A Couple Thoughts on Wall Street Entering the Crypto Market

 I thought I should address this, now that events are having some time to play out.  I'm not a big fan of the big Wall Street houses. But I want to send Blackrock's CEO a bouquet of roses and a bottle of wine as a thank you for their move into crypto, and filing for a bitcoin ETF.

Why? There are two reasons.

1. They have enormously expanded the market space available for all players. When I got started with the crypto fund, the total market space was about $1.6 trillion, counting all kinds of cryptocurrencies. When Blackrock first announced that they were entering the space, in late June, I expected that this would expand the crypto market space to about $6-7 trillion over the next 5 years. This last week, I find that the expectation is more like $60 trillion.

What does that mean to us? Well, I've always said that we, as a fund, will hit a ceiling at some point. And my expectation was that that ceiling was somewhere around 20% of the total market space. There's simply a limit to how much you can soak up. So, if you follow the math, that suggests we would have hit the roof, initially, at a valuation of around $320 billion. With that late June change in expectations, maybe $1.2 trillion. Neither of those numbers are anything to be upset about. If we actually do that, that will be simply stellar. But they also both imply a relatively small population of investors in our fund - there's really only so much room for investors at that level, even if they're small investors (at a $1million per investor average balance, which I think we'll hit next summer, that works out to _at best 1.2 million people - in a population of how many billion?) But at $60 trillion, that suggests a theoretical cap at around $12 trillion. I'm not sure, in practice, we'll ever get there. But boy will it be fun to try.

2. Because by participating in the market space, in practice they make any anti-crypto campaign by the SEC effectively impossible. Blackrock by themselves are enough of a dominant player in the market, that they can force the issue. But if they major Wall Street Houses are all getting in on the act? I just don't see any way for the SEC to kill this whole thing off. They _have_ to learn to live with it. Does it mean the SEC will likely finally get it's act together and start serious rulemaking on this front? IMHO, yes. Do I know what it will look like? Not a clue. Will we adapt to it? Of course.

Anyway, enough pontificating for now.

Oh, and for those interested? Here's a little internal stat: Our net performance to our clients across the last 9 weeks has been above 18% per week.   We've actually only had one week below that, and we know why that happened. As my grandfather said, "Never make the same mistake twice!" We don't.