The clock is ticking down to the deadline for the SEC. They have until January 10 to decide whether to approve or disapprove applications by ARK Investment and 21Shares for spot Bitcoin ETFS. This deadline will be followed by ten others for ETFs run by the likes of Blackrock. The assumption in the crypto world is that these applications will be approved. Working on that assumption we are wondering how spot Bitcoin ETFs will be marketed. Will the Bitcoin pitch for ETF investors be like how Bitcoin was marketed over the last decade or more in the crypto world? Or will it be modified to attract traditional mom and pop investors?
Bitcoin Spot ETF Deadline
The Securities and Exchange Commission is not allowed to wait forever when ruling on applications awaiting its approval or disapproval. In the case of spot Bitcoin ETFs the deadline for the SEC to decide is January 10, 2024. Although the deadline specifically has to do with the first two businesses that applied, there is good reason to expect that once the SEC makes up its mind it will rule on the entire backlog of applications. We have written about how expectations of spot Bitcoin ETF approvals have helped drive Bitcoin prices higher. We have also noted how this could well be a buy on the rumor and sell on the news situation. Bloomberg suggests that the reaction to approval will be more one of relief than excitement. How the Bitcoin market would react to disapproval of applications would be another matter entirely.
Why Invest in ETFs?
People invest in exchange traded funds for a couple of good reasons. This is an efficient way to diversify an investment portfolio without having to buy a few shares of many different stocks. An ETF that tracks foreign stocks lets an investor get access to foreign markets with buying lots of American Depositary Receipts. ETFs also give normal investors access to market niches where buying individual stocks can be difficult. Warren Buffett has suggested that investors who do not have the time, inclination, or expertise to select, purchase, and track a portfolio of stocks could do well to buy shares in an ETF that tracks the S&P 500 stock index.
Why Invest in a Bitcoin Spot Price ETF?
Bitcoin is not a mix of stocks, domestic or foreign. It is a single entity. However, buying and selling Bitcoin requires that you have a crypto wallet and know how to navigate the cryptocurrency realm. For many people this is a much greater barrier to investing than trying to buy stocks on a foreign stock market or tracking a portfolio of a dozen stocks. For a mom and pop investor interested in making money from Bitcoin, a spot Bitcoin ETF would allow them to buy and hold shares that track Bitcoin’s price. They would never have to worry about crypto wallets, losing their public or private keys, or having their assets hacked.
Will Mom and Pop Invest in Bitcoin?
This brings us to the basic question for investors when it comes to Bitcoin. Spot price ETFs make perfect sense for an easy way to invest in or trade Bitcoin. Now the mom and pop investor needs to apply what they know about investing to Bitcoin as an investment. Bitcoin performance in 2023 is a good argument for buying and holding Bitcoin.
Bitcoin performance over the last five years is another matter. Our point is that when convincing retail investors that Bitcoin is a good investment ETFs will need to talk the language of folks who use intrinsic value as a guide to long-term investments. The problem for Bitcoin is that it is more like a commodity than a stock and there are no forward-looking earnings to assess.
FREE MASTERCLASS: 3 Secrets to Take Control of Your Financial Future!