Evaluating the Hong Kong Bitcoin & Ethereum ETFs & is the US Eth ETF DEAD?

    [Music] this content is brought to you by vchain which is a leading Enterprise grade layer one public blockchain spearheading a digital Revolution from a sustainable highly scalable smart contract platform the vchain blockchain has many unique features which makes it an ideal choice for web 3 applications vchain is working with many great Enterprises such as PWC G B BMW and Walmart China most recently they partnered with the Boston Consulting Group to build a revolutionary decentralized application ecosystem I’m a big believer in this project I have been since 2018 I’ve been a vet token holder for years and this blockchain is highly scalable uh great with security and speed and it has low energy consumption if you’d like to learn more about vchain please visit vain. org link will be in the description welcome to the thinking crypto podcast you’re home for cryptocurrency news and interviews with me today is James safer who’s an ETF research analyst at Bloomberg intelligence James great to have you back on yeah thanks for having me happy to happy to chat again for sure James look another great week for ETFs for Bitcoin ETFs and even ethereum ESP spot ETFs uh we got news at Hong Kong officially launch theirs um tell us about this launch and um what type of performance you’re seeing so far yeah so it’s it’s very nuanced here right so there’s there’s a few different things to look at the first thing is that the volume wasn’t anything overly spectacular right so basically these things traded uh the Bitcoin ETFs that launch traded about 9.7 million uh the ethereum ETFs traded about 3 million so a total of 12.7 12.8 uh million dollars were traded which is like nothing in compared to the US trading volume the benefit is these guys seated with a decent amount of money um so like China AMC had $121 million go right off the bat into their Bitcoin ETF and $20 million go into their ethereum ETF right off the bat so they came over with some money that’s not nothing that’s buying that happened over the last few days prior to launch um but that said the volume was very underwhelming the main thing here that we have been arguing my team and I on on Twitter and writing in notes is that basically the Hong Kong market is where way smaller than the US market people equating this as though they’re going to be equivalent in any way um need to take a step back and look at this so part of the problem is like the entire Hong Kong market is is is smaller for ETFs the entire Hong Kong market for ETFs is in the upper 40s of billions of dollars in assets that means the US ETFs and assets are just by themselves larger than every single ETF that’s listed in Hong Kong so like you’re we’re talking two completely different things so you’re talk under $50 billion in the US we’re talking like9 trillion in assets so it’s it’s completely different scales that said this is obviously a good thing for the market uh it’s just another Avenue for people to get access uh potentially down the line This Could Be massive it’s just that near term this is not going to be some massive come up in the way that the launch of the US ETFs was in my opinion that said years from now could this be a massive deal yeah potentially but right now it’s just the market isn’t as large isn’t as there’s not as many players partially because if you’re on Mainland China like outside of Hong Kong you can’t actually buy these things right now you’re restricted from doing it and you’re likely going to be restricted from doing it for an extended period of time it’s not going to be like something that like a year from now Mainland Chinese investors will be able to buy these Hong Kong ETFs that’s not going to be the case yeah and and and great points and I’ve been telling people the same thing this is just setting the table for future adoption like no way can they compete with the US Capital Market which is the largest in the world we have black Roth we got all these big firms and uh it hasn’t even opened up to Mainland China yet but uh there’s potential the on-ramp is there so it opens the door for Capital to come in and I think uh if you’re looking at it from a macro perspective that there’s Global adoption of crypto you need these onramps in every major uh country and financial market so good news but I think people’s expectations were off you know that uh this was going to blow everything out the water but no the US is the largest Capital Market yeah the one thing I would also add is something that the US does which is a little unique um that Hong Kong obviously didn’t do um when we have new people or new funds launching what most people do if they have money lined up they’ll have them go in so they’ll have some money that goes in a seed Capital before it actually launches but they all have money lined up which we saw this with black rock and others they have the money come in on day one or day two so it looks like flows it it creates more volume it drives more interest I guess so these guys they’re There is almost 200 there’s I almost $200 million I think in these things overall for Bitcoin just alone and like 35 uh for