2024.02 - Patience

IMHO

On Tuesday, the SEC finally tweeted the approval for spot BTC ETFs.

…and immediately backpedaled claiming their account was "compromised", triggering a pump and dump and much ridicule on Twitter.

On Wednesday the real approval finally came. After a quick pump, price went back down to finish the day flat. On the second day price dump decisively to just above $43k and remained there over the weekend.

Was the ETF launch a dud? Hardly.

The new instruments saw $1.4 Billion in inflows (and Grayscale's Bitcoin Trust saw $579 Million in outflows).

So, why the price dump?

It's been hard to find a good, clear explanation but here are some points to consider:

• This was a highly anticipated event, creating "sell the news" pressure
• The ETFs had rough estimates for initial demand and would have had OTC agreements in place to source their initial inventory ahead of time
• The settlement times for ETFs are different to what we're used to with spot trading, there's a several-day lag between cash flowing into an ETF and them having to purchase the BTC
• A lot of GBTC investors had been "locked-in" (some for 10 years) with their investment underperforming Bitcoin, and the ETF finally offered then a way out —by the way, GBTC has a lot of BTC it could unload

All of which is to say: patience.

Price may not pick up for a while, depending on a few factors. There are large pools of BTC (like those recovered from Mt. Gox and the stashes seized by the US government) which may, or not, come into play to help funds build their initial positions. Until that "low-lying fruit" is absorbed, price won't climb, and if the Trad-Fi boys can do anything to make price drop as they accumulate, rest assured they will (the newborn ETFs have already hoovered up around 23,000 BTC with over 11,400 of those going to BlackRock).

The BTC market still needs to absorb the new dynamics the ETF will bring (for example it doesn't trade today because of the holiday). There are also new tax implications and settlement times to consider, as well as permitted trading behavior —apparently the ETF can move between cash and BTC to "buy the dip" opportunistically as long as it settles by a certain time, etc.

The initial inflows to the ETFs come from people who wanted BTC but could not buy it at exchanges for some reason. Given the "speed" of wire transfers they needed to have pre-funded their accounts BEFORE the approval was announced in order to buy last week. If you think about it, the number of people who were chomping to get into Bitcoin but couldn't, was probably not huge.

Through the noise, we should not lose sight of one fact: the doors have been opened for a large new cohort of new Bitcoiners to come onboard.

More importantly, this new cohort has not yet woken up to Bitcoin:

Yes, they will be buying Bitcoin™ instead of Bitcoin. No, they are not in it for the sovereignty, they are in it for the Number-Go-Up (which is fine) and are reasonably content with the current financial system. Fred Krueger makes the point:

Like I responded to Fred, BlackRock won't market Bitcoin "better" but it will be impactful because it's BlackRock doing the marketing.

I'd bet dollars to doughnuts Blackrock's new Bitcoin ad (below) doesn't speak to you if you already own sats and custody your own keys. Well guess what, it's not supposed to. This is aimed at an entirely different audience:

Right now, there's a good chance your buddies still ignore your Bitcoin rants but I expect that will change as the big funds start their marketing engines. It will be fascinating to watch people being "re-programmed" in real-time.

Two Wolves

Not everyone was cheering for the ETFs though, contrast Fidelity —who have a long history of being actively pro-Bitcoin— making efforts to onboard their customers

With Vanguard and other firms actively blocking their clients from accessing the new ETFs because "Bitcoin bad"

“Spot Bitcoin ETFs will not be available for purchase on the Vanguard platform.…[as] these products do not align with ... a well-balanced, long-term investment portfolio." —Vanguard

I find their stance hypocritical and disingenuous (given the rest of their funds and track records) but the market will decide if they're right.

The more interesting point is that as the sleeping majority starts waking up to Bitcoin, a steady flow of passive allocation will begin soaking up the available inventory and price will have nowhere to go but up.

Please understand, just as it will not go up immediately, it will also not go up in a straight line. Leveraged trading will make it so that dumps will be more profitable than pumps some of the time.

If you are already in Bitcoin congratulations. All you need is just a little patience.

And keep learning, remember: Now more than ever, Bitcoin is easy to buy but hard to get.

Bitcoin News

No Shortcuts

I fully understand how a guy who invests millions for a living is still clueless about Bitcoin. I don't understand why he doesn't get some competent help. (If you're friends with Dave have his people call my people, OK? thx)

Tounge Lashing

SEC Comissioner Hester Pierce (aka Crypto Mom) gave the SEC a good scolding for the poorly handled process of evaluating and approving the Bitcoin ETF

BRRR

Valkyre Funds (who sport the best ETF ticker, $BRRR) will be acquired by European investment company Coinshares.

You Got This Buddy

Gold outperformed Bitcoin on the day of the ETF launch. Well played boomercoin, well played.

Incentives

Bitcoin Mining would mitigate the emissions the Biden Administration intends to fine.

New Star is Born

Bloomberg, Yahoo Finance and CNBC contributor Samantha Laduc just posted the floowing "serious question" onTwitter:

If one Bitcoin is sold in units of "Sats," and there are over 2 quadrillion of those, HOW can they claim scarcity, lack of dilution, hedge against inflation/DEBASEMENT.

I thought this was funny, but then I saw her original tweet.

Rather than spending hours and thousands of words rebutting her points I'll recommend you read her tweet carefully and see how many falacies/mistakes you can spot. Your ability to do this is one of the crucial skills to being able to sleep at night while allocating to Bitcoin.

"Crypto" News

The jokes often write themselves

There And Back

BlackRock's Larry Fink praised Bitcoin, essentially comparing it to gold, which was good, but a few short minutes later…

Larry immediately launched into a rant about tokenization and blockchain straight out of 2007

Oh well.

Fiat News

Cubicle wasteland

If you don't think some of the pension fund allocation currently going to commercial real estate wioll move over to BTC, you have not been paying attention.

Healthy

The magnificent 7 continue to dominate the market

Where to Go?

Money Market Funds are flush with cash (understatement). Will this continue if the Fed cuts rates, as the market expects it to?

All I can predict is the first half of 2024 will not be boring.

Dystopian News

Davos

Over 2,500 delegates flew over 1,000 private planes to meet at The Global Puppeteering Convention (aka WEF Forum) is set to begin this week at Davos, home of the $43 Hot-dog and some of the finest orgies money can buy.

I look forward to finding out what disasters they plan on unleashing to "Rebuild Trust" and what lucky pre-teen they'll sign up as their next mascot.

Deutschland

As I'm sure you've heard in the news, there will be massive protests in Germany this week led by the farmers, who have now been joined by the train operators and perhaps the firemen.

Do you know why they're protesting? If you don't —given the historic size of the protest— don't you think that's curious?

Price News

Bitcoin Surfing

Bitcoin jumped and landed back on the Board ($42.4k) where it seems to be regaining its footing.

Dip Fishing

Between the fake launch and the real launch, BTC pumped above $48k to come crashing down before catching support on $42k.

Next big support down is $38k, next big resistance to the upside is $44k Hitting any of the two is possible right now.

Calm Chart

January still barely green, could well flip red as the dust settles on the ETF launch.