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January 30, 2024 ยท ๐ 17:08 AM EDT |
KIS-29: Bitcoin's First 3 Weeks on Wall Street
Coverage on IBIT, FBTC, BITB, & GBTC
5 min read
Hey Bitcoiner,
Note from the editor
๐ Welcome to Issue #29 of the keepitasatoshi.com newsletter, where we examine the top crypto asset projects and their communities.
This issue, we dissect the initial three-week performance of the recently launched Bitcoin ETFs in the U.S. Let's dive in to see how these ETFs have fared and what their performance tells us about the current state and future prospects of crypto assets in mainstream finance.
Stay curious, stay informed, and as always, #KeepItASatoshi!
When Bitcoin ETFs were announced, there was a mix of excitement and skepticism in the air. Many expected a bullish run, while we anticipated a 'sell the news' scenario. But what does the data say?
Grayscale Bitcoin Trust (GBTC)
Ticker: GBTC
- The Big Shift: GBTC by most accounts is the primary reason for Bitcoin's dip in price as they have offloaded approximately $5 billion worth of Bitcoin since the ETF launch.
- Market Impact: Despite GBTC's significant offloading of Bitcoin, the market has shown remarkable resilience. After an initial drop from $48k to $38k, Bitcoin (BTC) quickly recovered, stabilizing above the $42k mark.
- What's Next for GBTC?: Indications suggest that GBTC is nearing the end of its Bitcoin selling spree.
Key Takeaway: The GBTC trust originally allowed investment in Bitcoin through shares but didn't permit converting these shares back into Bitcoin. This led to significant fluctuations in its Net Asset Value (NAV), often causing it to trade at a premium in bull markets and a discount in bear markets.
As an ETF, GBTC can now buy and sell Bitcoin directly, aligning its share price more accurately with Bitcoin's market value. This conversion enhances GBTC's flexibility and market responsiveness, offering a more stable investment option for Bitcoin exposure.
GBTC's transition to an ETF has led to a notable decrease in its Bitcoin holdings, from 617,079 BTC at the ETF launch to 502,712.6 BTC as of 1/29/2024.
iShares Bitcoin Strategy ETF (IBIT)
Ticker: IBIT
- Impressive Accumulation: With an average stack of approximately $200M/day, or 4.7k BTC, IBIT has overnight become a significant player in Bitcoin.
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Managed by BlackRock: The involvement of BlackRock, a global asset management behemoth, in managing IBIT adds a substantial layer of credibility to this ETF. BlackRock's entry into the Bitcoin space is not just a validation of Bitcoin's investment appeal but also a potential catalyst for widespread mainstream adoption. Their expertise and influence in the financial world could play a crucial role in shaping the future trajectory of Bitcoin.โRapid Growth: IBIT's growth trajectory has been nothing short of meteoric. Starting from 0 BTC, the ETF now holds a significant 52,025.7 BTC. This rapid accumulation reflects a strong market appetite and confidence in Bitcoin.
Key Takeaway: The aggressive accumulation strategy of IBIT, combined with the expertise and management of BlackRock, signals a robust institutional trust in Bitcoin's long-term value. As such, IBIT is definitely an ETF to keep a close eye on for its potential influence on market dynamics.
Fidelity Bitcoin ETF (FBTC)
Ticker: FBTC
- Rapid Growth in the Bitcoin Market: FBTC has shown remarkable growth, expanding its Bitcoin holdings from zero to 46,238 BTC in a short span. This demonstrates not just an aggressive investment strategy but also a strong belief in the potential of Bitcoin.
- Significant Daily Investments: Averaging around $175 million or approximately 4.2k BTC per day, FBTC is making substantial moves in the Bitcoin market. This consistent and hefty investment pace underscores FBTC's serious commitment to and confidence in Bitcoin's value.
- Innovative Custody Approach: Unlike many other Bitcoin ETFs that rely on external custody services like Coinbase, FBTC employs its own self-custody solution. This decision reflects Fidelity's confidence in managing and securing its Bitcoin assets independently, a move that sets them apart in the realm of digital asset management.
Key Takeaway: While most Bitcoin ETFs, including some of the major players, opt for third-party custody solutions like Coinbase, the Fidelity Bitcoin ETF distinguishes itself with a unique self-custody approach. This innovative strategy likely stems from Fidelity's role as a pioneer in the financial industry, being the first to dedicate a full team to digital assets.
