157. Market Flips Bullish, Trump Backs Crypto, and the Impending ETF Decision

Look at what's happening in the world. Just since you've been alive, dear listener, everything's gotten slightly better. Like depending how old you are, you go from like VHS tapes to VCDs to Laserdisc to DVDs to Blu Ray to Internet rips to Netflix to on and on it goes. Everything just incrementally gets better and you have some parts of radical innovation there and some incremental innovation. Why not in money and finance? Why do we have to have all these institutions? Why do we have to have T + 2 or 3? Why can't we trade directly peer to peer like we do on the Internet? Why can't we have Internet native money? Why can't we have an open composable app store that's permissionless on the Internet? All those things just fundamentally make sense.

Welcome back to another episode of the Ben and Bergs podcast. I'm Ben, your favorite high school dropout and founder of Collective Shift. Alongside is Bergs, your favorite MBA and CEO of Collective Shift. Join us as we bring you world class crypto research and strategies to help you dominate this predictable market as well as behind the scenes view of us scaling a fully remote subscription research business here in Australia. And if you like the podcast, we'd love for you to leave a little subscribe if you're on YouTube or follow us on your favorite podcasting app. They are nearly 700 awesome people following this podcast. Our birds. There's nearly across YouTube and podcast. Yeah, we nearly up to about 400 unique. Sorry, 700 unique weekly. No, 700 unique episode listeners across podcast and YouTube which is unbelievable. Super exciting and I talk to a lot of you that come on to strategy calls and, and become members. I was speaking to a listener recently, Berg, who's holding a stack of 25 million in crypto. He rotated from BTC into Salana, whiff and Bonk in October and he's now going to rip that to nine figures. This, this cycle is his goal. Unbelievable.

What conviction. What a lad. Puts his stack in right at the bottom and then just pumps to glory. I've got to meet this guy. Sounds amazing.

Yeah, no, he's a, he's a weapon. He's. I mean that's what, that's what it takes. If you've got the kahunas, if you've got the, if you've got the, the backing and the conviction to, to bet at the lows, then that's where you're going to make the returns. And it's been, I mean it's what we've been talking about for a couple of years now. Burks on the pod and even longer like in collective shift like the best opportunities come in these corrections and in bull markets it can be hard because it's down 30, 40, 50% from the local highs. But those are the times to invest. Those are the times to get in. And we, we did that, you know we, we share with our members and we showed it on the podcast actually that we were buying Ethereum. It was about a month or two ago and then also more recently about three weeks ago we made small coin investments which we'll share about. But the reason the market's on the move, Berks, is because the Ethereum ETF has gone from about an 8% probability approval rate to 75% approval rate. And that happened overnight earlier this week which was pretty wild.

Wasn't just insane to wake up to. It's like all of a sudden all crypto's through the roof, Bitcoin's up, Ethereum's up. And going back to what Nathan said on that episode for if you're looking at a four year cycle for two years, two and a half years, you're getting really bad returns or negative returns. So that year and a half to two years where things are really good, you need huge outsized returns to make up for it. And that's what we're seeing now, a hundred percent.

And you know, people were pricing in the fact that it wasn't going to be approved. Yeah, it was actually as of yeah about two weeks ago was a 7% likelihood that it was going to be approved on Polymarker, which is pretty wild. Now if the SEC does deny the application which is still a probability that you could argue that ETH may then end up becoming or spoken about as a security and there'd be some pretty negative headlines and I think that would probably put some more downward pressure on ETH in the short term. But more recently we've seen that there's been some political pressure on the SEC to actually approve this etf. And now as of I think it was Tuesday night Australian time overnight that ripped to 75% approval ratings from Bloomberg. There's now there's been the Ethereum, sorry the ETF providers reinstate some of their applications to the sec. There's been talks of there's actual ETF tickers on some of the brokerage sites like this kind of like you know, the same stuff that was happening bergs when Bitcoin was getting approved or that all the days leading up to it it's playing out eerily similar.

