The everlasting universe of things
Flows through the mind, and rolls its rapid waves,
Now dark—now glittering—now reflecting gloom—
Now lending splendour, where from secret springs
The source of human thought its tribute brings
Bitcoin has had a long journey from technical proof of concept to red-hot commodity to unfashionable target of criticism and back around again a few times now. Previous peaks in 2017 and 2020 unleashed an acquisitive mania among some investors, until the wave crested and the pressure moved to the sell side. Excitement about its business and technological value has led to cycles of hype and subsequent backlash around the "blockchain" concept. Subsequent code-running cryptocurrencies like Ethereum have provided both an antithesis to Bitcoin and a bloc of cryptos to compare and contrast in terms of price movement, functionality, and codebase. However all the other cryptos combined are worth about the same in dollar terms as just all of the Bitcoin combined. Bitcoin's scale makes it an obvious choice to form the basis of the first crypto-based 'spot' ETFs, which have just been approved by the SEC in a “rule filing.” Previously, the only ETFs that had been approved were futures ETFs like the ProShares Bitcoin Strategy ETF BITO. Now the floodgates are opening and about 11 Bitcoin spot ETFs will be offered on stock exchanges fairly soon--as soon as Thursday, Jan. 11, 2024.
Who are the new players in the BTC space? There are a few fund managers that have previously offered Bitcoin futures based ETFs or other products and a few major financial giants and a few other fund manager entrants besides. The first group includes VanEck (their BTC futures ETF symbol is XBTF) and Valkyrie (their BTC futures ETF symbol is BTF), and tangentially could include pro-Bitcoin Ark Invest and also Grayscale, who plan to convert their existing 'Bitcoin Trust’ into an ETF; giants stepping into the game include Invesco, BlackRock's iShares, and Fidelity (I covered a report from them about Bitcoin in 2022); and some of the others offering funds include WisdomTree and Hashdex. Each offering will have its own fee structure, but the competition at the start has led to slashing of proposed fees (especially for the first few months).
So where does Bitcoin's price go from here? Conventional wisdom would have it "selling on the news" after the announcement of ETF approval; in the event it has held fairly steady, shooting up briefly above $47,000 before slipping down to around $45,800, putting it at about a percent down from 24 hours ago. The next major movements will probably be based on reacting to signals about how popular these ETFs will be. But in this age of automated investing, the ability to package an asset into an ETF is crucial to getting the asset class in front of institutional investors. For all the people choosing to invest in Bitcoin now that it can be part of their IRA, there will probably be many more in the years ahead who invest in it because their fund manager decided it was a good move.
Future price movements are impossible to predict—but speculation about whether Bitcoin “goes to zero” will probably quiet down for a while at least. I’ve discussed the harping on crypto previously, but today none of that really matters anymore—there’s ETFs.
Disclosure: Through personal holdings that I control and through investment LLCs in which I am a partner, I buy, hold, and sell stocks, bonds, ETFs, options, NFTs, and cryptocurrencies, not limited to but including some of those discussed in this newsletter.