Bitcoin ETF Inflows Continue | 1000x
Summary
The ETF launch was an expectations trade, not a simple referendum on GBTC outflows. Avi explained that GBTC held stale, directionally long capital that was likely to exit after conversion. In Jonah’s example, his initial estimate at $48,000 Bitcoin was roughly $2 billion of outflows; he turned bearish when the pace implied $3.5 billion-$4 billion, then recognized that traders had priced in $5 billion-$7 billion while actual outflows remained nearer $3 billion-$4 billion. “Markets move based on the second derivative of the news.”
Bitcoin’s setup rests on persistent ETF demand meeting reduced miner selling after the April halving. The Farside Investors dashboard showed $542 million of inflows on one Friday versus $45 million the prior Thursday; Jonah expects a steady tailwind rather than billions arriving on day one. For anyone waiting to buy lower, his warning is blunt: “You’re literally just hoping they stop.”
Jonah’s clearest relative-value call is to scale into ETH/BTC around 0.05275. He allowed that continuing spot-Bitcoin inflows could push the ratio toward 0.048, but expected Ethereum’s prospective ETF conversion to carry it to 0.0665 within two to four months. Avi agreed despite Ethereum’s weaker user experience, while Jonah argued that security, decentralization and its settlement-layer network effect matter more.
The hosts disagree on how to trade a round-number test. Avi says a failed break often produces a 10%-15% sell-off and that the prudent move is generally not to buy the first test; traders can buy either the dip or the eventual break. Jonah refuses to “dance between the raindrops”: IBIT was $284 a share, with no comparable round-number barrier, and he doubts his ability to time around flows he sees as unstoppable.
Jonah would turn a 50% crypto allocation into 80%-90%, but keep the construction conservative. He would put 70%-80% of the remaining undeployed crypto capital into Bitcoin, reserve the rest for dips or selective unlevered alts, and anchor decisions in a 10-year thesis: most crypto may go to zero, while a small subset could absorb major parts of technology and finance.
Avi argues that crypto fundamentals can follow capital rather than lead it. Bitcoin wealth effects finance speculation, higher NFT volumes support BLUR, and rising valuations let TAO become a platform and Blast attract builders; Jonah conceded this may differ from his commodities instinct that fundamentals create flows. His remaining discomfort is that, beyond proven uses and perhaps Farcaster, he does not yet see enough new fundamental demand for a true “supercycle.”
New allocators may lift weaker assets, but that is not a substitute for analysis. Jonah has a half-formed thesis that incoming allocators will pump some assets; Avi similarly suggested that around Q2 a rising tide could revive underperformers such as Solana and MATIC relative to Bitcoin. Both noted that increased liquidity can let a difficult speculative thesis be wrong for longer.
The next investable repricing may sit where regulation previously imposed the largest discount. Jonah’s example was Ripple equity, bought around a $1 billion-$1.5 billion valuation against a claimed $25 billion-$30 billion balance sheet while the SEC case depressed it; he now sees possible opportunities in assets regulators targeted. Avi points toward DeFi names such as dYdX and SNX. The broader discipline is to trade one deeply understood niche, then feed the profits into passive assets backed by a 10-year thesis.
Deep dive
1. ETF flows overturned the launch-day panic
Avi’s setup began with GBTC’s trapped capital: after its discount turned negative around February 2021, holders could own directional Bitcoin exposure while waiting for conversion. At a 50% discount, returning to flat would produce a 100% return, so some selling after redemptions became possible was inevitable.
Jonah was “blown away by the FUD” when traders compared early GBTC redemptions with smaller inflows into IBIT and other new funds. That first-order reading missed the tradeable question: not whether outflows existed, but whether they would accelerate, decelerate or reverse relative to expectations.
Jonah’s own revisions illustrate the method. At $48,000 Bitcoin he initially expected about $2 billion of outflows, moved bearish when the pace implied $3.5 billion-$4 billion, then saw the market extrapolate $5 billion-$7 billion even though reality remained nearer $3 billion-$4 billion; around $40,000, expectations had overshot the other way.
The practical recommendation was deliberately simple: bookmark Farside Investors’ Bitcoin ETF flow dashboard and check it daily. With one Friday showing $542 million of inflows against $45 million the previous Thursday, Jonah said “flows are the story,” reinforced by miner selling being cut in half in April.
2. ETH is the next product trade, even with a weaker interface
Jonah’s highest-conviction follow-on was ETH/BTC at 0.05275: “That’s a very good level,” although Bitcoin ETF demand might first drive it toward 0.048. He expected the ratio to reach 0.0665 within two to four months because ETH was the next product likely to be turned into an ETF. Avi agreed that ETH was a no-brainer.
The objection came from Ethereum’s user experience. Avi found Sei and other newer platforms smooth and consumer-friendly, while returning to Ethereum exposed friction; he nevertheless thought institutional product flows could overwhelm that weakness, just as Bitcoin’s limited application layer does not undermine its investment case.
Jonah’s pushback was that centralized databases and AWS offer an even better experience than Sei or Aptos, so interface quality cannot justify decentralization by itself. Ethereum’s case is instead “a decentralized settlement layer” with security, network effects, economies of scale and first-mover advantage; otherwise, users may as well stay centralized.