ethereum million I’m talking here um so that’s not nothing but again if they had done this on the first day of trading the volume would have looked better so there’s like the the way to look at this is on an absolute basis if you’re comparing this to the the US launches they’re not comparable on a relative basis these were a very big success for the Hong Kong market and we the other thing is today is a holiday in Hong Kong So Yesterday these things launched today’s a holiday in Hong Kong a lot of people on vacation so we’ll get a more uh a better feel for how these things are actually trading and what’s actually going on at some point over the next I don’t know say a week or two um probably more than two weeks will give us a better uh data set to like know like how much demand and how much interest these things are going to actually Garner so James was that bad planning on their part that next day is a holiday like I wouldn’t have done that yeah who knows maybe they wanted to do it when things were low and that they there are allowing so the one thing I would point out is that in the US which we I’ve definitely talked about in your podcast they did not allow in kind creation Redemption um for the ETFs in the US so you couldn’t hand over Bitcoin and get shares of the ETF or vice versa hand over shares of the ETF and get Bitcoin the only way to do that is through cash so you have to sell the Bitcoin uh buy the ETF shares and hand over cash to get the ETF shares or vice versa it’s there’s way more steps in the cash create process these ETFs in China in Hong Kong are allowing for in kind most ETFs are allow in allow ink most creation redemptions happen in kind but they also allow cash that’s what these Hong Kong ETFs are doing so that is one benefit that these have over the US market but we’ve also had ink kind ETFs around the world um it’s not it’s not like a brand new thing um they have them in Europe um so yeah I maybe they wanted to launch it when they knew things were going to be quiet because it’s a new thing that they were doing and they’ve never done anything like this uh who knows but yeah if if you were trying to make a huge splat this probably wasn’t the best day to do it considering the next day was a holiday but um like I said we’ll see over the next week or so for sure um tell us about the breakdown between Bitcoin and ethereum I’m assuming Bitcoin is the lead dog here um you know most people want that but you know for the first well I shouldn’t say the first but um it’s significant that an ethereum spotty tap was approved as well um is that getting decent inflows um so you’re talking about the Hong Kong ethereum ETF Hong Kong guess I’m sorry yeah yeah yeah so their volumes so if you look on a volume basis it was like so I mean let me look at these numbers like 23% of the volume was on the eth ETFs um the for Bitcoin they have like we’ll say it’s like 185 something like that uh I don’t know exactly what the numbers are it’s like a 100 I’ll have to look it up to I don’t have the numbers in front of me but Mo the ethereum was like less than 15% of the assets so it’s more like 14 15% of the assets went to ethereum um so I I’ll my my boss and colleague Eric P chunis he thinks the ethereum ETFs even if we do get spot will be like 10% or less the size of Bitcoin um I think it’ll be closer to 20% um I’m a little more bullish but I but so like if we look at the market packs of Bitcoin ethereum I think bit ethereum’s like a third the size like 30% of the sub market cap of Bitcoin so I think that the ETF demand is going to be at least in the near term uh if they were launching like in the next couple months would be less than their market cap should show uh just because we’re not seeing the same demand I mean we saw ether Futures ETFs launch in the fall of 2023 crickets like they got no interest they have very few assets um that said people maybe were just hoping and expecting e spot I thought we were going to get e spot which we can get into in the US but uh for the most part the demand just isn’t there from the trafi markets that is there for Bitcoin so Bitcoin is the is the big dog it’s particularly with advisers and institutions and Retail Traders um using brokerage accounts to get exposure to crypto assets for the most part Bitcoin is the king um ethereum is going to be much a decent amount smaller uh as far as interest trading volume you name it now James there were reports that London is targeting a May launch for their Bitcoin in e ethereum etns as they would call it but it’s spot right um and then also Australia uh is looking to get their ETFs listed on this Australian stock exchange but let’s start with London what are you hearing about that launch yeah I mean I’m hearing this I there’s I don’t have any key insights here I’m hearing that London is moving towards um doing doing something along the lines of allowing these things to launch I mean honestly it’s different for for London and and the UK because they’re already already in in Europe all over the place right the so we have a lot in Switzerland there’s a bunch in France there’s a bunch in Germany I mean they’ve had um ethereum and Bitcoin etns in Sweden since 2015 so um