In this video, we're going to discuss the potential price upside for Bitcoin following a spot ETF approval. What do you? We think that Bitcoin is going to do? We're going to look at standard Charters Research on exactly this. Not only are we going to do that, but we're also going to look at what's the potential for Coinbase And how does that differ from? well? Bitcoin Well, let's go ahead and start with the price projection from Sandard Charter For Bitcoin they see some substantial price upside upon the approval of a Bitcoin ETF. However, it could take some time, so it might not be an immediate upside.

They do, though. they see this as a watershed moment for normalizing Bitcoin participation by institutional money, and we expect approval to drive significant inflows and the price of Bitcoin. Now we'll talk about exactly how long and and priceing that, but let's understand: For A Moment Coinbase already represents a lot of institutional flow as as well as companies like Binance for Bitcoin trading. So I Personally do think it's very exciting that they mention hey, we can get even more institutionalsales.

Over 95% of the trading activity on Coinbase is institutional, but over 95% of the revenue at Coinbase from Trading comes from retail. So in other words, wait, like what institutions are already trading a lot? It's just retails getting ripped off. If you're trading a lot, remember, there are like institutional Pro accounts you can sign up for plac like Coinbase and lower your fees a lot. But anyway, that's how Coinbase makes a lot of money.

so Coinbase might not want that advertise too much. But oh well. So what do they say here? Well, they Standard Charter Compares Bitcoin in the Bitcoin approval to the first gold-based exchange traded product and they argue that after the first gold-based uh, exchange traded product was approved in November of 2024 here, the price of gold rose 4.3x in the next 7 to 8 years now. I Think it's worth adding some context to that 7 to8 years if we had an approval in 2004.

Well, what happened in the next 8 years? Well, just four years later you got the Great Recession which crushed everybody's impression of how important uh, real estate or stock exposure was and a lot of people flocked to Gold. So there is a counterargument here that that you know 7 to eight years after the ETP Holdings uh matured so to speak, could have been driven by the Great Recession and a flight to gold. Now they don't actually mention that in their analysis here. so I'm a little bit disappointed by Standard Charter I.

Have to say this is their Global Research piece here. The fact that they didn't mention that as a potential reason driving investments into gold surprised me. Keep in mind also that gold is substantially harder to hold like physically hold than Bitcoin. Any of us can hold crypto on our own Hardware wallet at home right now and hopefully you have copies of it and you don't lose hundreds of millions of dollars of it in a dumpster or you forget your password and you've got a few tries left before it all self encrypts and you lose access to.

Hopefully you're being smart about how you're self- custody in crypto, but let's just put it this way: it's a lot easier depending on how much you want to buy. It's a lot easier to self store a USB drive than it is a lot of gold. Yes, I Know we could throw a few coins into Uh One safe. but let's also be real.

you can't make copies of that gold, right? So you could have multiple USB drives. Safety Deposit Box home, another location parents homes, friends homes uh safety deposit box in Switzerland Whatever. right? Like, you can self- custody your own cryptocurrency very easily. but gold is very difficult.

travel across borders. with it over $10,000 in value, you get in trouble, you potentially get it Seas Uh, it's heavy. It's dangerous to store. It's very subject to theft.

There are a lot of problems with with gold that you can avoid with Bitcoin And so the reason I make that argument is it's also a little bit of a counterargument that maybe one of the reasons so much money flowed into a gold E Exchange Trade product ETF Basically, Uh is is is because uh, it was so much easier now to access gold. whereas really, how much easier is it becoming now to trade Bitcoin Arguably slightly easier you can swipe off on Robin Hood which wow, you've kind of been able to do that. Uh, so somebody else is still custody your coins. It's still not your Uh keys, not your crypto.

The only difference now is when you have an ETF approved, you actually get Cpic insurance which is Sipc insurance covering your Bitcoin investment right? So that's good. So we we like that because now if your brokerage gets you know uh, goes kaput or whatever. Uh, you, you have a claim to be able to get some of your money back. Remember you get coverage of up to $500,000 on Securities So let's say you're Allin Bitcoin and it's all in in an ETF You actually have insurance in case that broker goes bankrupt which was not true during the days of course of like you know FTX for example.

Okay, so to gauge how big of a driver it might be, they compare to the previous ETP now. uh, they also calculate how many Bitcoin they think will need to be created to sit uh to basically underly ETF shares. They don't counterbalance this though with how many Bitcoin are going to go from existing. Uh, right.