This positions FBTC as a key influencer in the Bitcoin ETF landscape, with the potential to shape future trends and bolster investor confidence in the sector.
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Bitwise Bitcoin ETF (BITB)
Ticker: BITB
- Emerging Yet Significant Player: BITB might not be the biggest player in the Bitcoin ETF market with its 13,576 BTC, but its growth trajectory is impressive. In the world of Bitcoin investments, this shows BITB as an emerging force to be reckoned with.
- Commitment to Transparency: Setting a new standard in the ETF space, BITB takes transparency seriously. They've made their Bitcoin address public on Twitter, allowing anyone to see their holdings. This level of openness is rare in the financial world and could be a major draw for investors who prioritize transparency in their investment choices.
- Attracting a New Investor Demographic: BITBโs approach, which combines growth with transparency, might appeal to a different kind of investor. This could include those who are more tech-savvy or those who value openness and clarity in their investment vehicles.
Key Takeaway: BITB may be smaller in scale compared to giants like FBTC, but it's making a name for itself with unique practices. Its emphasis on transparency and steady growth positions it as an interesting option in the Bitcoin ETF market, especially for investors who value these qualities. Keeping an eye on BITB could be insightful, as its approach might influence future trends in investor preferences and ETF practices.
The Bigger Picture: Demand vs. Supply Dynamics
- A Supply-Demand Mismatch: The combined daily intake of IBIT and FBTC is approximately 9k BTC, starkly overshadowing the daily mining supply of 900 BTC. This demand is 10x the supply, a gap poised to widen as the supply gets halved in less than three months, potentially escalating the demand to 20x the supply.
- ETFs and the Market: The aggressive Bitcoin accumulation by ETFs like IBIT and FBTC indicates a bullish sentiment in institutional investors, possibly leading to a tighter Bitcoin market.
Market Insight: The demand from just two ETFs outstripping the supply significantly could lead to price volatility and a potential bullish trend in the Bitcoin market. This dynamic, especially with the upcoming halving event, will likely be a critical factor for both short-term traders and long-term investors to consider.
What's Ahead?
As we conclude our discussion on the landmark achievement of Bitcoin ETFs, it's important to recognize that it is no longer 2019. 100x returns from investing in bitcoin are highly unlikely at this point. While the ETFs represent a significant milestone for mainstream adoption, the true alpha โ the life-changing opportunities โ lie beyond Bitcoin.
While Wall Street pats themselves on their back for finally realizing something we've known for years, we can now focus on where the puck is going not where its at:
- Decentralized Oracle Networks: Projects like Chainlink plays a crucial role as a decentralized oracle network, bridging the gap between blockchain smart contracts and real-world data. Its ability to securely and reliably feed external data into the blockchain ecosystem is crucial for the functionality of many decentralized applications.
- Data Availability and Blockchain Efficiency: Celestia, specializing in the blockchain data layer, is championing the modular blockchain concept, streamlining the creation of new rollups and enhancing blockchain scalability.
- Layer 1 and Layer 2 scaling solutions: Projects like Arbitrum, Base, zkSync, and Monad are revolutionizing ETH scalability and efficiency. Meanwhile, platforms like Solana, Avalanche, SUI and SEI are redefining blockchain capabilities with unique approaches to interoperability and speed.
- Decentralized Finance (DeFi) Innovations: DeFi platforms such as GMX and Pendle are at the cutting edge, offering novel solutions in trading, lending, and yield generation, far beyond what traditional finance offers.
- Personal Tokens and PFP NFTs: Innovations like Farcaster, CryptoPunks, and Pudgy Penguins are not just digital art or tokens; they represent a new era of digital identity and personal monetization.
- Decentralized Data and Storage Solutions: Projects like Hivemapper and Akash Network are pioneering decentralized data and physical infrastructure, offering robust and efficient alternatives to traditional infrastructure.
- The NFT and Gaming Revolution: Platforms such as ImmutableX and Xai are merging the worlds of gaming and NFTs, creating immersive experiences that push the boundaries of digital interaction.
Our mission is to navigate these waters, pinpointing opportunities that are both profitable and transformative. As the crypto world evolves, our strategies on growing 4 figures into 5 and beyond must adapt accordingly.
Engage with Us
What are your views on the current state of Bitcoin ETFs? How do you see them impacting the broader crypto market? Share your perspectives with us, and let's keep this conversation going.