Jonah also said commodities professionals were focused on ETH as a settlement layer because settlement layers in commodities are “notoriously tricky and problematic.” He did not think users would flock to NEAR, Solana or other alt-L1s merely for better usability; security and decentralization mattered more.
3. Capital may create the fundamentals it appears to lack
Jonah’s reservation was explicit: flows can lift markets, but a genuine supercycle also needs fundamentals, and he felt “disenchanted with the lack of new ones.” Farcaster might break through, but he was not yet feeling enough new usage beyond already-proven applications.
Avi reversed the commodities-style causal arrow. With the S&P 500 above 5,000, the Nasdaq ripping and the US economy appearing robust, Bitcoin inflows can create a wealth effect; that capital then moves into other assets, funds builders and improves fundamentals after prices rise. He was less enthusiastic about China and stagnating Europe.
His examples were sector-specific: NFT speculation raises volumes and supports BLUR; Pudgy Penguins was doing well and putting out products; TAO had begun attracting money for products built on top of it and becoming a platform in a way that was not true six or eight months earlier; Blast’s new layer 2 was attracting capital and builders. “The fundamentals will follow the flows.”
Jonah called his own view an “antiquated commodities mindset” in which fundamentals lead capital, conceding crypto might work differently. Avi’s immediate task was therefore not to demand mature fundamentals everywhere, but to identify where Bitcoin-generated liquidity would travel first.
4. The round-number debate separates trading edge from allocation discipline
Jonah starts at the far horizon because it helps prevent buying high and selling low. He said he had “never had more conviction” in any 10-year asset thesis: Bitcoin looked like the no-brainer, most crypto could go to zero, and a minority of networks might capture large portions of finance and technology.
For someone only 50% deployed, Jonah would raise exposure to roughly 80%-90%. He would place 70%-80% of the unused crypto allocation into Bitcoin, then keep the remainder as dry powder for Bitcoin dips or selective, unlevered alt bets emerging from specific ecosystems.
Avi’s shorter-term rule is to avoid the first test of a major round number because psychologically motivated sellers cluster there. When the number does not break, he said the market often sells off 10%-15%, and that the prudent move is generally not to buy the first time. He allowed for buying either the dip or the break.
Avi also thought ongoing inflows would overwhelm selling from existing holders, including miners, and said the market was only getting started. Jonah challenged the relevance of round-number resistance to ETF buyers: IBIT was $284 a share, with no comparable round number. He accepted that Avi might extract extra alpha, but judged himself “not good enough” to time it while inflows looked unstoppable.
5. Q2 demand, tokenization and regulatory retreat broaden the trade
Avi expected the largest new cohort in Q2, after the Q1 ETF approval gave firms time to take the market seriously and obtain board approval; the halving was due then as well. Jonah said exchanges were seeing a “tremendous” number of new retail and institutional participants, while investment banks and hedge funds that left after FTX were returning because they recognized crypto “isn’t going away.”
That influx may make leveraged top-30 trading more competitive, pushing natives toward on-chain metrics, shitcoins and other riskier areas. Jonah had a half-formed thesis that new allocators would pump some assets; Avi suggested that around Q2 a rising tide could revive underperformers such as Solana and MATIC relative to Bitcoin, while acknowledging that liquidity merely lets a weak thesis remain wrong longer.
Jonah saw the cultural confirmation in commodity markets: traders who mocked his crypto move in 2021 were asking about buying it for the first time. Bitcoin had survived low rates, apathy and the SEC onslaught; after its “fourth or fifth” rip-roaring rally, they increasingly viewed it as a digital commodity for wealth preservation, value transfer and occasionally as a medium of exchange for hard goods.
Functional convergence remains early. China and Russia trade crude denominated in renminbi, and India buys some crude in non-dollar terms; Jonah called these only a “baby step.” He sees crypto eventually replacing paper-heavy commodity back offices and tokenizing otherwise inaccessible markets such as West Coast jet fuel or Indonesian rice. Avi added that tokenized money-market funds become valuable because they are interoperable with crypto networks.
6. Regulatory discounts may be the next source of asymmetric returns
Both hosts thought US regulators had gone quiet after repeated court losses, with an election year further reducing the appetite for another offensive. Avi floated a worst-case scenario involving Elizabeth Warren; Jonah said that if she came to power, it would be “basically it,” while expecting either a Trump victory or a Biden status quo to leave the industry with more room than before. Jonah also credited the US court system’s checks and balances with dismantling bad regulatory arguments.
Jonah’s concrete precedent was Ripple equity, which he said traded at a 99.5% discount to the company’s balance sheet during its regulatory fight. He said they bought before the XRP decision at a $1 billion-$1.5 billion valuation versus roughly $25 billion-$30 billion of assets, mostly Ripple tokens along with cash and venture investments, while acknowledging that an appeal was possible.
The forward screen is assets regulators tried to suppress but markets have not fully repriced. Avi highlighted DeFi protocols, especially dYdX and SNX, as areas worth investigating rather than presenting them as automatic buys.
Jonah closed with portfolio process: master one narrow arena, join its channels, read its specialist publications and trade it actively without spreading across 50 or 100 markets. Then feed the gains into passive long-term holdings — in his case, profits from petroleum and refined-products trading into Bitcoin.