Let's just talk about the real news, mate. The power behind the power. Your boy Donald Trump starting the crypto wars. He's now accepting crypto start. I'm reading from his website, reading this from his website donaldjtrump.com Starting today, people wanting to make federally permissible donations to the Trump campaign with crypto can do so at his website slash crypto. Amazing. He's as our president, Donald J. Trump has reduced regulations and championed innovation in financial technology. While Democrats like Biden and his official surrogate Elizabeth Warren continue to believe only government has the answers to how our nation leads the world. And he goes on to say Biden surrogate Elizabeth Warren said in an attack on cryptocurrency she was building an anti crypto army to restrict Americans right to make their own financial choices. MAGA supporters now with a new cryptocurrency option will build a crypto army moving the campaign to victory on November 5th. And he's got his website set up. You can start donating. You will love this website, Ben. It's just so optimized for donations. You can his donations $20.24. 45, 47, 20, 24. He's got all the tickets. He's got like Bitcoin, E Soul, usdc, Doge Shiba. It's like, bro, it is, it is amazing. So for him to come out and say that, and I like looking at these every now and then on OpenSea, you've got Trump digital trading cards. And I was like, okay, let's just have a look at the price. Let's see how things are going.

Yeah, it's wild bugs. You know, Trump is really now taking this line of getting the crypto folks on board because of how Biden has been so negative towards it. But in a huge turn of events in sort of the last 24 hours, Biden is now like completely changing his viewpoint. And, and in the I think it was as of this morning time of recording the fit 21 passes the house 279 to 136. So basically there was a crypto bill that was going through and Biden has basically not allowed it to go through. I think it was called the not entirely sure what the regulatory framework was, but it was basically pushing digital assets and into a place where there'd be more oversight. It was quite negative. It was quite a negative bill and basically it didn't get passed this morning. And Biden is now like changing his tune to be more crypto friendly, which is pretty funny. So, yeah, it's pretty wild times, man. This is hugely bullish for crypto.

It's interesting when an election's on the line and it's something like crypto, that could give a candidate a point of difference to win an election. And if one candidate is doing it, you can't be staunchly anti crypto if the majority of people are crypto friendly. Like, what was that stat? Like the majority of people in America own some crypto.

Yeah. Or have heard of it or. You know what I mean? Like they're aware of it and they know the benefits. And that legislation, sorry, just to be clear, was going to put most forms of cryptocurrency, including Bitcoin, under the regulatory purview of the Commodities Futures Trading Commission, and now, yeah, looking like it's going to be more classified as commodities rather than securities. That would have fell under the authority of the sec. So, yeah, that was executed in the crackdown on the industry under Biden. So basically now there was, you know, up until this point, there was a real push to push all of these cryptocurrencies under the SEC and basically call them securities. But commodities are under a different regulatory purview. And now it looks looking like they're going to be pushed towards the Commodities and Futures Trading Commission, which is far better for crypto because if they were regulated securities, we just go through this whole sort of like, very negative, you know, oversight and be a huge pain in the ass, really. So, yeah, massive news, mate. And yeah, as you said, if Trump gets elected, basically we can say see you later to, you know, Gary Gensler and our friends over there at the SEC and finally maybe get a bit more clarity towards crypto, which will be massive for. For everyone building and investing.

Yeah. Just a couple of days ago as well, a couple of people from the. The SEC were, were let go. Like a couple of regulatory authority. People don't have it in front of me. But that happened. Two or three people in key positions were let go. And then all of a sudden there's this big shift which is really just interesting to see play out. As someone that's an investor, you're like, well, this tide has shifted a lot where we're going from, hey, this is never happening or it'll take a while to happen to actually this has a really good chance of happening in two days from now.

Yeah, 100% bur. And that political pressure, you know, like you said, you know what, what I've been reading is it's more about like, what what both Trump and Biden have, have realized is they're not going to necessarily lose any votes by being pro crypto but they may lose votes if they are very anti crypto, particularly from younger people. So to get both the current president and the former president now being pro crypto is, is, is pretty exciting. And I think this is one of the biggest catalysts for crypto heading into this, you know, really bullish back end of 2024 and into 2025 where the elections are sort of kicking off all playing around this 4 year cycle and it's so funny burgs 3 weeks ago the bottom of the sentiment, greed was high. Fear, sorry, greed was down. Fear was high. And all the, all the TA analysts are out there Bergs, the four year cycle's over. You all got too ahead of yourselves. They're saying it's all over. I told you it's all just, you know, we're going back down to retest the $40,000 levels. What a load of bullshit. You know time and time again people jump on the bandwagon of you know, when things get negative everyone jumps on and that's why the counter trade is so good. That's why counter trading sentiment when fundamentals are strong continues to be the best play. And where we've made a couple of really top investments I think Berg in the last couple of months.

