Rumors are circulating that the spot Bitcoin ETF’s will be approved tomorrow with trading going live as soon as Thursday 11th January. This is a huge milestone for the industry and there are a number of opportunities to explore. What We KnowAll the applicants have published their fee structures with many providing reduced fees for the first 6 months. Blackrock is the largest asset manager and their iShares Bitcoin Trust will have a 0.3% management fee per annum. This will be reduced to 0.2% for the first six months or when AUM exceeds $5B. Ark invest is waiving all fees for the first six months or until AUM reaches $1B, then 0.25% after that. Potentially the best value available at launch. Grayscale is reducing fees from 2% to 1.5% which still seems uncompetitive and I expect a lot of funds to be redistributed to the other providers once withdrawals go live. What Happens NextTomorrow morning (East Coast US) Wednesday 10th I’d expect to see an announcement from the SEC. My best guess is this will go live from their Twitter account although there may be other news channels that update first. Trading wont go live immediately but the news will no doubt affect the crypto markets, expect high volatility. If that doesn’t happen for any reason there will be a sell-off as the markets are pricing in imminent approval. Trading and the first in-flows into the ETF’s will go live on Thursday. At this point you’ll be able to buy Spot Bitcoin ETF’s on the New York Stock Exchange. This opens the asset class up to everyone in traditional finance.
There’s growing speculation about a sell the news event tomorrow and while that may manifest there is significant chance that over the next few years the ETF’s open up Bitcoin to a new market of institutional investors. This additional demand alongside the April 2024 halving should skew supply and demand in favor of crypto markets.
OpportunitiesThere are a number of opportunities that the ETF approval opens up. The first is holding Bitcoin in a tax free savings wrappers. In the UK this would be an ISA (In the US it’s perhaps similar to an IRA without the withdrawal restrictions) and Brits can invest £20k a year (£20k now and another £20k after April) into a stocks and shares ISA which can hold the ETF. The tax benefits of holding Bitcoin in a tax-free wrapper far outweigh the management costs at 0.25% a year. The second, completely separate opportunity, is to run a trend following short term trading system similar to this one which I used during the merge. This is one of those scenarios where I expect a big move but I don’t have strong confidence in the direction. A sell the news event could see Bitcoin sell off 10-20% while a consistent bid could see it appreciate 10*20%+ in a day. Using a trend following system with a very short moving average might help capture the largest part of the movement while reducing risk of the trade moving against any positional bias. A Milestone For The Blockchain SectorThis has been on the horizon since I first started writing code for blockchain systems in 2017. For spot Bitcoin ETF’s to finally get approved is a huge leap forwards for the industry. Take this time to sit back and think about how far we have come. Crypto is no longer a scam, it has become a respected asset class which is offered by some of the biggest asset managers in the world. The next few years are going to be interesting for the crypto natives that got into crypto early before tradfi in 2024.
Bitcoin continues it’s accelerating up only trajectory, but for how long? A significant sell off after the ETF news might not be detrimental to the longer term hopes for a continued 4 year cycle. ETH/BTC continues to bleed and is currently trading at 0.048. All focus is on the Bitcoin ETF approval and then it will remain to be seen if there is a rotation to ETH and alts or the Bitcoin narrative continues. Social links are below and if you enjoyed this newsletter I would appreciate it if you could share this content
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