Grayscale's NEW Altcoin ETF Launches - Chainlink, XRP, Dogecoin! | Zach Pandl - Thinking Crypto News & Interviews

Episode Transcript
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Speaker 1 (00:00):
Tiny fraction of the world's assets are token ised to
today and we think that this number will compound many
times over the next five and ten years. To my
ichain link is the crypto project that is actually going
to make this happen. Bitcoin investing involves risk, and it's
important to emphasize that these are volatile assets.

Speaker 2 (00:19):
What is your outlook on the macro and the current
market conditions and do you think the top is in
great question?

Speaker 1 (00:24):
And markets do create those emotions among investors.

Speaker 2 (00:33):
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be in the description. Hey folks, welcome into the Thinking
Crypto Podcast. I'm your host Tony Edward and joining me
today Zach Pandel, who is the head of research at

(01:38):
Greyscale Investments. Zach, great to have it back on. Great
to be with you, Tony, Zach. We've spoken multiple times
and it's a very exciting week for Greyscale. You've got
a new ETF live, that's the chain Link ETF. Over
the past week or so, you've got the xrp don'scoin
ETF going live as well. So an exciting time. I'm

(01:58):
really excited to do. I've been to the details around
those assets. Maybe we can start with Chainlink. Tell us
about that ETF.

Speaker 1 (02:06):
Well, we're thrilled to be able to bring this product
to market. Greyscale has been running a chain Link investment
vehicle since twenty twenty one, but now able to bring
that to market as an ETF really the preferred structure
for most of our investors. Look, a chain Link, in
my view, is really about the tokenization vision. Tokenized assets

(02:28):
are going to be a huge market and we're just
at the very very beginning of that process. You know,
a tiny fraction of the world's assets are tokenized to today,
and we think that this number will compound many times
over over the next five and ten years. To my eye,
chain Link is the crypto project that is actually going

(02:49):
to make this happen, and it has the data, the tooling,
the software, the compliance policies and integrations. They're going to
allow the blockchain world to connect with the world of
traditional finance. And so chain Link really a central project
in the crypto ecosystem, especially for this vision of tokenization.
We're thrilled to be able to offer investors access to

(03:11):
the Link token through a new ETF. Yeah, absolutely, chain
Link doing a lot. I was just recently a chain
Link smartk on and it's funny chain links technologies and
applications are being used by other blockchains which may even
seem like they're competitors, but the bridging aspect, like their
oracles and much more. Is such a great tech tech

(03:34):
that even these other blockschain projects, even trackfi is using them.

Speaker 2 (03:37):
Absolutely.

Speaker 1 (03:38):
Chain Link is kind of a connective tissue between the
crypto ecosystem and between the crypto ecosystem and traditional finance
as well. So it's not a bed on one particular blockchain,
one particular project. It is more of a exposure to
the broad vision of where the industry is going. And
if we're going to have widespread adoption of stable coins,

(04:02):
of tokenized assets, of decentralized finance platforms, chain link is
going to be a really critical piece of infrastructure and
essential utility in that future vision. I think that that's
how investors should think about exposure to this asset. You know,
if we're going to see broad adoption of public launching
technology for financial services, and that's really what I am
here working on that certainly the vision that I share,

(04:25):
and I think chain link will be absolutely essential to
that future and again really a great asset we think
for investors of many different stripes when they're building out
their crypto portfolio, allocating across tokens, chain link really an
essential ingredient in that diversified crypto exposure.

Speaker 2 (04:43):
Absolutely now a lot of the XRP army. They want
me to ask you about the XRP ETF, that Greyscale
launch and what you can tell us there about the
volume and AUM and so forth. Yeah, absolutely off to
a great start.

Speaker 1 (04:56):
So we you know, in terms of taking a step
back on the ETF story, you know, this started with
Bitcoin ETFs and it was more than a ten year
journey to bring those products to market. You know, Grayscale
played a critical part in that process bringing Bitcoin ETFs
to the US market. Then followed Ethereum, which also took

(05:17):
some time. The process is starting to quick and you know,
regulators have clarified for us, you know, how to bring
these products to market, and so there's been a significant
increase in the number of old coins or crypto assets
beyond Bitcoin coming to market. You know, your listeners are
very familiar with these things. But Solana x RP dogecoin

(05:38):
chain link just in the last couple of months, so
really broadening the exposure available to investors. X RP also
thrilled to bring that product to market. A battle tested blockchain,
you know, originally designed for payments applications, but expanding to
a broader range of use cases. Solana really the leading fast,

(06:02):
low cost blockchain today with a very wide range of
financial applications. Dosee coin, you know, a meme, you know,
a different flavor. So it sort of speaks to the
breath of things happening both in the crypto industry and
now the access that ETF investors have to these a product.
I think now enough tools to build a pretty high

(06:24):
quality crypto portfolio out of ETFs, which is exactly where
we wanted to get to after this, you know, many
years of working on this topic.