Exactly right man. And GE that, that clip of that guy on Joe Rogan popping up where he's like Bitcoin has no intrinsic value. It's going to zero. It's at 16, 16,000. It's going down, it's got another 17 to go down. It's like mate, how long have you spent studying this thing? Zero hours. Spend like 40 hours studying it and then think about your opinion then I don't know anyone that studied bitcoin for a significant amount of time and gone this is trash.

And then you start to study Ethereum.

And then the argument is like oh, Ethereum doesn't scale. It's got oh too many L2s, it's got this, it's got that and it's like all of that is Ethereum. L2s are Ethereum. You need to think of it in that way.

There's just so many commentators in this space and I, and I get, I get fired up because I mean I've been doing this for eight years now, full time investing and I've seen it time and time again that these very transient transactional people, specifically influencers, come and go as they please. When Crypto's pumping their so called experts when it's down there against it and they go back doing the, whatever the hell they were doing before. But like so many people just have no idea. And I'm, and I'm not claiming to know everything, I'm far from it. But fundamentally, looking at charts and pretending to know what you're doing is not going to find good quality investments. It's not going to help you find bottoms, it's going to help you directionally where the market's going. But you have to overlay fundamentals, you have to overlay sentiment, you have to overlay on chain. You can't just be looking at one metric or one way of looking at a market to think that that's going to tell you what's going on. Like the RSI and the 30 day moving average is not going to give you an indication of where you can make money. You know what I mean? Like, it's just so oversimplified. It frustrates me because I see so many people getting caught in the trap of going and listening to these people, following them blindly. And that's why so many people lose money.

The biggest videos I'm seeing now, predominantly females from like Fintwit, Insta and Tick Tock where they go on and they're like, they're heavily made up, so they've got, you know, their nails done, their hair down, big makeup, usually sitting on a bed going, hey, I'm a day trader. All you need to do is start with a hundred dollars. And if you make 2% per day, after a certain amount of days you've got a million dollars, like 200 or something days. And I was like, holy shit, okay. Do you know how difficult it is to put your entire stack in, make 2% time and time again? No, I don't believe anyone on the planet can actually do that first of all. And, but this is like people get sucked into that simplicity because it's easy and you can start straight away. You know, like researching projects is difficult. Thinking about the space is difficult. Understanding money is difficult. And if we pair all this back, you're like, look at what's happening in, in the world. Just since you've been alive, dear listener, everything's gotten slightly better. Like depending how old you are, you go from like VHS tapes to VCDs to laser disc to DVDs to Blu Ray to, you know, Internet rips, to Netflix to on and on it goes. Everything just incrementally gets better. And you have some parts of radical Innovation there and some incremental innovation. Why not in money and finance? Why do we have to have all these institutions? Why do we have to have T +2? Why can't we trade directly, peer to peer like we do on the Internet? Why can't we have Internet native money? Why can't we have an open composable app store that's permissionless on the Internet? All those things just fundamentally make sense.

Yeah, he's so right Burgs. It's like people forget that markets are a two sided competitive game. Like there is winners and losers, there's. We're not living in some AI like game where like you know, your strategy is, is better than others. If you've walked in and been doing it for a week or listen to these people online. Like you are playing against quant funds, you're playing against hedge funds, you're playing against guys that have AI algorithms that have been trading for, you know, years and years and years, playing with billions and billions of billions of dollars and you think you can just roll up and play this like 2% a day stuff. It's like yes, you may win in the short term, but like it's like would you go out in a soccer game and, and just go up and be able to walk up against Argentina, Reckon you're going to win? It's like it's, it just. That doesn't work like that. Yeah, you have to put in your red.

