Bitcoin is still in a rapid adoption phase, with the peak of the current cycle at $200,000, said Greg King, founder and CEO of Osprey Funds. “I think we’re in a natural consolidation phase. Our view is that Bitcoin is in a bull run. It’s sort of in its fourth of fifth big bull leg of Bitcoin. If you look at it historically, as it’s gone through phases of adaptation, it puts in an all-time high that holds for at least 200 days, and once that happens, when that all-time high is pierced again, which we just had in November at $20,000, on average, the next bull run is a 900% return,” King said.
Greg King founder and CEO of Osprey funds has a fund that is now tracking Bitcoin and is publicly traded. It just launched on the OTC markets in the us two weeks ago. Very exciting. And I'm very much looking forward to getting your outlook on the Bitcoin and crypto markets. Greg, welcome to the show with your first time on Kitco.
Hey pleasure to be here, David. Pleasure to have you, Greg, we're going to talk about your fun and just admitted it's mechanisms and the purposes it serves for investors. But first let's get your thoughts on the Bitcoin market after all your fund distract Bitcoin. As you know, the price has run up to nearly $60,000 has come down a bit since its highs.
What's your sentiment on current price? Actually, have we gone overboard or is this just the beginning? Well, I think we're in a natural kind of consolidation phase. Our view is that Bitcoin is in a bull run. Um, it's, it's sort of the fourth or fifth big bull leg of Bitcoin. If you look at it historically, um, as it's gone through phases of adaptation, uh, it puts in an all-time high that holds for, uh, you know, at least 200 days.
And once that happens, when that all-time high is pierced again, Uh, which we just had in November at 20,000 on average, the next bull run is a 900% return. So obviously you can't guarantee that, but if you just kind of look at the historical patterns and understand that Bitcoin is in an adoption phase, As a new technology, then we think that that kind of a rubric makes sense on the low end it's 400% historically high end 1600.
So breaking through 20,000, we think that somewhere around 200,000 ish is maybe where we put in the next tie. Uh, so this, I would view as a consolidation. You have comments from Janet Yellen a couple of days ago. You have, you have a lot of cross-currents here and that's absolutely fine. Uh, November is when it passed 20,000.
You know, we're trading at 47 48. That's a big run-up in anyone's book. Uh, so it's fine to consolidate here. I don't see that as a major issue. When you talk about adoption phase, are you referring to blockchain technology where Bitcoin in particular, because Bitcoin has been, I guess, in this adoption phase for 10 years now, it's been, it's been accepted and 2010 and usually technologies have a limited deadline for how long could be in this adoption phase.
So do you think this could last for another 10 years or are we seeing the maturity stages of Bitcoin's life cycle? Well, we definitely don't think we're at the maturity stage. Um, you know, there's this S-curve of adoption that technology goes through and you're right. Bitcoin's 12 years old at this point.
Um, but still, when you look at the potential for investment into Bitcoin, um, th it's, it's absolutely stunning. How much is still on the sidelines? You know, over the last 12 months, we've had a couple of. Different institutional investor types coming in, uh, that has really livened up the space. For example, publicly traded corporations, uh, which put Bitcoin on their balance sheet, um, insurance companies, uh, and even mutual funds making filings to hold Bitcoin in their accounts.
These are just a few in each space, but if you know, 20% of the companies in each of those respective silos takes a position, there's still quite a bit of adoption to go. Okay. I often hear from the crypto community that Bitcoin should be regarded as a currency. Let's assume that it is by definition or currency.
I have to draw parallels to the U S dollar then, uh, as you know, the dollar, like any currency. Partly driven by interest rates in the domestic country. So of interest rates in the us go up, the dollar is seeing to strengthen vis-a-vis other currencies, if the interest rate differential with high for the U S so for Bitcoin, then I wonder if there's any sort of relationship with interest rates in the us or anywhere else, because presumably if interest rates rise, this currency should also gain value as interest rates on these earned products.
Do you fly blockchain products should also rise as well, right? Yeah, I think that's, uh, interest rates are clearly a consideration and perhaps as interest rates have, have risen recently, um, and you're seeing this off in Bitcoin as a non yielding asset, maybe that's part of the explanation in a microcosm.
I think in the long-term the way we view it and people do talk about it as a currency. I think the better, uh, moniker is a store of wealth. Um, because currency sort of implies, you know, you can use it to pay for a cup of coffee and transactions and things like that. And as we all know, Bitcoin suffered a little bit.
Uh vis-a-vis what Satoshi may have envisioned when he, she, or they wrote that white paper, um, in that it really, uh, is a bit clunky in terms of. Doing many transactions per second, however, as a potential alternative to gold, um, in digital form, I think that's really where it's catching on. I've spoken to two economists so far who, uh, with, for different reasons, both think that the true intrinsic value of Bitcoin is $0.
Now I have a feeling you're going to disagree with that view, but I'll leave it to you to respond to that. Yeah. Um, well, uh, I, I, I don't think the value of Bitcoin is zero. Um, intrinsic is a difficult concept to sort of define as it relates to something like a currency, because the intrinsic value of a $100 bill is kind of zero also.
