Do we really need a bitcoin ETF now?

in Project HOPE2 months ago


Things have evolved rapidly in the Bitcoin ecosystem. Many institutional investors have acquired Bitcoin since 2017. The list includes some marquee names such as Tesla, Social Capital, Square, MicroStrategy, and UK-based Ruffer Asset Management (GBP 22 bn under management) to name a few. The list of finance billionaires who now own Bitcoin has also grown to a reasonable size since 2017. Bitcoin has made a lot of people change their opinion about it and now everyone sees value in it.

Given that more and more UHNWIs and corporations are warming up to bitcoin and purchasing it, the problems associated with buying bitcoin and bitcoin's custody don't seem very unsurmountable. In fact, MicroStrategy has prepared a whole list of documents to educate companies about Bitcoin and how to buy it and store it securely. There are many Bitcoin exchanges that operate Bitcoin OTC trading desks that specially cater to the institutional market and many companies, including the likes of Fidelity offer custody solutions to companies.

Today, I read this news on Coindesk - Invesco Plans Two Crypto-Focused ETFs. Fidelity, VanEck, Invesco, and Gemini are some of the names that have been trying hard to get a Bitcoin ETF approved. However, the SEC hasn't been kind enough to approve any of the applications. Therefore Invesco is now trying to avoid the SEC approval and is planning to launch an ETF that invests in crypto-linked equities and other Bitcoin investment vehicles.

If we look at all of the above, then there are multiple ways for all kinds of institutional investors to invest in Bitcoin. If mandates prevent companies from acquiring Bitcoin directly, then there are these options - Coinbase or MicroStrategy shares, Grayscale's investment trusts, and bonds (convertible debt issued by MicroStrategy to acquire Bitcoin, that is also secured by Bitcoin). There are numerous hedge funds that institutions can invest their money with. To add to it all Invesco will provide a new alternative soon and MicroStrategy will be issuing more debt.

With so many options in place, does a Bitcoin ETF add any value anymore? I guess not, which is why there is not much talk about it these days and the recent concerns raised about the ETF did not cause much furore. There is also a case of a Pension Fund buying bitcoin directly - MassMututal. I guess the only reason why an ETF matters now is because there is an ETF for almost every other asset class and even Bitcoin deserves one!


Hmm.... Different people will definitely have different point of view about the effect of ETF on Bitcoin. I'm mostly concern about the bull market or bull run in the crypto space. If implementing ETF on BTC will make that happen I see no reason it shouldn't be implemented on BTC. Also if ETF will have severe effect on the price of BTC causing it crash then I think it's best to avoid it completely.

Thanks for sharing this great post with love from @hardaeborla and I hope you have a great day ahead ❤️💕❤️💕

I think the key is not bull run or bear market. What matters most is adoption and acceptance and more people using it to store value or making transfers. If more people understand why Bitcoin is important and hodl small amounts, then that is good for the overall ecosystem. An ETF that is available as an investment fund, when people choose which fund their pension will go to will definitely increase money going into the bitcoin market. A lot of roboadvisors or tech enabled wealth management funds only invest in ETFs. So there will be some positive impact of an ETF. However for majority of the market, an ETF is not really necessary.

No matter how I love bitcoin and how hard I defend it. I start to think that's not that relevant to invest a lot in it. Some part yes, but a big part maybe not the best option. I like a lot of things about bitcoin. But the problem is always fees, slow transactions and the money that's already invested in it. I mean most of bitcoin is mined now and big companies already invested a lot in it. For sure the price will keep growing, but comaring it to other crypto, I see so many other cryptocurrencies that are created to bring much more value. They could even have instant transactions and no fees, but still proving a lot of value. That's why I have some doubt that bitcoin is that good for ETFs. As I said maybe some part of the portfolio should be invested there, but not the main one. After all the diversification is the best way to minimize the risk !

Diversification is the key. I have a wee bit more tolerance for risk I suppose, but one shouldn't neglect investing in precious metals, chocolate, and staple consumer goods.

Having bitcoin EFT wont be such a bad idea, since basically all other crypto asset value are relatively pegged to the value of Bitcoin so with ETF it means more bitcoin acquisition which gives more chance for other alt coin to grow.

A healthy diversification of cryptocurrency is a wise financial strategy, in my humble opinion.