Speaker 2 (06:33):
Oh yeah, and gray Scale was certainly ahead of the curve.
I mean, you guys started building these trusts in these
investment products very long time before, and more.

Speaker 1 (06:43):
Than twelve years ago, so you know, in this game
for a long time and continuing to innovate. I would
just emphasize, you know, we are the only asset manager
staking in our Ethereum ETFs today, for example, and we
are constantly looking for new projects. You know, these are
some of the og tokens. You know, Bitcoin, Ethereum, chain

(07:04):
Lake have been around for a while, but there are
always new things coming to the market, and this trust
of business a precursor to the ets. We continue to
look for innovative projects in that space. So I think
it can expect Greyscale continue to be up at the
bleeding edge of the crypto industry, really across the token
and product spectrum.

Speaker 2 (07:24):
Now I read recently that there's also potential for a
z cash etf to attle bit about that. Yes, Greyscale
has been focused on privacy the importance of privacy for
a very long time. Look when I take a look
at the crypto industry or block public blockchain technology in general,
it does look like there is still some missing pieces

(07:46):
in the technology stack. If the technology is going to
achieve its full vision of transforming finance, capital markets, banking,
it's going to transform those industries, it has to have privacy.
You know, that is really a critical element. You know,
everyone has an expectation that their paycheck and their taxes

(08:06):
and their assets and their spending habits are not visible
on a public ledger, and I would stress that institutions
will absolutely have that expectation. So if institutions are going
to start using these assets, it will require privacy. Z
cash is really a leader in that space, you know.
They kind of our original privacy currency asset, very much

(08:29):
like bitcoin in terms of its design, features, proof of work,
cap on total number of tokens, these types of things,
but with embedded privacy, and so we are really seeing
i think a privacy awakening across crypto investors, early stage
at tech investors in general, and z cash is benefiting

(08:49):
from that. Other privacy assets are benefiting from that, and
I think will continue to and I think again you
can expect Grayscale to be on the leading edge here
as it has in with z cash for a long time.
Offer we've been offering investors access to z cash through
private vehicles for a number of years. Hopefully we will
also be able to offer ETF investors that exposure in

(09:13):
the fullness of time. It's exciting and I'm certain, like
you highlighted, there's going to be more products down the road,
and I'm excited to see the rollouts of those products.
There were also reports that Grayscale is seeking to do
an IPO. What can you tell us there and know
certain things may be under wraps due to regulations and
so forth.

Speaker 1 (09:32):
Well, yes, that's great, Yes, that's true. As you know, Tony,
I in a quiet period at the moment ahead of
that to potential event, so I'm limited on what I
can say, but as soon as we have more to
share on that, we will be sure to share it
here on your program and elsewhere.

Speaker 2 (09:48):
Awesome, and you know we're recording this on Tuesday, December twelfth,
and SEC chair Paul Atkins was on CNBC this morning
talking about they want to open up the markets have
more IPOs in twenty twenty, so it seems like a
very good time. But again, I know you can't talk
a much about it, but I did want to get
your thoughts on the current market conditions. You know, Zach,

(10:09):
a lot of people are feeling a bit dismayed. You know,
the markets can do that to us, right, because it's cyclical.
What is your outlook on the macro and the current
market conditions and do you think the top is in
A great great question, and markets do create those emotions
among investors, and we just tried to give people sensible,
ideally quantitative guidance on what's happening so they can make

(10:31):
good risk management decisions. Your bitcoin has had about a
thirty percent draw down from its highs in early October,
which does seem like a big number. Of course, however,
in the context of bitcoin, this is about an average
size draw down. You know.

Speaker 1 (10:50):
So bitcoin is a volatile digital commodity that has lots
of ups and downs over time, and a thirty percent
pullback is actually about an average draw down. We typically
see pullbacks of ten percent or more three to five
times every year in crypto bull markets or bitcoin of
bull market, So you know, it is a meaningful pullback,

(11:12):
and certainly, you know, investors need to think hard about
what that means for their portfoid. But it is a
kind of typical size for bitcoin. Grayscale does not believe
that we are on the cusp of some larger multi
year cyclical drawdown. I do not think that although the
bull market has lasted for three years, that there is

(11:32):
an expiration date of some kind on the on the
crypto bullmarket. And you know, I would just emphasize the
kind of fundamental drivers of what has taken us to
this place, and it's two main things. One is demand
for alternative stores of value because of big institutional and
macro changes, deficits debt, the risk of inflation, threats to