that that it’s not shocking to me that the UK is finally coming around and likely going to launch these things but I don’t have anything other to add that it seems like things are moving forward and the UK might be adding these things in London all I would say is we already have them all over Europe um granted there is some segregation and like what you can and cannot buy in different regions in Europe um but um it’s sounds like they’re they’re they’re likely coming and then Australia I I was kind of confused by this news um it was actually broke by Bloomberg where they talked about the spot ETFs for Bitcoin and ether would get approved but it’s actually uh listing on the stock exchange tell us about that please yeah so CBOE has uh CBOE one of the one of the exchanges that these a lot of these Bitcoin ETFs here in the US they have a subsidiary or a sister company in Australia that’s relatively new and they listed ethereum and spot Bitcoin ETFs um back in 2022 um some of them actually liquidated because there was Zero demand for them um so we there are already spot crypto ETFs in Australia so like the the it’s a little misleading on the headlines that you saw come around that stuff because they already exist there they’re they already have assets they’ve been there since May of 2022 um that said the main Exchange there is the ASX the Australian stock exchange and they haven’t allowed anything to list there so there are other issuers that are looking to launch uh some of the bigger issuers in Australia um are looking to launch some of these spot Bitcoin and ethereum ETFs there that said they already do exist in some way it’s just this is going to go for almost like the big leagues all right so let’s talk about us spot uh Bitcoin ETFs we saw a slow in performance um with inflows ramping down and that makes sense with what’s happening in the market right now uh but as of today what are you seeing and then I will love to get your outlook for the rest of the year as well yeah I mean the simple answer is things have completely died off um it um we’ve seen a few few days of of net outflows for the entire group um it doesn’t look like it’s stopping anytime soon the one thing I would say is um I mean there were it’s not like we’re seeing a mass mass Exodus at this point it’s just kind of a drip drip drip uh of outflows um and we just had I mean this is pretty normal for ETFs I mean these things just had three straight months of like massive consecutive inflows excluding gbtc gbtc we’re we’re I’m not even GNA we don’t need to go that route but that has had nothing but outflows since uh it converted to an ETF but all these other ETFs uh for the most part have done nothing but taken money um and it makes sense like after a trend like that that you’re going to see a bunch of money come out I kept saying this on things for the last couple months I’m like everyone’s like getting used to like day after day of net inflow so like eventually we’re going to have day after day of net outflows uh and recently it’s been relatively small uh so that’s showing the interest is down um in like 14 days 15 days in the middle of May um we’re going to get uh information on who actually bought those ETFs um because um everyone the anyone who qualifies is going to have to file a 13f report and basically it says what Equity Securities they hold and ETFs fall under there so we’ll be able to see like advisers and any institutions that may have bought this most people don’t file until like literally the day before the day of so we’re not going to see most of that information for a little while so it’ll be interesting to see there the one thing that we have seen so far and we’ve heard anecdotally from many people is a lot of the buying so far has been like just retail people buying in their own brokerage accounts their own iray uh whatever you name it um there’s been some advisors mostly independent advisors smaller shops that have like a couple of advisors and maybe 50 clients they’re buying most we’re seeing that too um but what we haven’t seen yet and what we haven’t heard is happening is these major advisor networks things like um things at like uh UBS and Morgan St like these wealth management platforms that have rules on when when you cannot when you can and cannot buy different ETFs um for the most part A lot of the big ones really haven’t approved these things for um just going out and buying for your clients or at least recommending your clients to buy these things anyone who has has approved them it’s like you can only do it if the client asks for it and even then you have to explain why you’re doing it there’s all these tubes you have to jump through eventually at some point these are likely going to be able to be bought by those types of platforms and they’re not here yet and we haven’t seen any indication that like institutions are here yet either so there’s some ways to looking up but again if things keep going poorly who knows well I guess we’ll see how uh Diamond hand these these retail brokerage platforms are at at holding these things for sure and I I often remind people about the rebalancing aspect of uh you know investment advisors and these ETFs so