Um, it's really about what that represents and its utility. And so, as we know, money is simply a system of account. It accounts for labor, it accounts for goods, and we all agree on it. Um, and in order to serve in that capacity, it needs to have certain characteristics like durability and fungibility, so on and so forth.
And if you, if you do that analysis, I think Bitcoin stands up really well. And frankly, as an investor in gold, I, I hold gold coins and silver coins and things, you know, that's how I found Bitcoin. And over time, Um, that's how I developed a respect for Bitcoin, because I realized that not only does it hold up in some of those categories, vis-a-vis gold.
Um, it's actually better in some, not all of course, but in some categories it's better. Okay. All right. Let's talk about your fund then the, uh, Osprey Bitcoin trust. Walk us through what this fund is. First of all. It's very straightforward. Our fund holder holds Bitcoin. We put it out, um, at the lowest price possible.
It's a 49 basis point management management fee fund. Um, and we tried to partner with the best in service providers. So our custodian for the fund is fidelity investments. Obviously well-established firm, uh, it's important to feel safe about who's safeguarding the, uh, the assets of the fund. And if you look at the U S market, there's a lot of talking about Bitcoin ETFs, and there's a few that have launched overseas and recently some in Canada, but nothing in the U S so far.
Um, there's only really been one large product, um, that has. Dominated and then quite expensive. So we felt it was time to bring investors in other choice, uh, at a lower price point using a different set of service providers and service providers are normally not that big, a deal in funds, but crypto funds.
It's a different story. You really do want to focus on where the assets are kept, how they're, how they're stored and so on because of the digital nature of crypto. So OTC started trading two weeks ago. It's now available under that ticker symbol. Uh, and we're excited about that. And some future launches we have planned.
So walk us through the, um, I guess the appeal for investors then, because, uh, if I wanted to be exposed to crypto, I could just buy Bitcoin directly. Why would I pay a 49 basis point management fee for your fund? Well, there's definitely gonna be costs no matter how you access your crypto. And we recognize that lots of investors want to hold crypto directly, which is totally fine.
It's similar to the difference between, you know, ordering gold coins and getting excited when they arrive in the mail, uh, versus buying a gold ETF. And you, you're definitely going to have your purists who. Who preferred hold crypto, who prefer to hold gold. But other folks are just interested in the diversification and portfolio benefits of holding those investments as part of a broader, you know, retirement plan or, or portfolio.
And so creating this fund and setting it up to trade under a ticker symbol really allows traditional, um, IRA, investors and brokerage investors to access. Bitcoin like returns without I'm going to pull their money out of the system, you know, take it away from their advisor and send it to an online exchange or put it on a, you know, a little a USB drive or something like that.
Okay. Uh, I'm noticing on your and your a fact sheet here. You have a section for private placement details, minimum investment of $25,000 lock up period of 12 months for accredited investors only. Can you describe or explain what these, uh, what these criteria mean? Sure. So this is really a function of the regulatory stance in the U S right now, it would be great.
If ETFs were, were allowed, my career has been launching ETFs and other exchange traded products. I've done over a hundred of them. Um, but that's actually not allowed yet in the U S we hope it does come soon. Um, so right now, the way these funds work is we're able to offer them direct. To accredited investors who have a one-year holding period.
Um, but after that, they trade under this ticker symbol. So our fund is actually two years old. So there are investors who have helped it's now available on, uh, online or, or I should say, under the ticker symbol. And once that happens and those shares are unrestricted, anyone can access them if they have a brokerage account.
So it's really almost like a two tier distribution phase. Originally goes out to accredited investors. One year later, those shares are available in the secondary market and that pool of liquidity develops. And that's, what's beginning to happen for us. And I'm curious as to why you transition into the crypto space, like you said, you and I have talked to Al offline.
So you've you, you you've been the creator of several, a well-known ETFs and funds that many people already use, and those have nothing to do with crypto. Why, why the crypto space, what made you, uh, enter this, enter this sector? You know, uh, I know when I started, I bought my first Bitcoin in 2013 and it was sort of in the, um, you know, 2000, 2013, sounds like a long time from 2008, but it really wasn't.
It was still kind of in the, in the throws of, of bouncing back from the financial crisis. All the money printing that was going on. I was loading up on gold and silver, frankly, and it really wasn't performing like I wanted so somehow or another, I came across crypto, bought some Bitcoin and have been studying it ever since.
Um, and I just believe that Bitcoin in particular and some other. Cryptocurrencies are here to stay. I B I believe there are technologies that are disruptive and they're adding value to the global ecosystem. And so I'm doing what I've done for my whole career, which is packaged those investments up, make them available to mainstream investors because I believe investors should have, should have that access.
Okay. Well, let's talk about, uh, some of these other funds that you've created in the past, and we'll tie it back to Bitcoin. I know you, you know, I've talked offline, you were behind VXX. Am I correct? Yeah, that was one of them. So, yeah, that's a very popular vehicle. I measuring volatility. Have you ever considered doing a volatility fund for Bitcoin itself?