(11:56):
central bank independence, questions about the long run i'll look
for the dollar. All of these things are going to
keep a bid for alternative stores of value assets, whether
they're physical commodities like gold and silver or digital commodities
like bitcoin and ethereum. So that is one big piece
of what's driven us to this point, and the other
big piece is regulatory clarity allowing institutional investment in digital assets,

(12:20):
and just look at how that continues to progress every
single day. You mentioned comments from regulators this morning, but
we've also had news about institutional investment, about investment platforms
allowing access to crypto ets for the first time. I
believe that that process continues and that capital will be

(12:42):
flowing into the crypto asset class as a result of it.
So we are continuing to be optimistic about where crypto is.
Crypto investing bitcoin investing involves risk, and it's important to
emphasize that these are volatile assets. They have meaningful draw
downs from time to time. The thirty percent pullback that
we've seen is about average. I see some signs of

(13:06):
bottoming in the marketplace today over for a short term perspective,
but from a medium term and longer term perspective, what
I feel very strongly about is that the pillars of
demand for this asset class and the drivers of innovation,
this acid class are still very much in place. So
my view would be this is a good time to
begin accumulating crypto. You know, in general, you know, investor

(13:29):
experience is better the lower the price that you get in,
so you know, this can be an opportunity for investors
with that long term horizon to accumulate the acid class.
That's that's really the key recommendation that we are giving
to Rascal clients today. Oh absolutely, you know you mentioned
institutions now offering you just I think you're alluding to Vanguard,

(13:50):
and that was the big news we got yesterday after
you know, initially their previous CEO had said, you know,
bitcoin's out of story value, are never going to offer
the ETFs, and now they have. Look, everyone takes time
to learn about this asset class and this technology, including myself.
You know, it certainly didn't click with me the first try. Look,

(14:13):
I think we can be so confident about the longer
term because it's not about you know, one particular policy
an asset manager, or one particular regulator or elected official.
It's about a piece of technology, an innovative piece of
technology that is going to drive transformation of financial markets.
And it's incredibly exciting I think to be along that journey.

(14:35):
You know, innovations and digital money and digital finance that
are going to change the way that we interact with
the financial system in the future. And so you know,
I think people that have spent time with the technology
understand that, and it's easy for them to to stick
with the long term vision. It's you know, easy for
people that haven't thought is hard about it. I think
kind of hit the books and looked at the data

(14:56):
as closely to be put off by small, shorter term
changes in price. And look, I understand that having worked
in markets for a long time, but you know, if
you're optimistic about that long term vision, at lower price
is an opportunity, an opportunity to accumulate these compelling assets
at good levels. And do you foresee that once the

(15:18):
Clarity Act, the Market Structure Bill has passed in the Senate,
and that is expected to potentially pass in like Q
one twenty twenty six, that you will see more of
these firms and companies starting to offer access to crypto
ETFs in much more maybe tokenizing launching their own stable coin.
As long as we continue to see bipartisans support for

(15:40):
regulatory clarity for the asset class and for the industry
here in the United States, you will continue to see
institutional investment in in digital assets. You know, whether this
particular piece of legislation gets done in Q one, I
think is less important than you have broad bipartisan support
for bringing that clarity and fostering innovation in this industry

(16:04):
and asset class in the United States. And that's what
I see. I do think the ball is going to
move further down the field this year, you know, this month,
in the month of December, I think we'll make more
progress or early next year. But as long as I'm
seeing that, as long as I'm seeing bipartisan support for
digital assets in the United States, I'm confident that things

(16:25):
are still moving in the right direction. I think that's
very much what you see. And that is just because
the voters are bipartisan. Your crypto voters are bipartisan, crypto
owners are bipartisan, and so we're we continue to see
that that clarity being brought by regulators regardless of their
party affiliation.

Speaker 2 (16:46):
Oh for sure, you know, going back to you know
when you were highlighting the market cycles and things like that,
and you know, to draw down we're at just about
thirty percent or so. Do you think as crypto matures
and more of street participants, big institutions start investing these assets,
that maybe it's going to move even in closer correlation

(17:09):
and maybe less volatility with the stock market, So it'll
move like the SMP, the NASDAK and so forth. It
won't be like Crypto's chart is very different, right, bigcoin
is very different from let's say the Nasdaq and things
like that.