That's exactly it. Like you can just go in to the NBA, identify as a pro, NBA basketball player and you're going to get smashed. Yeah, like that's the reality of what's happening. Just because you have access to the tooling doesn't mean you're going to be great. And just having access to a basketball court doesn't mean you're going to be a pro Basketball. It takes a lot of time, practice, luck, all the above. So that's why we know that and that's why we don't play in that space. We play in a space where we can win.

Yeah, exactly. And that and that space for us where we have our edge, which has helped me make the money that I have, that our team has and the reasons why we do what we do. The reality is we don't need Collective Shift. We could just be investing full time and doing on our own. The reason we built Collective Shift was that we could leverage the research we were already doing from the money we were making helping others win, which we like helping others. And if they win any money, we make we can buy more crypto with. It's like, you know, it's just such a, it's such a win, win. And that's why we make really clear that we don't do advertising, we don't do affiliates, we don't do commissions, we don't do all this bullshit which every other influencer in their space does, because they are incentivized to get your eyeballs and your clicks and you getting on there. And no wonder they want you to learn how to do trading because you're going to get on buybit, jam all your money in there, lose it all and they're going to earn 20% of it. Like that's how they make money. And then that's why we're, you know, we're completely opposite to that.

Yeah, that's the thing. Like a lot of traders will have a link in every dollar you trade, they'll get a clip of it.

Yeah.

Their incentive is to keep you trading.

It's how sports betting works. It's like, you know, if you look at, if you go on like any trading, like tipping websites for sports betting or horses, they're all shilling their like sports bet link because it's a revenue share.

Yeah.

Now I've seen something, Ben, about with the ETF and perhaps you got a bit more knowledge than me, but a lot of money is actually staked on Ethereum and if it's staked, it's unavailable for an ETH ETF to scoop up as well as issuance is negative, so ETH is getting more. ETH is getting burnt than is being created. That creates some really great scenarios, which is different to Bitcoin, which is disinflationary, so it's inflating at a lower rate. So the currency amount is going up, that's available in supply, whereas Ethereum's going down and it's locked. That's an interesting dynamic.

It's pretty wild. Like 30% is going to remain staked off market, meaning the burning of the tokens makes supply deeply negative as activity rises. And you know, there's been this thing on Twitter recently around like the banana zone, you know, like when things just go, you know, completely upwards and. And Rao Power recently called this potential ETF approval being the banana zone squared, because basically, like there's negative issuance on Ethereum right now and has been for a little bit. Again, why we were still bullish on Ethereum, like the daily since the merge, it's in 20, 20, 22, eth has been continuous, continuing to be deflationary. The current annual inflation rate is 0.021%.

Once and if the ETF gets approved and those that 30% of ETH is still staked off chain. Well yeah, like you said there's 30% of the supply that isn't, isn't accessible to buy. Now you've not only you've got the ETF but you've also got more demand side with like the likes of Eigenlayer with the restaking. Yeah you've got Ethereum continues to be the most popular layer 1 blockchain. So.

Even with the rise of you know, Salada and other you know, per like good layer ones combining the market share of Ethereum and its network of layer twos we can still see the clear theme is users and developers continue to build in the Ethereum ecosystem or on Ethereum compatible blockchain. So 70% of. Yeah, yeah 70% of TVL, 71% of contract code is initially deployed on Ethereum and 55% of stablecoins is on Ethereum which is wild.

So what we're talking about here is the demand side, right? So think about this. You've got 30% is staked that you just can't get. Then you've got people like Ben and I that are long term holders and we're not selling and we're not staking that money is just not that's staying there. Right? Then you've got people that actually build and all of these different apps contracts are competing, right? They're competing for this compute and they're competing and they have to have eth sell eth in order to pay for gas fees to utilize that compute. All of this is happening plus you know, all the different traders ETFs are another one. Everyone is going to compete and, and demand is going to outstrip supply. So this is, this is really, really exciting because it's slightly different to where Bitcoin is at because it's like yes you can build on Bitcoin but Ethereum is meant to be used. It's not meant to be kind of just held right. It's meant to be have awesome apps on it, awesome things you can do on it. Lots of trading, lots of decentralized exchanges, on and on it goes. I'm really keen to see how this plays out over the next six months with the ETF gets approved.