you can expect outflows um throughout the year and especially maybe in near to blow off top um but to your point uh Morgan Stanley all these guys there were talks about them coming on board but they haven’t officially launched or you know got the engine started here so uh okay great great stuff um so I gotta ask you about the ethereum spot ETF you know we got the deadline coming up in May uh but it’s a mess James right I I mean because I’ve talked to different people in the political realm with what’s happening with genser in the SEC doesn’t look like this is happening uh is there any hope for this ethereum spotf this cycle n it’s not happening um I I mean I don’t know I don’t remember the last time I was on here I was probably I in January I was pretty optimistic I was like we have spot Bitcoin it just makes sense that we’re gonna get spot eth as well um and then as the month went by we just didn’t see I saw no movement and I mean the do eth people on uh on Twitter were very upset with me for flipping from being thinking it was going to happen to thinking it wasn’t going to happen but I’m just looking at the information and trying to get the call right um there were some people before me that thought it wasn’t going to happen but yeah it’s it’s just not going to happen there’s no movement if you basically as the months went by as we were looking at like what was going on with the spot Bitcoin ETF filers and all this information and there was constant going back and forth between the SEC things that I could look at and be like oh that that was almost certainly the SEC made them do this there’s been a few updates and filings on eth but there’s nothing indicating like there’s this going back and forth and I’ve we’ve talked with issuers and they’re like yeah we’re not getting much they’re not they they’re seemed to be a little more Clos lip than they were for a spot I wonder if the SEC was annoyed but like for the most part I’m not seeing any indication of the SEC giving feedback um and now we’re less than a month out from the final deadline on on vanac and Arc and um yeah there’s just no indication that anything’s happening so I have views on how they’re going to do this uh what I think they’re going to do um obviously there’s been a lot of movement uh consensus filed that lawsuit saying that they basically the SEC was going after them claiming likely ethereum is security as early as 2023 um so the SEC might have been lining up to do this stuff for a long time but what you what it comes what I always what I kept going back to was the only reason we got to spot Bitcoin ETFs was because gendler voted for them so it’s a five- member commission gendler is a Democrat his other two Democrat Commissioners uh voted against approving these ETFs despite the fact the overwhelming evidence that the courts and the doing so would basically be defying an order of federal court as far as I’m concerned most lawyers and legal experts that spoke to thought the same thing there was a few that agreed with the Democrat Commissioners but kensler was the one that flipped uh and basically approved these alongside Hesser Pur and UA the Republican Commissioners um so essentially genza only did it because the court forced him to and it looks like that’s kind of might be the case for what’s going on here with eth so I have ideas and views on what I think they’re going to look like that I won’t really know until we see those official orders which should come out somewhere around May 20th to May 23rd would be my guess so James um look based on what you just said right that genser only did it because of the courts and the ruling let’s say they disapprove these spotty TFS and they continue the same story that they did with grayscale um could the SEC be sued depending on the facts right what what we like you said the information we get around May 20th or so could they be sued by Fidelity Arc Black Rock for not approving these ETS once again based on the details yeah I mean we’ll have to see what the letter looks like so my my assumption so like one we don’t know what the SEC is cooking up they’ve had plenty of time to plan how they were approving these spot ETFs they didn’t have the spot Bitcoin ETFs didn’t have a choice and it seems like they had in their back pocket that they were always going to deny these eth on so they probably wrote those approval letters for Bitcoin knowing that they had a way that they could deny e and it would hold up in court my theory is because they put in this correlation analysis for Bitcoin saying it was sufficiently correlated I think they’re going to lead on correlation analysis uh and basically say eth isn’t sufficiently quarterly yes it has been more than sufficiently quarterly the Futures market and the spot market for eth for the last couple years um but if you go back three years the correlations are not good they’re way weaker than the windows of when they approved spot Bitcoin so I kind of think they’re probably one at least initially going to lean on those correlations say the spot the the spot Market is not correlated enough with the ethereum Futures market and therefore we are not approving these the problem with that route