MAJR Newsletter 087

ETFs: The gateway to more Bitcoin adoption.

Jun 01, 2021

-thepatco

MAJR NEWS BRIEF

There is a race for the first Bitcoin ETF in the United States. The ball is in the SEC’s court.

We’re halfway through 2021, and it’s fair to say it has been a wild ride. Things could get crazier as various companies around the country have filed their applications with the SEC to offer the first US Bitcoin ETF. An ETF, or exchange-traded fund, is a type of security that tracks an index, sector, commodity, or other asset, thus mimicking the given asset in price. For example, some of the most popular ETFs track the S&P 500 Index. These securities can be bought and sold on a stock exchange like the NYSE. This bitcoin cycle proves evident, there are new heights of demand as both retail and institutional investors have entered into the space wanting ownership of the hardest asset around. An ETF for the leading cryptocurrency would only increase this demand while providing increased accessibility and opportunity for exposure to bitcoin.

Where Are We Now?

The Winklevoss twins submitted the first filing back in 2013 that was obviously rejected. Many more proposals have reached the SEC since then but sought the same result. The main concerns from the government are the lack of transparency and uncertainty as this is an asset unlike any other. It will be an uphill battle to get Uncle Sam on board, but not impossible. If there is one thing Bitcoin has proven over the last decade, it has shown it is resilient. This is no different when it comes to the discussion of ETFs. Could 2021 be the year where we finally get approval?

Currently, there are eight high-profile proposals that sit upon the SEC’s desk. The group is led by some star-power worthy of noting: VanEck, Valkyrie, The New York Digital Investment Group (NYDIG), Anthony Scaramucci’s SkyBridge Capital, Galaxy Digital, and Fidelity. All of the funds are variations of the same physically-backed ETF model. This refers to the strategy of legitimately holding bitcoins in cold storage somewhere similar to how certain funds do this with gold. Although it is very much a waiting game at this point, I believe the growth of bitcoin adoption and demand will force the SEC’s hand into giving the green light for an ETF. A number of the proposals are under active, official review now and some start this month after experiencing numerous delays. But you can only delay the future for so long.

Wrap Up.

Bitcoin has evolved to something that cannot be ignored. We’re certainly farther along than we were in 2013, and the network is continuing to become more efficient, secure, and valuable than ever. The successful launches of bitcoin ETFs in other countries, like Canada which has three, only support and provide momentum for one to be created in the states. There have been obstacles in the past that bitcoin has overcome, and launching the first ETF is one of these challenges the community faces now.

Approval for a bitcoin ETF would be another big step in regards to overall adoption. It would essentially mean the government would be signaling they are in favor of bitcoin as a store of value and an investment giving people a regulated way to get in on the action. Until that happens, there are other ways to get similar exposure. The closest thing we have is the Grayscale Bitcoin Trust ($GBTC). This is an investment vehicle that is backed by bitcoin and allows people to buy shares into a trust holding one of the largest pools of the cryptocurrency. GBTC was the source of attraction for many institutional investors including Cathie Wood at Ark Investment Management which has over 7 million shares. An ETF is coming.

It is only a matter of time. Bitcoin will not be stopped.

- Brevin White

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In other news:

Coinbase’s Visa debit card will sync with Apple Pay and Google Pay, the crypto exchange said Tuesday. Additionally, Coinbase said in a blog post it will begin offering cash-back spending reward features to waitlisters this week. The card is available across the U.S. (with the exception of Hawaii); a variation rolled out in European markets in 2019.
The price of oil was on course Tuesday to close above $70 a barrel for the first time in two years on investors’ optimism that improving oil demand and a dwindling supply glut may mean the market can absorb any additional supply from OPEC and its allies.
Bitcoin is struggling to extend its two-day winning trend and remains coiled in a narrowing price range. The cryptocurrency is currently trading 2% lower on the day near $36,600, having faced rejection around $37,900 during the Asian hours.
Some investors are preparing for wild swings in financial markets, worried that inflation, and the Federal Reserve’s pledge to let it rise, will lead to a more volatile world. The reason: The economic policies aiming to create inflation now are the opposite of the ones that kept markets relatively stable for decades.

FACTS

Unlike fiat, Bitcoin does not grow on trees.

Unlike fiat, you can’t touch, feel, or PRINT Bitcoin.

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THIS IS NOT FINANCIAL ADVICE. IT’S IMPORTANT TO DO YOUR OWN RESEARCH. INVESTING IN CRYPTOCURRENCY OR ANYTHING FOR THAT MATTER COMES WITH RISK. THE INFORMATION PRESENTED IN THIS NEWSLETTER IS FOR INFORMATION AND ENTERTAINMENT PURPOSES ONLY.

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