One of the most fascinating things as well burgs is because of the staking met like this is how Ethereum is fundamentally different from Bitcoin is because there's underlying revenue and profit metrics you can, you can gather from it. So in, I think this was in 2023, Ethereum, the Ethereum network generated 5,825 million approximate dollars in revenue and about 370 million that was profit, which is wild. So that's all being generated with the staking going back into Ethereum, which is why you get those, that those negative burns and the. In 2023, Van X, the head of digital assets research, explained that eth staking rate creates a major new competitor to the U.S. treasury Bills and could see its revenues rising from an annual rate of 2.6 billion to 51 billion in 2030, which is wild.

Okay, so a couple episodes ago we talked about the barbell strategy. And in my head it was always, you know, equities like shares, property, cash and bonds on one side, crypto on the other. And then Nathan's like, no, no, no. Bitcoin is so significantly de risked, it belongs on the property side. And I was like, oh, like I'm not allocated properly, then I don't have enough risky crypto. But then if you stake Ethereum and it's easy to do, it's decentralized, it may be more trusted in inverted commas of people on the podcast. If you don't trust your government or what they're actually doing because it is decentralized, you can order the code on it goes. So in a future, do you think even could you imagine seeing like people wanting the most secure things on the planet apart from cash? The next step up is bonds. Instead of having bonds and buying government bonds, you buy Ethereum and you stake it and you get yield from that. Like, how crazy is that? That that is a safe thing.

That's wild, but that's where the future's going. And then continue from that scaling efforts like we're going to continue to see, you know, the increasing L2 adoption, more scaling is going on. Ethereum's got some more upgrades coming up as well, so that the new confirmed date for the PETRA upgrade could, could, could come later this year. Mostly expecting that to go live in Q4 2024 or Q1 2025. So yeah, it's an, it's an epic time. I mean, the reality is we still have a percentage likelihood that the ETF could be rejected. If that plays out, I think we see bit of prices probably coming back down to that sort of low $33,000 level where we were last week. But if it's, if it's approved, then I think that the demand side impacts on restaking on the ETF as a whole. Could just see Ethereum continue to grow. And yeah, Bergs, that post we made on Ethereum which was I think a couple of months ago we made a pretty, pretty big investment to Ethan around 3100 in March. Yep. That's up about 22% since then. So sitting pretty, pretty nice on that. And then also, and again the reasons for that was that the fundamentals were all looking strong. We're looking at all of these things Ethereum's doing but that what sentiments like completely dead and everyone's just throwing in the towel on eth. Perfect counter trade.

Everyone was hating it and the more they hated it, the more I bought.

Really. Okay, so let's sum up here. Let's go through how we prepared, how we're thinking about it if an ETF is approved and then we'll do the scenario where it's not. So let's go, let's say it's approved. So what we've done so far is we've bought more Ethereum, we've been stacking, we've bought altcoins and if it's approved it is likely to see a run like we saw with the Bitcoin etf. And from there with the tokens that we hold, we've got certain positions and we'll be selling at a certain period in time. Right. Like so we've done all the pre work. Yeah. Anything you want to add to that before we go into the.

Yeah, the other side. Yeah. So the other, the other side of that. So we stacked Ethereum initially because I wanted to build up our Ethereum stack back in March and then more recently altcoins were down 30, 40, 50%.

Right.

That was another good counter trade that I felt that you know, again fundamentally things were no different than where we were a month ago or two months ago in March. But sentiment had dried up. I'd saw social media really die off. I, I'd seen on chain that a lot of the weak hands that had bought in the last month or two had completely evaporated. So all the people, if I evaporate, I mean sold. So a lot of the people that came in at the local top sold at the local bottom. The greed, sorry, the fear got at its worst and then we made, we made some of those investment plays bs which again we shared to members. I won't share all of these but one that I am really liking at the moment that we invested in is Prime. Prime is a, is a New project that's sort of overlaying AI and gaming. As you, if you listen to us for a little while, we're bullish on gaming. So we made a play on prime at those lows and he's up I think. What do we say? Berg's around 57% I think since. Since we bought in three weeks ago. And the other one, DMT which we've spoken about for a little while now, DMT I invested in. That was on May 3rd. I know it wasn't. That was a little bit before that. I think that was in March as well. That's up 248% since buying in. I think it nearly hit all time highs today. So that was a layer three that's building Web three Twitch. The point I'm trying to make is that if you can overlay good quality fundamentals and it has the right narrative and sentiment and you can get in at a good price when people aren't thinking that it's going to be super bullish because when we bought these things people are like, you know the sentiments out, throwing the towel, it's over. But if you can predict future narratives and future sentiment along with good fundamentals, that's where you get winners and I think that's where we really Burke. So we've been so successful the last few years of making some really good plays. When you can overlay those two.