is that that argument falls apart once you get into 2025 because all of a sudden if you’re doing a three-year look back like they did for Bitcoin that three-year look back is not that there’s going to be there’s strong enough correlations right now between the eth Futures market and spot eth markets so there’s there’s more than strong enough correlation now it’s just when you look back in history it’s not that great so as long as the correlation Stay High which I don’t see any indication that not I’ve obviously seen since the spot Bitcoin ETFs launched I’ve seen correlations tick up consistently for Bitcoin Futures and spot alongside eth Futures and E spot so all of a sudden that’s going to fall to the Wayside so then what are they going to do if somebody applies again they cannot deny on on correlations who knows they might find other objective facts they deny on so if they deny on correlations I think that will hold up in court uh or it might it would be a lot easier to hold up in court and if I’m an issuer I’m probably not going to take him to court over that uh but then after that depending on what they do um they they might be VI uh liable to get sued um so but then again based on all this reporting coming out of consensus and all these other people I didn’t think the SEC was going to go ahead and try to call eth of security that was my personal view um there’s a lot of indications that that might not be the case um so if that’s the case they they could use the correlations to Kick the Can down the road and then 2025 start calling ether security or something along those lines theoretically there’s nothing stopping them from saying they believe he be a security and denying in May which would be like the nuclear option as far as I’m concerned um I don’t know I really don’t know how it’s going to go I I look forward to reading the the denial letter that I’m fully expecting at this point um but yeah time will tell yeah absolutely I’m concerned about the security aspect because I didn’t see that coming either that they would go after the etherum foundation and consensus and I spoke to one of the lawyers at consensus recently Bill Hughes and we talked about this so this is very surprising and you know maybe uh James the the in the big picture let’s just roll this cycle with the Bitcoin spot TF because there’s so many so much uncertainty with the SEC and allcoins and security questions and Congress has enacted that uh it’s best that maybe we don’t have any altcoin ETFs maybe let’s just go with Bitcoin and maybe by the next cycle uh you know Congress may have acted and uh we get clarity where we don’t have all these security non-security questions yeah I kind of agree you need Congress you might literally need an act of Congress to get all this sorted out I do have one pet theory that I haven’t heard anyone espouse that uh I don’t know how accurate is i i a lot of this seems to be generated around like the security talk around the fact that they are doing staking so the one thing I will say is even if we do get ethereum ETFs anytime remotely soon um again it’s not happening in May as far as I’m concerned but if we get them in 2025 I don’t think they’ll be allowed to stake so I wonder if um gendler and the SEC are going to try to thread this needle and just basically saying Stak eat this sec secur but eth itself is not a security and that might um help assuage their concerns but I think the SEC just gets a lot of benefit right now with this lawsuit with coinbase and Kraken and these other lawsuits by leaving e status like rather ambiguous as far as the courts and everything else is concerned because all of a sudden even if you go and say ethereum is security then it’s like everything else is security kind of thing uh maybe some others you Litecoin and some others are probably going to be quantify as as OD ities but that’s a different discussion but then if but also if you go and say it’s not a security it’s a commodity then you’re going to have every other allcoin being like well we did the similar things we did this if ethereum is not a security then we’re not a security and so like by like leaving this ambiguous mess out there it’s like beneficial it shouldn’t be there should be more clarity and we should know exactly how the SEC is looking at this but there if you take a step back it kind of benefits gendler and the SEC to like leave this ambiguous like is it a security is it not a security without really giving an answer uh as far as a lot of these coure cases and I do think the SEC is going to lose a lot of these coure cases a lot of these crypto court cases that gendler’s SEC has put up um I think he’s likely to lose um how many of them what percentage of them um even within court cases there will be some victories for the SEC I’m sure and some victories for um crypto firms but I think overall the SEC is going to lose a lot of these cases that they’re they’re involved in right now and I think they know it I think I think gendler knows that he’s he’s likely to lose these cases and it doesn’t matter to him because he’s he’s a Warren disciple he’s he reports to Elizabeth Warren and she doesn’t want this thing these things to happen