What's Going On with the Spot Bitcoin ETF?
On Monday, the imminent arrival of spot BTC ETF approval became more apparent after a string of bullish developments.
The day kicked off with Scott Johnsson, a General Partner at Van Buren Capital, noting that recent BlackRock regulatory filings revealed the asset manager had already received a Committee on Uniform Securities Identification Procedures (CUSIP) number for its spot BTC ETF and could begin “seeding” the ETF as early as this month!
Seed capital may represent an insignificant inflow for an ETF. Still, BlackRock’s intention to begin purchasing bitcoins to seed their instrument and the resulting disclosure demonstrates that they are actively taking steps to launch the ETF.
Bloomberg Senior ETF Analyst Eric Balchunas later Tweeted out that the BlackRock iShares Bitcoin Trust, the name for their spot BTC ETF, had been listed on the Depository Trust & Clearing Corporation’s (DTCC) website under the ticker “IBTC.”
The iShares Bitcoin Trust has been listed on the DTCC (Depository Trust & Clearing Corporation, which clears NASDAQ trades). And the ticker will be $IBTC. Again all part of the process of bringing ETF to market.. h/t @martypartymusic pic.twitter.com/8PQP3h2yW0
— Eric Balchunas (@EricBalchunas) October 23, 2023
Despite IBTC having been listed with the DTCC since August, according to a statement from the firm, traders’ abrupt realization that the steps are being taken to get spot BTC ETFs to market was sufficient to catch many off guard, resulting in the positioning shift.
Buried beneath all of the BlackRock news was the expected formalization of the decision made by the Federal Court of Appeals that overturned the SEC’s “arbitrary and capricious” denial of Grayscale’s attempt to convert its Grayscale Bitcoin Trust (GBTC) product into a spot ETF.
The culmination of all this Bitcoin bullishness proved sufficient to launch the asset out of its bear market trading range! Not even the delisting of IBTC from the DTCC’s website on Tuesday morning (it was subsequently relisted) could put a damper on the party 🥳
Historically, price appreciation in BTC is a prerequisite for the bull market, and with the granddaddy of crypto’s tokens posting a monstrous 15%+ rally on Monday, traders are now asking the perennial question: is it time to get bullish?
Undoubtedly, the Bitcoin spot ETF approval train is pulling into the station, and it is only natural for markets to attempt to front-run the potential investor inflows it stands to unlock. Still, it would be a mistake to presume that capital will be rotating into your bags automatically.
We’re still months away from the potential launch of the first spot BTC ETFs, and even in the likely event that they’re approved (it is indeed possible that they could be denied), crypto still needs external capital to show up with the bid to propel continuation of the bull market!
No free lunch is assured 🙅
Degens often turn to altcoins in an attempt to amplify their upside exposure, but presently, it seems that Bitcoin will be leading the rally, and it appears unlikely that the rising tide will equally lift all boats.
Some assets like MKR (which is one of the rare crypto companies generating a ton of cash thanks to its adoption of a real world assets strategy) and SOL (a ticker heavily oversold in the wake of the Alameda/FTX collapse) have managed to outperform BTC in 2023. Still, the majority find themselves in situations similar to MATIC and UNI, which are both underperforming Bitcoin and have lost value in terms of USD during the year.
Even bluechip ETH, which is valued more like a claim to the network’s underlying activity as a high-beta tech play than as an ultra-hard money, is lagging behind Bitcoin.
While the launch of Ether futures ETFs gave the asset regulatory parity with Bitcoin and made the approval of a spot ETF a possibility, the discrepancy in market-perceived value between the two assets and sell off in the ETH/BTC ratio makes sense, especially considering the market’s lackluster appetite for Ether futures ETF products when they launched earlier this month.
For the moment, investors may be willing to place discerning bets on performant assets, but with looming macro overhangs and sentiment positioned to shift in a nanosecond, it is indeed too early to call for the end of the bear market.
Relish the fact we may be in the early innings of the bull market, but keep your portfolio conservative and flush with Bitcoins/cash to ensure you don’t get too far ahead of your skis 🤝