Speaker 1 (17:22):
It's a great question. As the crypto asset class has
matured and gotten larger, there has been an increase in
the correlation between crypto and say public market equities indexes
like the S and P five hundred or the Nasdaq
one hundred, But it is still a moderate correlation and
I think it will probably stay that way. How investors

(17:45):
should think about this is, you know, crypto will probably
behave from a correlation standpoint, similar to commodities like oil.
You know, the crude oil, for example, has some beta
to the stock market, some correlation to the ups and
downs of the stock market, but it also frequently marches
to its own drummer because it is something quite distinct

(18:06):
with distinct fundamentals crypto is kind of like that Bitcoin ethereum.
The other large assets that we've discussed are kind of
like that. They will have some beta to equity markets,
but they will also frequently march to the beat of
their own drummer, and this makes them excellent portfolio diversifiers.
So it is inescapable when crypto is a four trillion

(18:28):
dollar mid size alternatives asset class owned in lots of
different portfolios, through lots of different product structures, including self
custody ETFs, private funds, all these different types of structures,
so inevitably it will have some beta to the broader
ups and downs in equities, but at the same time
it remains an excellent portfolio diversifier. And I think institutional

(18:53):
investors understand this, and they will not be discouraged by
some correlation or a moderate drawn on and I think
it's doutial investors. Capital will continue to enter the crypto
asset market.

Speaker 2 (19:08):
And I'm also curious to see how the equities markets
they react to when they go on chain, right with
tokenized stocks and all these things that are being built.
I mean, just yesterday, I think Blackrock highlighted in the
economist Larry Fink and I've got the other person's name
from Blackrock. You were talking about how tokenizations the future
of finance and how it's going to change markets. So

(19:29):
when when the NASA that go or the S and
P five hundred go on chain and it's twenty four
to seven trading opening up to more markets globally, I
wonder how that's going to change the chart on the
stock you know, the S and P five hundred and
things like that.

Speaker 1 (19:43):
The most important thing is that it will bring user benefits.
You know, investors will be able to buy and sell
their assets on the weekend, in the evening on public holidays.
They don't have to wait a day for that to settle,
for the cash to be available to put in another investment.
They may be able to borrow against their assets on

(20:03):
a permissionless platform rather than you know, working through a
bank a type lender. So tokenization is just a innovation
in capital markets that's going to bring user benefits. It's
going to drive value to the underlying blockchains. And I
would just like to stress how early we are today.
So you know, we have thirty to thirty five billion

(20:24):
dollars of tokenized assets today, which sounds like a big number,
but it is only zero point zero one percent or
one basis point of equity and bond market capitalization out
in the world, which is a three hundred trillion dollar market,
and that is only a portion of the assets that
could be tokenized over time. I think it is it

(20:47):
would not be surprising to see the market cap of
tokenized assets to increase by one thousand x over the
next five years. And it sounds like a very large
growth rate and is a very large growth rate, But
I speaks to how early we are in the process,
you know, how far this could potentially go, and the
fact that we have all the pieces in place in

(21:09):
terms of the underlying technology, whether that's blockchains like Ethereum,
middleware software like chain link, as well as the regulatory
clarity that's going to allow institutional investors to push in
this direction. So we are very optimistic about the outlook
for tokenized assets, and I think investors should consider what

(21:29):
that means in their portfolio, and I think it means
really allocating to the platforms like Ethereum that will host
tokenized assets, and allocating to the other technologies like chain
link that'll facilitate that process.

Speaker 2 (21:44):
Yeah, it's exciting, Zach, and I'm really really curious or
excited to see once that Market Structure Bill passes. You know,
I feel like the floodgates are going to open with
innovation and builders because people want to have to look
over their shoulders, they know what the rules of their
own are, and how which blockchains they can use and
how they can use it and so forth. It's going
to be an exciting time. Absolutely.

Speaker 1 (22:07):
You know, this has been a long time coming. I
do think that public blockchain technology has had a slower
uptake than I think people would have liked, you know,
over the first ten plus years of existence. You know,
of course it has had lots of success, but this
process is just getting started. And financial technology, like public blockchains,

(22:30):
does require a regulatory framework in order for it to
become mainstream. We need to make sure that there are
consumer protections, that they are protections for the broader financial system,
and that's what we are seeing. You know, think about
where the Internet was in the mid nineties, for example,
where web browsers and other types of tools were facilitating
the mainstream coming online. You know, today better technology and

(22:55):
regulatory clarity are facilitating the mainstream coming on chain that's
where the industry is at today, and I think it
speaks to a very bright five to ten year I'll
look for this industry and asset class.

Speaker 2 (23:07):
Absolutely well, said Zach. And you know, I'm looking forward
today when you and I can do an in person
interview in my New York studio, maybe in sometime in January.
You know, we get some news about new ets, even
IPO and things like that, where we can talk more
about it. Let's make it happen. I would love to
do that. Awesome. Thank you so much, Zach.

Speaker 1 (23:26):
Thanks Tony,

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Grayscale's NEW Altcoin ETF Launches - Chainlink, XRP, Dogecoin! | Zach Pandl

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Grayscale's NEW Altcoin ETF Launches - Chainlink, XRP, Dogecoin! | Zach Pandl