Bitcoin investors ended 2022 in a severely depressed mood. That mood has turned to satisfaction and happiness as we move into 2023. While stocks went up by about 17% last year, Bitcoin trounced the stock market with a more than 160% rise! Changpeng Zhao may be facing prison time and was ousted as head of Binance but still saw his net worth in crypto go up by $25 billion! Although Bitcoin beat all other investments in 2023 it remains to be seen where the senior crypto token is headed this year. Regulatory pressures persist in the crypto world. And it is unclear whether spot Bitcoin ETFs will be approved and, if they are, if that will cause the Bitcoin surge to continue.
Will There Be a Spot Bitcoin ETF Demand Shock in 2024?
On one hand there are still investors who say that Bitcoin is fundamentally worthless and a risky asset that regular investors should avoid. The counter argument is that regular mom and pop retail investors lack the “band width” to make money from Bitcoin. This is largely because they do not have Bitcoin wallets and are not interested in keeping track of private and public keys. The argument goes that by making Bitcoin investments accessible to average retail investors, they will flock to spot Bitcoin ETFs and create a surge in value that takes Bitcoin over its November 2021 peak value.
Bitcoin Investing Verus Trading Versus Avoidance
We have written about how one approaches Bitcoin investing versus Bitcoin trading. And we have repeatedly noted over the last year that there are serious investors who got badly burned during the price collapse that was crypto winter. Bitcoin is more like a commodity that a stock. As such we might expect the 38% of American investor who hold gold to be interested in Bitcoin. It does not pay interest or dividends but has an eventual top limit similar to precious metals. Although gold has had very impressive bull markets it has also sunk in value and stayed down for decades. Anyone who is aware of this and makes the connection to Bitcoin will be more interested in trading than long term investing. For those who lost everything during crypto winter, avoidance will last forever.
Bitcoin Investment Disclaimer
Investment disclaimers are common and are commonly ignored by investors. Investment advisors are required to state clearly that past experience with an investment is not a guarantee of future results. While this is a legal requirement for many investments the specifics are commonly not understood by the average investor. As a rule investments that pay the best also have the most risk. We certainly saw this with the two peaks in Bitcoin value before the slide into crypto winter oblivion. While Bitcoin had a great year in 2023 it still did not make it back to its November 2021 peak price. The sad fact of the matter is far too many who invest in Bitcoin as well as gold, stocks, or commodities, are drawn to these investments by previous impressive results. And these results, such as in 2023, are not a guarantee for success in following years.
