Crypto ETFs Could Unlock the Next Bull Market

**Krista Lynch** (0:00)
And crypto has really matured. You know, when you start to hear big banks talking about crypto, I think that those in the retail community who are really looking for more of a shiny object type quick investment, it's less exciting. But that also speaks to the fact that it has become a mature asset class. It's now something that big banks and big asset managers are allocating into. And to me, I think that's most exciting because it demonstrates mass adoption.

**John Gill** (0:24)
Grayscale has been a first mover and innovation leader in the ETF space for years. Why are these products taking over crypto and what do investors need to know about this involving investment vehicle? Hello and welcome to The Milk Road Show, the podcast that knows that Bitcoin tastes delicious no matter what kind of wrapper you put it in. I'm your host, John Gill, and today is Wednesday, July 8th. And today we are joined by Krista Lynch. Krista is the head of capital markets at Grayscale Investments, where she leads efforts to support the firm's crypto ETFs. Prior to Grayscale, she was a vice president at BlackRock, just like me, where she managed the daily primary market trading activity for iShares fixed income ETFs. Krista is awesome, and she's going to share a ton of alpha with us today. So that sounds good to you. Make sure you like and subscribe, share this episode with somebody who's going to enjoy it. Before we jump in, I want to let you all know that if you are buying, selling, researching things, our Milk Road PRO analysts are always on the lookout for the next latest news in crypto. If you want access to all of that, Milk Road PRO is 33% off this week only. So check out the link in the description. Join our community. Today's episode is brought to you by Bitget Stocks 2 with real liquidity, real dividends, and securitize the regulated rails for tokenization. Without further ado, welcome to The Milk Road Show. Krista Lynch, how are you?

**Krista Lynch** (1:33)
Thank you so much for having me. I'm good. How are you?

**John Gill** (1:36)
I'm doing really well. I'm excited to have you here today. Grayscale has been a leader in this industry for a long time. A lot of people in our audience have been paying attention to the recent outflows that we've seen from these ETF products. And I wanted to kind of start the conversation there. Do you see any sides of these tides starting to turn on the outflows from crypto products? And just what are you seeing from your seat at Grayscale?

**Krista Lynch** (1:58)
Yeah. So unfortunately, we have seen a lot of outflows from the Bitcoin cohort collectively. Now, as an ETF practitioner myself, I think it's important to note that the efficiency and the lack of frictions that this has really brought to the market is indicative of the success of the ETF as a wrapper for crypto and for Bitcoin specifically. So while we don't love to see the outflows, we are encouraged to see how successfully ETFs are handling this period of stress. Now, as you said, the ETFs have had outflows. They've had about $5 billion in outflows year to date, which is a large number. But they do stand at over $75 billion in assets under management collectively.
Now, to put that into context, these products have been in market for a little over two years. Now, let's compare that to gold ETFs, which have been in market for over two decades. We're at about a third the size of the gold ETP cohort, and given that we've only had two years versus 20 years in market, I think it is still very telling of the success that these have had in gathering assets in a short period of time. Now, what are some of the things that could turn the tides? I think we're very constructive on things like the Clarity Act passing.
Unfortunately, as time goes on throughout this summer, it does look less and less likely like it will pass. But these are potential tailwinds for crypto as an asset class and a potential catalyst for the tide to turn, as you said. And potentially start to see some inflows or a reversal of outflows in the cohort itself.

**John Gill** (3:30)
Krista, I have heard you in interviews in the past say that your clientele for your ETF products tend to be more longer term investors as opposed to shorter term traders. Can you talk about the pros and cons of servicing one of those cohorts versus the other? And why do you think long term investors tend to favor Grayscale?