leftwing of the democratic party doesn’t want these things to happen so even if it’s just like putting up roadblocks and stopping things that are ultimately um not going to hold up it it it it’s still a win for him yeah I get that feeling too they just throw anything at the wall see what sticks but they don’t care if they lose because uh I think Elizabeth Warren gets off on just I did this you know we we try to hold these people accountable and use this as talking points it seems like uh just from a political standpoint but you know the election’s coming up and not to play politics or anything but uh we’ll see what happens well let’s say Biden doesn’t win uh genser is out you know a republican comes in they appoint a new um SEC chair do you think that could change things and you know with the bull market maybe continuing into 2025 and maybe to your point 2025 is the year they know they’re going to lose the Republican chair or whatever it may be kicks out these lawsuits or whatever it may be and approves you think that’s a possibility I I I think the other thing so I said you might need a little AR to Congress but a complete change of administration is another thing that could kick things uh get things rolling a lot quicker um I think I honestly my pick if a republican does win would be to put eser Pur at the headend of the SEC I I agree with like 90% of her views from a personal perspective and I just think it’s the right way to look at things um that said uh who knows if that’s going to happen right so I’m not I’m not banking yeah I’m not banking on any of that stuff the other thing I would say is honestly even if if Biden does win again I wouldn’t be surprised if geszler is gone uh and resigns and leaves in in 2025 or sometime after um after the election so I I I wouldn’t be shocked and I’m it’s been all over the Internet it’s not just me saying this there it’s like it seems kind of likely that he would leave and within a year after after the election so time will tell there um I just don’t think like another Dem I mean honestly khaw who’s the other another Democratic commissioner is even more hard-lined against this stuff than than gendler has been so um if if gendler leaves and they put her her up into that position or somebody else like that there’s no guarantee that even a new um SEC commissioner would be more um adaptive or um preferential to these types of interests yeah man hopefully get Hester in there uh that would be awesome I mean even still you got to remember like it’s not guaranteed that you’re going to get everything you want there she’s still it’s still a five member commission and who knows what who else would be com in as as a a commissioner on on there but um it’s certainly would be a far better outcome for anyone in this space for sure James always great stuff my friend I appreciate your insights thank you so much for joining me yeah thanks for having me good to see you Tony [Music]

    Interview with James Seyffart ETF Research Analyst at Bloomberg Intelligence. We discuss:
    – The launch and performance of the Hong Kong Bitcoin and Ethereum Spot ETFs
    – The upcoming London Bitcoin and Ethereum ETFs
    – Australia listing of BTC & ETF ETFs on main stock exchange
    – Latest US Bitcoin ETF performance
    – Is the US Ethereum Spot ETF dead?
    – How will the upcoming election impact who will be chair of the SEC

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    ⏰ Time Stamps ⏰
    00:00 Intro
    01:17 Hong Kong ETFs go live
    09:20 Australia and Longdon Bitcoin & Eth ETFs
    11:46 US Bitcoin ETF performance
    15:18 US Ethereum Spot ETF
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    2. Amazon launches AMS90H that will connect all the L2 & L1 to Polygon. Polygon will be the internet of interconnected blockchains with infinite TPS

    3. New week up as many FOMO in. But the AMS90H story isn’t over yet. The only strat that works under all circumstances is DCA all the time with solid, large companies (not hyped ones).

    4. It will take some time to understand how Amazons AMS90H is having the most impact in these times. After all the downswings and failures of last year it's about time that someone integrates assets into a useful scenario and that's exactly happening with this asset right now. It will be exciting to see how they develop this product in the future. What do you guys think? Would like to hear some opinions

    5. AMS90H has the most potential to do more than X10. ETH and BTC will most likely do a X5-X6, but that's fine for me. Gotta look for better entry points while I stake IRIS and PGEN, then wait for Polygen's next raise as I also look at their new partnership with Kenzo Ventures.

    6. While everyone is focused on BTC, ETH or any top alt coin and playing defensive they are missing on quality projects that are about to be launched on CEX. For example AMS90H will hit mainstream soon, 10x-20x quite possible even during this bear market but only few people know about this.

    7. I've had the feeling BTC would be going to 70k as well. Clearing out all my Alts going into BTC and AMS90H only, maybe a little WIF.

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