3 Reasons the Bitcoin ETF Is a Huge Deal
Robert Ross|December 19, 2023
The crypto space is full of riffraff.
Many crypto “experts” simply fell backward into millions after figuring out how to buy Bitcoin (often for illicit purposes) before it was easy to do so.
Anyone who’s spent time in the crypto space knows its chock-full of scammers. That’s one reason I wrote my book, A Beginner’s Guide to High-Risk, High-Reward Investing, for one of the largest publishers in the U.S. I was tired of people getting duped by crypto scams.
That said, there is a lot of money to be made in crypto. That will be especially true in 2024, as the sector could soar thanks to the approval of a Bitcoin ETF.
Here are three reasons a Bitcoin ETF would be a huge deal for investors.
No. 1: Not Your Keys, Not Your Coins
Prior to the introduction of the SPDR Gold Trust (GLD), it wasn’t easy for individual investors to invest in gold.
You had to buy physical gold, use futures contracts or buy gold mining stocks, all of which have complications, like storage, risk management and operational uncertainties.
It’s a similar story with Bitcoin. Individual investors who want to invest in cryptocurrency need to download an app like Coinbase, store their Bitcoin in a cold wallet (to avoid falling prey to an FTX-like insolvency) or invest in Bitcoin mining stocks like Riot Platforms (RIOT).
The obligation of maintaining crypto custody – keeping crypto securely stored and managing the private key to a crypto wallet – is a reason individual investors often eschew Bitcoin, even if they’re tempted to invest in it.
But once a Bitcoin ETF is approved, you’ll be able to buy Bitcoin via a few clicks on any brokerage platform, and all custody will be handled by the firm that runs the ETF.
No. 2: New Money for the Crypto Market
Let’s say you run a pension fund and want to invest a small percentage of your fund’s assets in Bitcoin. However, you quickly realize that it’s nearly impossible to do so.
For one, pension funds are subject to tight regulatory oversight. The lack of clear regulations around cryptocurrencies makes the industry a “no-go zone” for many institutions.
But an ETF run by Blackrock or Fidelity would fix this issue. Both are reputable financial institutions, and their involvement would bring a new level of legitimacy to the industry.
And much as it would for individual investors, an ETF would allow institutional investors to gain exposure to Bitcoin without directly holding the cryptocurrency, potentially mitigating concerns related to custody and regulatory compliance.
No. 3: Market Expansion and Accessibility
The approval of a Bitcoin ETF will mark a significant step toward the mainstream adoption and accessibility of crypto.
As mentioned in the first two points above, Bitcoin will become much more accessible to both retail and institutional investors who have been hesitant to navigate the complexities of cryptocurrency custody and trading.
And that increased accessibility will lead to the overall growth and maturation of the crypto market.
Because an ETF will allow for the seamless integration of crypto into traditional investment portfolios, it will attract a diverse range of investors, fostering liquidity and stability. A Bitcoin ETF will not only facilitate a more straightforward entry to the crypto space but also expand crypto’s reach, potentially paving the way for a more inclusive and robust digital asset market.
And it will unlock billions in value. Crypto analysis firm Galaxy Research expects $78 billion in new cash to flow into a Bitcoin ETF in the first three years it’s on the market…
And over that period, the firm expects these inflows to spark a 75% rally in Bitcoin.
I’m Betting Big on Crypto in 2024
Nobody knows for sure what will happen after a Bitcoin ETF is approved.
But it’s worth noting that we saw a massive rally in gold prices after the SPDR Gold Trust was launched in 2004…
In fact, gold prices rose 350% over the following six years. If Bitcoin goes on a similar run, that would peg its future price at $144,620.
This type of setup is what I call a “smart risk.” With so much potential upside, it’s worthwhile to bet a small amount of money even if the thesis is proven incorrect.
This is exactly what we do every week in my investing service, Breakout Fortunes. While we launched this service only back in October, the average gain in our portfolio as of December 6 was 19%. Not bad for just over a month, especially given that the S&P 500 was up less than half that over the same period.
Check out the types of “smart risk” plays I’m making right here.
Robert Ross
Robert Ross’s unique style of clear and direct stock research helped him build a massive following in the investment research industry, starting his career at investment research company Mauldin Economics and quickly rising through the ranks to become one of the youngest chief analysts in the industry. Today, over a million investors turn to Ross every month for his take on investing, economics, and personal finance. He now shares his unique insights in Total Wealth and Manward Money Report.
