The Bitcoin Futures ETF Timing Is Ridiculous

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To investors,

Bloomberg reported last night that insiders have confirmed the SEC will not oppose the Bitcoin Futures ETF applications that are set to begin trading on Monday. This led to a short term price appreciation of bitcoin, along with quite a bit of excitement on Twitter.

It is important to remember that the ETF is not approved and trading….until it is approved and trading. There is always the chance that someone steps in at the last second and tries to prevent the inevitable from happening. Barring that attempt being successful, the Bitcoin Futures ETFs will bring the first bitcoin-related ETF structure to American financial markets.

The journey to a bitcoin ETF started back in 2013 with the first ETF application from Cameron and Tyler Winklevoss. Now eight years later we are on the doorstep of the very first approval. As the saying goes, the best things take time.

But is the Bitcoin Futures ETF actually the best thing?

Honestly, probably not. The approval of a bitcoin “spot” ETF would be better from investors, both from a price tracking and fee structure standpoint. But beggars can’t be choosers in the beginning. So we are likely going to see the Bitcoin Futures ETFs trading at the start of next week.

The crazy part about this entire thing is that the government will now be complicit in two actions that contribute to significant bitcoin price appreciation. During Q2 of 2020, they printed trillions of dollars right into the bitcoin halving. This type of market manipulation sent investors seeking safety in inflation-hedge assets, which led the professionals, such as Paul Tudor Jones, to describe bitcoin as “the fastest horse.”

Remember, bitcoin is completely unaware of any macro economic forces. It doesn’t know, nor does it care, if people are printing money or if they are decreasing interest rates. Bitcoin’s network continues to produce block of transactions after block of transactions without fail. That is the beauty of a decentralized, open monetary network.

But the government is not done yet.

The SEC appears poised to approve the Bitcoin Futures ETF at a very opportune time for bitcoiners. Approximately 85% of bitcoin’s circulating supply has not moved in the last 90 days. There is extreme illiquidity in the market, so if demand were to increase because of an ETF approval, the price is likely to rocket upwards in an insane way. Add in the fact that we are still experiencing persistent levels of 5%+ inflation and you can quickly see why there are so many forces pushing investors into bitcoin.

The equation is simple — a highly illiquid asset is going to increase access to large capital pools while being overlaid with a macro backdrop that has investors scurrying to every corner of financial markets to find inflation-hedge assets.

This is an absolutely gorgeous setup. The best part? It has been available to anyone in the world for years.

There were no insiders. No one was able to get access in the private market at the expense of the public market retail investor. There were no special deals. It all came down to whether someone was willing to put in the work, educate themselves, and have the courage and conviction to convert their assets to digital sound money. Some people did it. Others thought they were too smart for the market.

Ultimately, bitcoin is the most free market asset that we have. It is being repriced in real-time by investors. A decentralized, digital, open monetary network is worth multiples of the current $1 trillion in my personal opinion. But what do I know? I’m just a random volunteer on the internet who plugged into the bitcoin network and is doing my best to help us advance along to a better world.

Hope each of you has a great end to your week. I’ll talk to everyone on Monday.

-Pomp

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THE RUNDOWN:

Bitcoin Futures ETF Won’t Face SEC Opposition at Deadline: The Securities and Exchange Commission is poised to allow the first U.S. Bitcoin futures exchange-traded fund to begin trading in a watershed moment for the cryptocurrency industry, according to people familiar with the matter. The regulator isn’t likely to block the products from starting to trade next week, said the people, who asked not to be named while discussing the decision. Read more.

Cathie Wood’s Ark, 21Shares Team Up on Bitcoin Futures ETF Application to SEC: Noted investor Cathie Wood’s Ark Investment Management and investment-product firm 21Shares are part of a new application to the U.S Securities and Exchange Commission to list a bitcoin futures exchange-traded fund. The Wednesday filing was submitted by Alpha Architect ETF Trust, with 21Shares listed as the fund’s sub-adviser. Ark Investment will provide marketing support, but not make investment decisions or provide investment advice, the filing said. Read more.

Coinbase Proposes US Create New Regulator to Oversee Crypto: Crypto exchange Coinbase wants the U.S. government to create a new regulator to oversee the cryptocurrency industry. Unveiled Thursday, Coinbase’s Digital Asset Policy Proposal suggests Congress pass legislation to regulate Marketplaces for Digital Assets – its term for crypto exchanges that offer custody and trading services, as well as borrowing and lending services – and create a registration process for those entities. The exchange also proposed that the crypto industry establish a self-regulatory organization for crypto businesses. Read more.

Coinbase Jumps After Sign-Up Numbers for NFT Marketplace Revealed: Coinbase shares rose 6% Thursday after reports that the crypto exchange’s new non-fungible token marketplace has a waiting list of more than one million people who signed up on the first day it was announced earlier this week. As of Thursday morning, the waiting list was at 1.35 million, which is four times the 300,0000 users that OpenSea, the world’s largest NFT marketplace, has, according to a note from financial services firm BTIG. Read more.

Second Biggest Mortgage Provider in US Stops Accepting Crypto Payments: United Wholesale Mortgage, the second largest mortgage lender in the U.S., has stopped accepting cryptocurrency for home loans, the company announced on Thursday. In August, the company said it would start offering the crypto payment option via a pilot program to gauge demand for this service. It was the first mortgage lender to do so. Read more.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

Nic Carter is a Partner at Castle Island Ventures and a Co-Founder of CoinMetrics.

In this conversation, we discuss bitcoin mining, renewable energy, Texas, inflation, and debunking FUD.

LISTEN TO THIS EPISODE OF THE POMP PODCAST HERE

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