Bitcoin ETF Paves the Way for Further Adoption
Happy Monday!
Last week, I wrote that US politicians were, on the whole, progressing towards a stance more accepting of the crypto ecosystem. This past week, it has been reported that the SEC will not object to the approval of the first US-based Bitcoin ETF – the ProShares Bitcoin Strategy ETF. Trading in the ETF – or Exchange Traded Fund – could begin as early as next week.
Those in the industry knew that, at some point, a crypto ETF would be inevitable. However the SEC had frustrated the industry’s attempts to introduce one again and again, so the news this week represents a significant milestone in the maturation of the crypto markets.
Why is a Bitcoin ETF such a big deal? The main reason is because this type of financial instrument will enable, for the first time, much broader participation in the Bitcoin market. Traditional funds, family offices, and traditional financial advisers will now have access to an instrument they can safely invest in to get Bitcoin exposure. While the ETF is not perfect – it is based on futures contracts rather than the spot market (i.e., actual BTC) – it is a great start in bringing Bitcoin to a wider, more traditional, investing audience.
The approval of the ETF comes at a potentially explosive time for Bitcoin in the macro sense. On-chain analysis indicates that approximately 85% of Bitcoin supply has not moved in at least 90 days. This indicates that a large amount of the current supply of Bitcoin is being held by “strong hands” a.k.a., HODLERS. New entrants to the market will have to fight over the remaining 15% supply and paltry ~900 BTC being mined per day… that is until 2024 when just ~450 BTC will be mined a day. Longer term holders – defined as those that have held their Bitcoin >155 days – has reached new highs at >65% of supply.
The market has taken note. Bitcoin price so far in October is on what can only be described as a tear. We are quite close to all-time highs and, after that, uncharted territory.
Of course, that doesn’t mean we will continue to shoot up from here. Notably, leverage has been creeping back into the Bitcoin market once again. As we saw in May, too much leverage can lead to more extreme volatility and/or corrections.
But, as I’ve said before, “eyes on the prize”.
Crypto News:
The first bitcoin futures ETF in the U.S. is set to begin trading in the week ahead (LEARN MORE)
Coinbase NFT Marketplace Waitlist Soars Past 1.5 Million (LEARN MORE)
New York and Texas are winning the war to attract bitcoin miners (LEARN MORE)
White House Considering Executive Order on Crypto Oversight (LEARN MORE)
