That's massive. But the reason those outflows are possible is because there were so many inflows in the months and years before. The inflows ultimately lead to outflows, but what matters is taking a step back and looking at the big picture, and it all comes back to net flows over the long run. And the more distribution there is, the more plumbing there is for more investors to get access to this asset class, the more opportunity there is for flows to come back.
I don't have much time, but I do want to ask you about Wintermute's efforts to expand into prediction markets. What do you see in that space right now?
Yeah, Wintermute is used to expanding to new markets. In 2017, crypto was an early market and we brought our liquidity providing expertise to make that market more efficient. We see prediction markets as the next frontier, as a way for investors to isolate certain elements of data, financial markets that they want to get right without being exposed to other elements. And it's a natural fit for us given the fundamentals of blockchain technology used in a lot of these prediction market platforms to leverage our liquidity providing expertise on these markets.
David, well done. Come back anytime. Thanks a lot.