I have the thought has gone through my head. Um, we're, we're a, uh, a ways from that. Um, simply because the ecosystem around Bitcoin, the capital markets infrastructure necessary specifically the options market. Yeah. Is basically nascent almost non-existent there is a, there's an options market, but it's, it's very, very tiny.
So until that builds out, you really can't do Bitcoin vol. Uh, but I've definitely had that thought. Yeah. Yeah. And I think it would be a popular product. Yeah, definitely what they could be moving up and down like crazy every day. Traders would love it. Yeah. I, um, I have a friends, I have a few friends who regularly trade the VXX and unless, you know what you're doing, you either get rich or you lose a lot of money.
So it's definitely an exciting product to be in. If you're a trader, um, Okay. Let's, let's tie it back to Bitcoin now. And the price action here. We're seeing now you talked about the futures markets, the options markets. That's a very good point because it, it, I think from my opinion, it is an indicator of one's, uh, products, maturity in the market.
We've seen a slow, slow sort of yeah. Adoption into, uh, structured products, futures markets open couple of years ago, as you said, options, markets still not developed. Is there, is there a way forward, reg, is there, is there a room for development on this, on this front? I mean, there's tons of room for development.
I think, uh, one of the large obstacles I feel is, uh, bank support. So really when you get into the derivatives markets, Um, you know, almost by definition, there's a lot of leverage involved and the, you know, the wholesale providers have balance sheet to the ecosystem. Historically, if you look at other futures and options, markets are banks and that's because the way banks are set up, uh, and regulated, you know, they're able to provide that significant balance sheet support.
You don't really have that right now. Banks do not hold or trade Bitcoin. I mean, You're hearing sort of these little rumors that they're there. They're doing a beta test over here or there, but by and large banks are not sitting there lending balance sheet support to the Bitcoin. Uh, futures and options markets.
So until that happens, I think it's going to be limited growth. I mean, there's still been a significant amount of growth. Um, but when the banks come in, I think that's when you'd really see things take off. Why is it so difficult? I've spoken to other ETF providers as well. Why is it so difficult to create ETFs for Bitcoin or cryptocurrencies in the U S I know the sec has been a major roadblock.
Do you see them lightening up their standards on cryptocurrencies going forward? We still have. Notable figures in the regulatory environment, particular in particular, Janet Yellen, treasurer. She is notable for not liking Bitcoin in many capacities. Do you see this being a roadblock to further regulatory development?
Potentially, um, it's, it's not like a, the previous administration under Jay Clayton loved crypto at all. Uh, so, um, you know, you have Gary Gensler coming into the sec. Uh, there's a lot of buzz about him. He's very well-regarded as being a bright guy. Hands-on intelligent, focused on crypto. He's taught a course at MIT.
Um, so I think it will certainly be a central topic. And I do expect some, um, progress in terms of regulation, uh, whether or not that means that a Bitcoin ETF will get up approved, I think is still up for debate. Um, just because, you know, there are so many considerations. And so, I mean, that's the primary reason that a Bitcoin ETF to your original question, why has it been so difficult?
It's been so difficult because the sec has said no to a couple of dozen applications at this point. And you would enter the ETF space were to become available on a regular from a regulatory perspective. Uh, we, uh, I have been cautioned not to promise that, but let me assure you, we would be very interested and very focused on that, uh, as, as whenever that becomes possible.
I understand. Finally, let's talk about a recent price action. We'll see. Well, we talked about that. We'll close it off. Do you think $50,000 a coin is a fair value? Do you think it has more room to climb or is this, is this a. Is this the fair intrinsic value that the market deems should be the longterm play here?
Well, it goes back to the old efficient markets hypothesis, right? So, um, was, was the market efficient, you know, uh, in 2017 when it was 20,000 and then in 2019, when it was 4,000 and then a few weeks ago, it was 60,000. Uh, I don't know. Um, but I do think that Bitcoin has a long way to go in terms of adoption and because it's finite, right, there are only 21 million Bitcoin that will ever exist.
If you imagine the additional investment. That needs to kind of squeeze in there. Uh, the market clearing price for that demand level is much higher than it is today. I, this is one thing that I've considered myself is that yes, the, the, the S the supply of Bitcoin is finite, but the supply of capital around the world to invest in cryptocurrencies as an asset class.
Is also finite. So as we see the emergence of new altcoins, some of which have even superior technology, according to many standards, couldn't you see capital flowing away from Bitcoin into these other coins. Yeah, for sure. But I'll take issue with what you said that the amount of money across the world is absolutely not finite.
In fact, it's grown by 40% recently in the U S so, um, eh, you know, and then you think about absolute numbers. Uh, Bitcoin's market cap is a trillion dollars. Like how many investment funds are there out there? You know, available to be invested. Um, so even, even if it were finite, I still think that the, the disparity between those two pools, um, is, is so large that there would still be a lot of upside, but it's not, it's not fine.
All right. Thank you very much, Greg. That was a fantastic update. And I look forward to getting more from you as your fun progresses. Good luck. Thank you very much. Great to be here. Great to have you on the show. And thank you for watching Kitco news. Don't forget to subscribe. If you're watching this on YouTube on David Lynn, .