Uh, like how much existing demand there is that is now going to move to the ETF Now that's a little complicated so I'm just going to draw that out a little bit because again, I'm a little weirded out that you know I mean I'd like to just be able to shout out like hey, it's going to go 4.3x But like some of the mitigating factors here I don't think they really mention so we can easily make the argument like they did here. that look, we're going to need to create at least uh or have access to 400,000 Bitcoin very quickly to uh to you know, underly all of the ETF Products that come out uh with with a B BTC approval. Okay, well so multiply that by you know, the $45,000 we're trading at right now. Uh, and so that gets us obviously a very, very long number that I have to pause here for a moment.

just put a bunch of commas between. It looks like we're in the billions. Yeah, we're at $8 billion, so that's $18 billion that's you know. probably on the relatively low side for ETF inflows.

But the point is, if the ETF demand, let's go extreme. Okay, it is possible that that $18 billion of Bitcoin goes from just trading on the chain to going 100% to the ETF shares. which basically mean that 400k will just sit at you know, coinbase or whatever and the ETF shares get traded. So the same 400k just goes somewhere else because the trading volume goes to the ETF as opposed to bit like the actual Bitcoin blockchain.

So understand For a Moment how that would look. Okay, so let's say you're for example, uh, an ETF provider. Okay, you're going to make your own ETF So we're going to say this is the uh subscriber uh ETF And and this is your own ETF and you have $18 billion And and you're like, yeah, we're going to. We're going to put this $18 billion onto a hardware wallet and we're going to be known as the custodian.

Custodian just means you're looking after something kind of like a custodian at a school. They look after something you're looking after in this case with a Bitcoin on a hardware wallet. and presumably you have insurance. There's a Cic insurance, not on this.

The Cpic insurance isn't on on this custody right here. but what is it actually on? Well, it's on these. like fake shares that are created. There's this ETF process called create and redeem.

and basically they just create shares out of thin air. Uh, you know, let's call it the S. Well, that sounds like short so we'll call it the subb. There we go.

The subscriber Bitcoin ETF shares, right? So that's your ticker symbol. and then if you have $18 billion of Bitcoin, let's say your Shares are trading for $18 billion a share. Well then you have 18 shares outstanding at 18. uh or sorry at at $1 billion.

Okay, so you just created paper basically to represent what is on that Hardware wallet and then these shares can be traded freely on like interactive brokers or uh, you know, um whatever TDM a trade Fidelity whatever. So this is really interesting because this part is what's Cpic and Ured, not the the underlying though. of course that is expected to have its own uh, stringent requirements and and underlying requirements and so on so forth. Okay good so now the argument here is Standard Charter says oh, we're going to need so much more Bitcoin to actually support these ETFs uh and as a result they compare to that 4.3x we got with gold.

Oh and also remember in the 15 minutes after Bitcoin's ETF was first approved, we saw it rise and then drop about $700 from where it was before the Hacked release of the Bitcoin ETF Uh, based on the you know the Sec's Twitter account being hacked. Whatever. Okay, we're not going to make a video here about whether it was hacked or not. it could have been BS it could have been to sample what would happen with the market.

it could have been insiders. It could have been a whole lot of BS Okay, it doesn't really matter, but the point is, price actually went down $700 net net after in that 15 minutes after the leak before the SEC said it was a hack and then Pric has just sort of stabilized it. So really weird. But watch Coinbase I think Coinbase's stock is going to go down.

We'll explain why in this video, but it is possible a lot of that same demand just goes to ETF shares and then you actually don't have demand for the Bitcoin on the blockchain, right? Keep that in mind when you're trading these shares, you're you're either trading here which is the underlying Bitcoin on blockchain or you're trading here which is not on the Chain right? This is not on chain. This would be when it moves, which when it's custody it might never move. This would be, uh, you know, onchain. Okay, great.

So Standard Charter basically says we could go up as high as 4.3x but let's keep going here. Just sort of their bottom line. So their more base case is that we'll probably end up seeing a 2.3x uh, up to a 4X during the year that Bitcoin a Bitcoin ETF is approved. Uh, if it's similar to Gold I person think there's some mitigating circumstances to that.

So I do think we could agree with them Drive institutional demand. but I think they're a little bit, uh, bullish. Maybe a little bit too bullish on how quickly Bitcoin might move in the first year. Now the good news is, you've got the having this year, so that could help as well.

Last time we had that though, stimulus checks were flowing so there's a question you know, are we going to have as much excitement and Euphoria as we did in 2020? Now who knows. Anything Can Happen Of course we could also look at the prior have uh, havingsex Coinbase and you'll see it. but what? Um I I Throw this here for free. Uh, this is different from like the courses on building your wealth at Meetkevin.com That's where I teach you entrepreneurship, how to avoid paying taxes real estate investing Stock Investing Everything that I know about building businesses, building companies.

that's those are the courses I Meet Kevin.com Most popular one right now is the Gold course which includes the course member live streams. We do uh every morning the market is open. So what do we have here? spot Bitcoin approval? Uh, likely within five days I I wrote this on January 5th. Okay, we already know that that's old news.