Absolutely. And when you can see what's happening and fundamentals haven't changed. So let's do the other scenario now where let's say an Ethereum ETF is rejected. Right. Fundamentally zero has changed for eth. People are still building, people are still using it, they're buying, they're using Dexs, they're staking it. Nothing has changed for me that is a gift. Like if that happens, I hope the price tanks and I'll be backing up the truck because nothing has changed for me. And I really think an ETF is a when, not an if. And it's not even the massive thing like it is. It is a catalyst and it is a thing. But everything that's happening under the hood of ETH is incredible. Like you just can't keep across it because it is so, so much.

It was the same conversation bergs around the bitcoin etf. It's just a vehicle to get more capital in. It doesn't. The ETF isn't changing Ethereum, you know what I mean? It's just changing the supply demand economics which is super bullish.

Yeah, it's a Demand driver, that's all it is, 100%.

But like you said, you know, if it gets rejected, will we cool off? We wait till the election, something happens, maybe Trump gets in and then we, we go again. You know, it's just, it's just time.

This is the kind of way we're talking now. When you've had multiple cycles, you look at it with a cooler head and just see it for what it is, not crap. I put my money in it, like let's say 3700, whatever it is today and oh no, it's going down to 3,000. I need to panic sell. It's like you don't just zoom out and think long term. Like, you know, in two years, three years, five, 10 years, what will happen along that way? What will the price be? Has anything fundamentally changed? Yeah, calm down, it's okay.

Agree guys, we're going to wrap it up there. Thank you so much for listening as always. If you do want to know our investments, when we're buying, when we're selling, if you want to join the party, if you want to really try and crush at this bull market, we'd love to help you out. You can book in a free one on one strategy session with us and we can, we can try and see where you're at, see where your goals are, see what your challenges are and just genuinely help. And we've helped so many Bennett Berg's listeners. It's, it's honestly epic. And yeah, join our community, join our live sessions. You know, we share as much as we can on the podcast. Reality is we, we, we have to keep the secret herbs and spices to our members and we'd love to have you join us. So yeah, if you'd like to just jump in the link below, you can book in a call completely. No obligation if it's not for you. We're trying to point in the right direction.

And Ben, how good does it feel like when you give me a call, you're just like, oh, I just had another Ben and Bergs listener, like on a strategy call. They've signed up as a member and it's just, oh, I can't even describe the feeling. It's just so amazing that people are out there, they're listening to us, they're resonating with it, they've got a bit of crypto, want to get started. They come across to the business and we just set them on the right path. Like that is one of the best feelings. It's most, one of the most satisfying things I, I have in my life.

I still remember when we first animated, when there was, you know, your mom, my mom and the next door neighbor listening to the podcast and now.

Never listen, mate. She still doesn't listen. She's like, no, I have to listen to you in person. That's bad enough. You're trash. Get out of my life. No, she's great, but she just doesn't listen to the podcast.

But no, seriously, you know, coming from where, where we started, you know, nearly two years ago now, it's actually our two year anniversary, Bennettburgs in June, I think next month. So to come from where we were to have like seven hundreds of you, seven hundred of you legends listening in, it's, it's absolutely awesome. Hopefully you've learned a thing or two. I assume you have if you're still listening, if you weren't probably heading off. But yeah, we're going to keep coming to each and every week without the giving you what you need to know to try and crush this bull market. So thanks so much, guys. We'll see you on the next episode.

Thanks, J.