Bitcoin ETF this week?

Obligatory disclaimer/disclosure: None of what you are about to read is financial advice. I personally own Bitcoin and have at various times since 2011.

If you’ve been following the Bitcoin ETF saga over the last few years, you could be forgiven for your skepticism that we might actually be nearing the finish line. A rumored ETF approval has been in the works for what feels like years now. Here’s why I think we’ve actually crossed the Rubicon this time:

Eric is a Senior ETF analyst for Bloomberg and a consistent voice of reason in the space, so if he thinks it’s a done deal, I have no reason to doubt it. I also like the symmetry of a 1/11 launch date.

Assuming all the final pieces fall into place, and we have an ETF trading on Thursday, what difference does it make?

First, let’s talk about the hype (and why you should probably ignore it). There are rumors flying around that there are oceans of money waiting on the sidelines to pour into this thing (or these things, plural) as soon as they’re available.

Blackrock is seeding their ETF with $10 million, but rumor has it they have $2 BILLION behind that ready to flood in at the open. I don’t believe it, or rather, I’ll believe it when I see it. Bitwise is reportedly seeding their own ETF with $200 million.

With all this money allegedly ready to hit the market, that should be huge for Bitcoin, right? Well, maybe not. You’ve probably heard the old adage, “Buy the rumor, sell the news.” This could be a “sell the news” event for the ages.

Back in September/October when the hype started building for the ETF approval, you could’ve bought Bitcoin all day for $25,000. Now it’s $45,000. That’s a lot of folks buying the rumor, and you see some of their names printed on your ATM card. In other words, the big institutions are likely already positioned in Bitcoin and got in well below the current price.

The other important thing to point out is that the ETF is a derivative product, or very close to it. Meaning, the ETF derives its value from the underlying value of Bitcoin itself. It can impact the underlying value of Bitcoin based on the purchase and redemption volume of the ETFs, but that temporary imbalance is likely to equalize quickly.

So, who are these ETFs made for? Mainly all the people who want exposure to crypto (Bitcoin in particular), but for whatever reason are forbidden from buying it. This includes pension funds, investment advisory firms, brokerages and other institutions who are only allowed to buy assets on regulated public exchanges. It’s also great for the normies who want exposure but don’t trust the crypto space or their ability to navigate it.

It’ll be interesting to see if this actually happens this week. I have a feeling it will. It’s absurd to think that there’s a ~$2 TRILLION asset class out there (crypto) and no way to trade it on a regulated public exchange. Perhaps that’s finally about to change.