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Crypto’s go-to ETF pundit talks BlackRock filings and the XRP Army

Crypto’s go-to ETF pundit talks BlackRock filings and the XRP Army
Bloomberg Intelligence senior analyst Eric Balchunas has become a crypto ETF influencer. Credit: Rita Fortunato/DL News
  • Bloomberg Intelligence analysts Balchunas has become X’s go-to pundit on Bitcoin ETFs.
  • It’s a role Balchunas relishes, as he helps crypto degens understand the obscure world of finance and regulation.

The past five months have been a wild ride for Eric Balchunas.

It all started on June 15, when the Bloomberg analyst confirmed to his 116,000 Twitter, now X, followers that BlackRock’s filing to convert its trust to a Bitcoin spot exchange-traded fund was real.

Ever since, he and colleague James Seyffart have catapulted to star pundit status.

He gained about 8,500 more followers almost overnight, and now posts to 162,100 — a sign crypto folks look to him to track the latest news about pending Securities and Exchange Commission approvals of BlackRock and 11 other applications for spot Bitcoin ETFs.

His newfound celebrity status has not been without its hiccups.

When Balchunas posted that a filing appearing to show that BlackRock had filed for an XRP ETF was a hoax, he became the target of online abuse from some of the token’s passionate supporters.

Balchunas spoke to DL News about BlackRock as a market “Godzilla,” how the crypto world is like visiting a new city, why financial titans moving into crypto is very different from disgraced FTX founder Sam Bankman-Fried’s operations, and being “mugged” online by the “XRP Army.”

DL News: Did you notice a gain in your Twitter/X followers after the BlackRock filing?

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Eric Balchunas: Yeah. It was massive hopium, the idea that this wasn’t a red herring. Any time you can supply the hopium you get followers.

[Myself and Seyffart] found a kind of middle ground as interpreters of the ETF world and the SEC. People were wondering if they could trust the news.

As the ETFs roll out, there will be more information that we’re going to need to interpret for people. We give them the truth and they can process that however they want.

Why did your coverage grow your following?

I’ve been fascinated by this story. It’s got all the elements of a great drama. There’s a race, there’s a countdown, the highest rungs of asset management, and the government are involved.

And you’ve got this thing that’s going to connect this really unique underworld to the traditional world.

The BlackRock filing was like an explosion. BlackRock is on another level. It’s one thing if Global X or VanEck files for it, but BlackRock is the biggest asset manager by far, it’s like Godzilla.

It’s just really changed the game.

How are these ETFs going to change crypto?

It’s like the mp3. If you’re trying to sell me — I want to say Radiohead or Bob Dylan, but I’ll use Taylor Swift so I don’t sound old.

If you want to sell me the Taylor Swift album, I want it on Spotify or iTunes, I don’t want the CD. And I’m not going to pay $17 for it.

The ETF is like that. We’ve found it to be very good, very efficient.

A spot Bitcoin ETF would be retail’s best chance to get something that tracks the price.

That’s especially for the advisors who manage $30 trillion of rich boomers’ money. They can’t store Bitcoin, it’s against their rules. An ETF would solve that for them.

Investors don’t want to deal with fees on the exchanges, they don’t want to deal with wallets. They’ve used ETFs before and trust the format. It’s just that simple.

It’s fair to say this is a watershed moment. How do you see TradFi changing crypto?

[BlackRock CEO] Larry Fink and Fidelity saying Bitcoin is an asset class and a store of value — that’s a whole different ball game to the ETFs.

That’s a big statement that TradFi is interested in this space. And that’s a watershed moment in itself.

When you TradFi it, you’re not going to get an FTX. BlackRock’s not going to screw you over.

BlackRock ETFs have been around since 1995 and there’s never been a problem.

‘It’s SBF-proof. No one can take the money and move to the Bahamas.’

They have a long track record, it’s all above board. It’s SBF-proof. No one can take the money and move to the Bahamas.

For a normal investor who is more conservative, this would help them sleep at night while participating in this asset class.

Coinbase exchange charges customers anywhere from 0.6% to 3% and has a complex fee model. Is that threatened by the ETFs?

ETFs are disintermediating forces, they are price compression vehicles. I call the ETF industry The Terrordome — it’s so hard.

Vanguard and BlackRock offer everything at, like, no fees.

‘Coinbase will lose business for sure.’

It’s just fierce, fierce competition that has whittled down costs to almost nothing.

It’s a utopia for investors.

So something like Coinbase, which is used to charging over 1% per trade — no one in their right mind would pay 1% or even 50 basis points.

Coinbase will lose business for sure.

Now their custody business will grow. And the ETFs may grow the pie in a bigger way and help Coinbase like that. But if I were them, I wouldn’t take ETFs lightly.

Do you think there will be demand for the spot Bitcoin ETFs?

When BITO launched, it launched into a mania. [BiTO was the first Bitcoin futures ETF, launched on October 19, 2021. It attracted $1 billion in the first few days.]

I don’t think this will be anywhere near that.

[BITO] was throwing your bait into a lake with a million small fish that are hungry, and they just attack that bait right away.

Now, some of those minnows are turned off by crypto after FTX. There aren’t a million minnows sitting there waiting anymore.

What there are, though, are bigger fish underneath. There are these large advisors who manage rich boomer money.

But those are not people to go crazy on day one. They will take their time and see which one’s going to be more liquid, who’s the cheapest, what’s the biggest brand name — they’re going to sniff around a little bit.

And then, finally, they’re going to chomp on the bait that is best for them.

That will bring in bigger amounts of money. But it’s more slow growth over three to five years than a frenzy on day one.

How are you making sense of the crypto crowd you’re talking to?

The crypto world is like being dropped into a new city, you’re feeling your way around the different neighbourhoods.

The XRP situation was like randomly taking a left turn on a small street and getting mugged.

They have a personality, and then the Ether people have a personality. And then there are the Bitcoin-only people.

They’re all very excitable, they have fun. They’re always replying with memes. There’s an artistic, fun element that I enjoy.

But there are times I’ll get slammed by somebody for no reason, like a sucker punch.

So it’s been really exciting, weird and somewhat exhausting, to be honest.

This interview has been edited for length and clarity. Reach out to the authors at trista@dlnews.com and joanna@dlnews.com.