So Coinbase though I Want to look at the coinbase analysis quickly? Oh, and what'll actually help us with this coinbase analysis is understanding the latest that we're getting with the price wars in the ETF space. Now this is wild. The price Wars Right now. Absolutely crazy.

Everybody is lowering prices on these Bitcoin ETFs Because everybody wants the custody. The idea is the quicker you get the custody the better. Uh, you know the the more money your company will be able to make. So for example, you've got Arc just lowered their fees so they're in like a price War Here they just lowered their fees to 0.21 bid wise, lowered their fee to .2 undercutting Arc by literally one basis point.

Uh, both of them expect to use Coinbase as a custodian. Uh, and they'll actually have a fee waiver for six months or a billion dollars of assets under management. so for a certain period of time, they won't charge any fee. Uh, And then you can see the other fees here range from 20 basis points all the way to 49 basis points.

All of it very a lot lower than that 1.5% that Grayscale Bitcoin Trust had. So this ETF is driving prices down massively and very very very quickly. which is fascinating. Okay, and I think that price war will continue I I Honestly think these will end up being like zero fee products, which is probably what they should be.

But anyway, so uh, I I think that and we wrote this on eack and you could see all the details here. But basically I think you go to Ec.com type Coinbase, right? But basically I think that Bitcoin ETFs reduce Bitcoin trading volumes I mentioned earlier that uh, trading represents 70 Well, I didn't mention this part, but we talked about the institutional part. But anyway, trading represents 73% of Coinbase's revenues. Of that 73% 29% represents Uh is is made up by Bitcoin So uh, using 2022 percentages, if 100% uh, percent of Coinbase's trading went to an ETF uh, they and then I multiply here: $674 million of trading revenues times Uh, 70.

well of revenues times 73% for trading times 29% for Bitcoin Basically $149 million of Revenue would be lost per quarter. That's an annual loss of almost half a billion dollars or just over that would require at about 10 basis points of custody fees about 596 billion of Bitcoin ETF in custody at Co Coinbase to offset that loss. So in other words, I'm kind of bearish on Coinbase. Why? Because even though they might be custody Bitcoin I Think they're going to make very little money on that Bitcoin and that same race to the bottom that you're seeing in the actual ETFs I Think you're going to see here by Fidelity and Gemini as well.

They want to beat up on Coinbase 2 and make them work for their money. So that means Coinbase could lose. And and look, we know 100% of Uh trading isn't going to go from Coinbase to the ETFs right? That's that's obvious. We know that.

But even if it's 50% Well, okay, still, that's that's a lot That would lead to a loss of over, uh, $60 million a quarter uh of uh of of potential revenues. Uh, for. Oh, and and of course, assuming the 94% multiplier here for retail customers, even if you only assume 50% of retail trades went to ETFs, it would still cost them $67 million a quarter. That's with just 50% going to the ETFs right? Uh, and just assuming the retail trading goes over to the ETFs, that's a lot of money.

Uh, that they would have to custody just to offset the loss of Bitcoin trading. Because remember going back to that picture that I made anything that is traded as the share on the right side that's not on the Chain You have to be a licensed broker dealer. They call it a BD You have to be a licensed broker dealer to be able to do those trades. So think: Robin Hood TD Mar Trade Fidelity Schw.

Whatever. right? Uh, when you're on chain, you could be coinbase, but literally what we're doing here is creating a product that makes it less desirable for some people. A lot of people will still be on chain, but for some people to trade onchain so they'll move over to the ease of trading at a brokerage, you know. Michael Sailor has called his company a proxy ETF proxy Bitcoin ETF He could also potentially see some outflows, but his company will probably mostly be Val valued at whatever the underlying Bitcoin they hold is and and so they'll have plenty of valuation left.

So anyway, this is, uh, very interesting in my opinion. Hopefully you found uh, this very helpful and interesting. If you did consider sharing it, consider subscribing and we'll see you in the next one. Thanks so much Goodbye! Why not advertise these things that you told us here I Feel like nobody else knows about this? We'll We'll try a little advertising and see how it goes.

Congratulations man, you have done so much People Love you People look up to you Kevin P there financial analyst and YouTuber meet Kevin Always great to get your take even though I'm a licensed financial adviser, real estate broker and becoming a stock broker. This video is neither personalized Financial advice nor real estate advice for you. It is not tax, legal, or otherwise personalized advice tailored to you. This video provides generalized perspective, information and commentary.

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